International Securities Regulatory Authority Scam
A group of scammers operating under the name ‘International Securities Regulatory Authority’ is operating a follow-on-fraud targeting victims of investment scams.
Victims are normally contacted by a separate scam company (which will be part of the same scam team) and are told that they can recover the investor’s money. They point their intended victim to the ISRA website to reassure them that they are a professional firm because they are regulated by ISRA and that ISRA oversees all transactions.
ISRA is a fake organisation. It claims to be based in Switzerland, but it isn’t. This is a scam operating out of Asia. The same team have been scamming investors across Asia for years using a lot of different company names, but have recently been expanding their operations outside Asia.
This group operates scams on an industrial scale and they steal a lot of money. They are churning out new scams on a regular basis, but the format has always been the same. This follow-on-fraud is generally stage three in their scam operations. Up until now all their scams begin Stage One – a fake share offer.
Their go-to strategy is to contact investors with an opportunity to purchase shares in big name global brands such as Alipay, Tesla, Google, Apple etc. They claim the company is about to issue new shares and there is an opportunity to buy them at a discount to market price before they are officially listed. This isn’t a simple scam. This team has established several scam companies each time which typically includes:
1. The firm which makes the approach to investors and is described as the share broker. It’s website normally has a share price ticker tape, financial news updates etc to make it look like it works in the world of finance;
2. A bogus law firm which provides a legal opinion on the transaction and a testimonial verifying the trustworthiness of the first company. Sometimes the bogus law firm is the one offering the escrow service which will hold the investor’s money until the fake transaction allegedly completes.
3. A fake regulatory body like ISRA or a fake insurance company. The purpose of this body is to provide further reassurance that the transaction is genuine.
The letterheaded paper and branding are normally high quality. The websites are normally believable, but not always of the quality you would expect from allegedly high level firms. If the investor buys shares they receive a share certificate with fake signatures of officials from the company they believe they invested in. The investor has no reason to believe they haven’t bought shares. One of the reasons the scammers choose large firms is because even if the investor had doubts and wrote to Google, Tesla etc the firm would never respond to their letter.
Company 1 stays in touch with the investor and will try to sell him/her shares in other companies. Once it is clear the investor doesn’t want to buy any more shares because he/she has run out of money they roll out Stage Two of the scam. Stage Two is where they tell the investor there is a party which has agreed to buy the first lot of shares. This will result in a huge profit for the investor. The investor is encouraged to sell the non-existent shares to this phantom buyer.
At this point, the investor is told that he/she has to pay either an admin fee or a withholding tax or an insurance fee before the full purchase price can be released. The scam group’s paperwork is very professional looking because they have perfected their scams over many years.
The scammers provide the investor with fake bank documents showing that a large sum of money is held in an account with the investor’s name as the reference for payment. They say they are just waiting for the fee to be paid and all the money will be released to the investor. Sometimes the scam salesperson will use the fake sale as an opportunity to squeeze even more from the investor – “If you pay the release fee you will have made a profit of $250,000. You could put that money into the new share opportunity I told you about. The only problem is that the opportunity will be gone by the time you get the $250,000. I think we might be able to secure the deal for you if you paid a 10% deposit and then we can wait for your transaction to go through. That would be fantastic for you. Let me check with my boss that we can do this……… Good news, he says we can”.
If the investor pays the release fee the scammers will keep coming back asking for more and more money before the funds can be released e.g bank charge, tax increase, withholding tax etc. When the scammers feel the investor has grown wise to what they have been doing they close down the websites. The scammers republish the website a month or so later with different branding and a different company name.
It gets nastier. We’ve seen cases where a few weeks later the bogus law firm contacts the investor and says that the investor owes the balance on the second share purchase. The investor paid a 10% deposit and now he/she has to pay the remaining 90%. When the investor says he is waiting for the first sale to go through and hasn’t been able to contact his ‘broker’, he/she is told that this doesn’t matter. They were separate transactions and the investor signed a share purchase contract. If they don’t pay the balance they will be taken to court (normally in the USA). It is all a lie.
If it becomes clear the investor is not going to pay the 90%, the bogus law firm will say that they can probably put a hold on any legal action if the investor pays another 10%. We’ve seen cases where the investor pays another 10% and at that point the bogus law firm knows it can keep coming back every few months with more threats of legal action just to squeeze more out of the investor.
The scammers might then wait a year before they move to Stage Three of their scam operation which is the follow-on-fraud. This is where they contact the investor under a new company name and say they have been able to recover the share money for the investor. They claim the shares had actually been sold and that the money which the investor thought they were going to get really does exist, but the disappearance of the original company caused the transaction to be put on hold. The money is waiting to be collected. Once again, a fee must be paid to them to release the money.
One name they used recently for the follow-on-fraud approach was Global Tax Solutions [LINK to GTS scam website]. They introduced the International Securities Regulatory Authority Scam element again saying that ISRA, based in Switzerland, is overseeing the transaction. The investor still believes that he/she owns shares because he/she has a share certificate.
ISRA personnel use false names. One person calls himself Joel Gerber and claims to be the legal counsel for ISRA. He writes to the investor stating the legal position and confirming that ISRA is protecting the transaction.
We know many of these share scams are linked to the same group of scammers because the scams have all used the same money mule accounts to receive investors’ money. These bank accounts act as cutouts to prevent investors from tracing the final recipient of their money. For example, in this GTS / ISRA scam investors sent their money to an account in Germany in the name of John Jennings, and an account in the USA in the name of Kaloca Inc. We warned about these bank accounts as far back as February 2020 in this article on Brookfield Investment Funds PLC [LINK to our article].
The International Securities Regulatory Authority Scam is the latest to be rolled out by this group of scammers. Heed this warning and do not buy shares from any company which approaches you out of the blue and do not pay any company which claims to have buyers for your investment.
International Securities Regulatory Authority Scam.