Matt Allwright uncovers the secrets of sophisticated scams. He meets retired IT manager Mick, who invested in wine and ended up losing thousands of pounds to conmen.
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Each year, almost half the population of Britain
is targeted by some kind of scam. The brains behind these scams
are quick-thinking conmen, who know every trick in the book to get you
to part with your cash.
Coming up, the scam that targets ordinary people who invest in wine.
They are probably going to run off to Belize.
The wine was never bought in the first place.
And the crooked construction company
that caused havoc across 14 counties.
We had no internal water, no lights, we had nothing, no floor.
I'm here to tell you what the conman doesn't want you to know,
how to stay one step ahead of the game and not get scammed.
Now, if you have worked hard and put aside some savings,
chances are you have thought about making some form of investment.
An ISA, or some stocks and shares.
But have you ever thought about mixing business with pleasure,
by investing in something you really enjoy?
If you are considering an alternative investment,
how about En Primeur wine?
What is that, I hear you ask?
It works like this. You buy the wine in the barrel,
and then you sell it in the bottle, making yourself a bit of extra cash.
It sounds pretty good, doesn't it?
but the conmen have cottoned on to En Primeur wine
as a way to scam people out of their savings.
I've come to meet retired IT manager Mick, who's had his fingers burned.
-Hi, Matt, how you doing?
-Come on in.
In 2007, Mick came into some money from the sale of a house,
with retirement to pay for, he was keen to make a sensible investment.
when I found myself with some capital to be able to invest,
wine seemed to be the first choice.
Over the last few years in particular, we've seen
the value of certain wines rise substantially.
The theory behind wine investment is simple, you buy the wine as soon
as it's released, it gains in value over the course of its lifetime.
Mick was encouraged by what he saw online,
but he didn't realise that by registering on websites
and logging on to internet forums, he was making himself known to scammers.
Out of the blue, he received a brochure through
from the Bordeaux Wine Trading Company Ltd, yes, out of the blue.
Did that not make you suspicious in any way?
No, because I assumed because of my interest online, you know,
you get the tick box, "Can we contact you with further information?"
I assumed it was one of those sort of set-ups.
Mick read through the brochure and was impressed by what he saw.
There will be probably some impressive-looking convincing
literature, it might be a brochure with photos of all these fine wines
in cellars, or the chateaux, very professional, slick-looking website.
It also had newspaper cuttings about how well En Primeur wine
had done in the past, how it was predicted to do in the future.
Mick went to specialist websites, internet forums
and even checked official records.
I actually went to Companies House, and had the details of how they were,
how they were trading and if there were
any problems with them.
At that particular time they appeared to be a fully bona fide company.
Mick felt he'd done all the checks he could do,
and nothing had given him any serious cause for concern.
When the company followed up the brochure with a phone call,
Mick was keen to hear what they had to say.
It was really, "Well, you have a think about it,
"have a bit more time to look at the information we've provided.
"Have a look around, see what's going on in the market place,
"and you'll find what I'm telling you is true."
That was the tone of the conversation.
I was not feeling nervous, in fact I was actually feeling quite excited.
Mick was now one step closer to becoming a fully-fledged wine investor.
Unbeknown to him, the men he was speaking to were con artists,
and their softly, softly approach on the phone
was all part of a plan to gain Mick's trust.
At no time did they say,
"Right, now do you want to sign on the dotted line?"
It was always,
"Have you any more questions? Can I give you more information?"
"Is there anything else I can do?"
The next stage, the second stage,
is where things move forward to the sale.
It must have been about a week later the same chap phoned back
and again, with the same sort of warm approach,
and then the discussion turned to
"Well, what shall we do, which ones shall we do?"
It was case of, "We currently have this available, this is something
"that not everybody is getting the opportunity to have,
"we can make it this price for you now."
It's something you want to do anyway,
you've done all the checks you want to do
let's commit and do it. That's what I did.
Mick agreed to buy case of one of the world's finest wines,
Chateau Lafite Rothschild, for £5,382.
Mick had entrusted thousands of pounds to the company,
and this is where En Primeur wine scams get really clever.
If you buy wine in the barrel, you have to wait two years
for it to be sent to you, that gives the conmen the perfect opportunity.
