Irish investors among those caught in $2m US fraud

INVESTMENT: Irish investors are among the 150 people defrauded out of more than $2 million (€2.1 million) by an international boiler room operation closed down by the US authorities on Wednesday.

The Central Bank confirmed yesterday that it had received more than 80 complaints about calls from Millennium Financial Ltd offering unsolicited investments.

The Bank said it believed that only half a dozen or so had lost money, but added that some individuals who were taken in might be reluctant to come forward.

The Securities and Exchange Commission (SEC) has obtained an temporary restraining order in the New York courts against Millennium, which held itself out as being based in the Montevideo free trade zone in Uruguay.

Millennium specialised is selling shares in companies that it claimed were about to join the stock market. It told investors that the shares would jump in value either just before or after the flotation.

Three companies mentioned by the SEC were Key Card Communications, kNutek Holdings and Sonic Garden Inc.

The SEC detailed the tactics used by Millennium. The company would first offer investors shares in existing stock market companies at below market prices.

"After showing investors an apparent 'profit' or by warning of an imminent loss in the exchange traded companies, Millennium recommended that they purchase the pre-IPO stock," according to the SEC affidavit.

The company claimed to have offices around the world including Brazil, Mexico, Singapore and Switzerland.

"In fact, Millennium had no physical presence in any of its listed locations... Millennium paid other businesses to re-route mail, faxes and telephone calls to at least three other countries," according to the SEC.

Millennium employees "cold called" prospective investors in 20 countries but the majority of those defrauded were in Ireland and Britain. "Millennium instructed investors to wire money through intermediary banks in New York City. At least €1.7 million of funds that investors paid to Millennium were wired through 19 of these banks to Millennium's bank account in the Caribbean island of Nevis," according to the SEC.

The Central Bank said yesterday that it had published three warnings about Millennium in the national newspapers since March 2000.

A spokesman said the Bank had co-operated with the SEC, which was better placed to pursue the company as it had some assets within the SEC's jurisdiction.

The SEC has asked the court to injunct Millennium from continuing to violate US securities laws.

It is also seeking judgment to force the company to "disgorge ill-gotten gains".

The Central Bank spokesman said that the best chance for investors who lost money was that some of it would be recovered by the SEC.