Because of the gap between paying for the wine and receiving it,
it gives the company enough time to siphon off the money,
not buy the wine, and off they go, they've done a runner.
I got a certificate along with the batch number,
and everything they said would arrive did arrive.
I felt as though I had myself an En Primeur investment,
-I felt I had joined the club.
-You're a wine investor?
Yes. I felt good about it. I felt good about myself.
The conmen now had Mick exactly where they wanted him.
They were ready to raise the stakes.
Three weeks after Mick made his initial investment,
the Bordeaux Wine Trading Company were back on the phone.
They said, "One of the opportunities that is now open to you
"is the ability to expand your portfolio,
"and we've just taken an opportunity for another case, should you be interested."
So I thought, well, "In for a penny, in for a pound."
Mick spent a further £5,451 on a case of Chateau Haut Brion
and was sent another certificate confirming his purchase.
Barely a month went by before the company were back on the phone with another proposition.
They said, "Michael, we've just had one of our customers,
"unfortunately, has found himself in a difficult position,
"he's going through a bit of a messy divorce, and has got
"a case of wine which has become available, we're offering it to
"you at a slightly reduced price."
Mick went ahead and bought the third case,
a Chateau Margaux, for £6,561.
How much money were you in for?
By the third case, just over £17,000.
-Any sense of vertigo at this stage?
-Not until after the Christmas.
That's when the doubts started to set in.
You see, when Mick bought his first two cases,
he'd received a certificate of ownership
within a couple of weeks, but a couple of months had gone by since
Mick had bought his third case, and the certificate hadn't yet arrived.
He got on the phone to chase it up.
"Don't worry," he says, "it's because of the Christmas period."
I said "OK, not to worry, I'm going on holiday for a week.
"I'll expect it to be there when I get back."
But when Mick got back from his holiday
there was still no sign of the certificate.
Something even more alarming happened.
The company's website had disappeared.
Things go quiet, and increasingly
you find it very difficult to get any communication with the company.
Because they've probably done a runner with your money
and the wine was never bought in the first place.
Mick went online, desperately trying to find out what was going on.
He was put in touch with someone else
who'd invested with the same company.
With some trepidation, I e-mailed this particular chap.
Once we'd established we were both in the same boat,
we actually opened up quite a big dialogue.
The other investor had also paid thousands of pounds to the company
and couldn't get hold of them.
And as Mick listened to his story, the penny was starting to drop.
Once I realised there was more than just me who had concerns,
then that really sort of heightened my doubts.
But Mick and the other investor weren't alone.
Scores had been duped by the same firm
and it was now being investigated by the police.
But for Mick, it was too late.
Practicality and logic steps in and says,
you'll never see it again, so there's no point worrying about it.
Mick's determined to try and stay positive
but it's hard to escape the effects of losing such a huge sum of money.
It was something the family would have benefited from,
had it been genuine,
and five years down the line we would have been able to, you know,
enjoy the fruits,
but obviously, there weren't any at the end of the day.
I don't think it was about profit for you.
I don't think it was about greed from how you're talking about it.
From what you're saying,
it sounds like it's more about belonging to something,
and it's being clever, because your first reaction to the cold call
was like, "They can't be scamming me, there's no hard sell here."
That was the psychology of that first call
and it worked.
-It worked an absolute treat.
-It did, yeah.
There is some consolation for Mick.
In July 2011, the men behind the Bordeaux Wine Trading Company Ltd
who scammed him out of £17,000, were banged up for fraud
and the wine industry is now doing what it can
to make En Primeur investments safe from scams.
So, if you want to invest in wine,
here's what you need to know to avoid being drawn into a scam.
I think the key thing is, make sure you're with an established merchant,
someone with a track record,
not someone who's just sprung up overnight.
Look at their history, how long they've been going.
Have a look, for example, how big are they?
Do they sell a lot of wines?
If they're a merchant who's selling tens, hundreds, dozens of wines,
and not all at these high prices,
that suggests they're a proper bona fide wine merchant.
Look at the Companies House website where any company is registered.
It's not that difficult. For £1 you can see that company's accounts.
Sadly, none of this changes the fact
that Mick has lost a huge chunk of his retirement savings.
Like many scam targets, he's been left wondering
how this could happen to him when he thought he'd done everything right.
People that fall for scams are not greedy or stupid or gullible.
They are...everybody, and it's the right moment.
if this hadn't happened to me, I probably would be one of them.
I would have said, "Are they stupid?"
or, "Didn't they see it coming?"
Having been through it, no, you don't see it coming.
So, you've bought a house and you want to build an extension.
After wrestling with the council for weeks,
you also now have planning permission.
All you need to do is find yourself a decent builder
except you don't have to, because you know what?
Ding-dong! One's just turned up on your doorstep
and he can do exactly what you want him to.
Builders. Unless you live in a tent,
at some point in your life, the chances are, you'll have to use one.
For a consumer trying to find a builder,
it can be a very daunting process because in this country,
anyone can set themselves up as a building company.
There are no standard qualifications,
there is no national registration.
It makes it hard to differentiate between a good and bad builder.
There are plenty of good builders out there, but take it from me,
there are a few rogue ones ready to scam people as well.
But between 2005 and 2007,
a group of Gloucestershire builders took rogue trading to another level.
They devised a scheme to scam people out of their savings.
Scores of homeowners were drawn into their web of deceit.
Using two firms, Construction Management Development Ltd
and CMD Construction Services Ltd,
the conmen raked in almost £1 million
by taking on jobs they had no intention of finishing.
But working alongside the police,
Gloucester's Trading Standards Office were determined
to catch the men who'd left customers' lives in ruins.
There were people who were very, very distressed.
You know, you're living in a home that is a building site
and you'll just awake to it every single day.
Joanna and Michael Doherty, Debbie Mitchell and Helen Wicks
were all customers of CMD Construction Services
and their troubles began
when they decided to extend their homes.
My dad had passed away suddenly.
And because we didn't want my mum to be on her own,
what we decided to do was to sell our own house
and have a granny flat
built on the existing house
so we could all be together,
but my mum would still have her own independence, if she wanted to.
Debbie's grand plans were built around an extension to her kitchen.
Also there were going to be two new rooms added on upstairs,
an en suite bathroom and a dressing room.
Helen was also planning a two-storey extension.
Which was a third bedroom
and an extension on the kitchen and a garage.
These were all major projects that required a lot of money and work.
Stage one was to get planning permission
and as part of this process, Joanna, Michael, Debbie and Helen
had to make their applications public
so people could raise any objections.
But that meant their plans could be seen
by the beady eyes of the crooks behind CMD Construction Services,
and it wasn't long before they got in touch.
I thought it must have been
some sort of pre-approved supplier list by the council
because no-one had my details,
I hadn't approached anybody other than the few quotes I'd already had.
It sounded too good to be true,
the quote, because we had been quoted twice that price
by other builders locally.
We had a quote for £45,000.
we also had a quote around 42, which was the quote we were going for,
and they came in about £36,000.
How on earth did they know enough detail to give us this quote?
And when I rang them and asked them that, they said...
With the information available on the internet
they were able to put together a competitive quote.
And there was one man
who seemed to be CMD Construction Services' main salesman.
And he certainly had the gift of the gab.
He seemed quite a warm, genuine character.
-He was very professional.
He sounded very convincing. He also sounded very likeable.
He also gave us the name of a customer
who they were doing some work for at the time.
We rang her up
and everything seemed to be going smoothly and she was happy.
Debbie, Helen, Joanna and Michael decided to go ahead.
CMD's next move was to send someone round with a contract to sign.
He didn't necessarily talk us through the contract.
We just read the contract and then signed it.
At that point we were, you know, quite pleased,
the fact that the price was good
and we were getting somebody who sounded very competent.
All three couples went ahead and signed their contracts,
something that would later come back to haunt them.
It's not uncommon to pay a small deposit,
up to about 10% of the building project,
because the builder may need to buy expensive building materials.
If it's more than 10%, I think alarm bells should be ringing.
About £5,800 as a down payment.
I think it was something like 20% of the total amount.
I think £10,000
was the figure that comes to mind.
-I had to give them a cheque for just over £5,000, I think.
And sign the contract at the same time.
They came every day for the first week.
They were digging out the foundations in the snow.
Actually, I think I phoned up Matt as well
-to thank him for the commitment they'd shown.
But it didn't last.
I think they came, it may have been one day, it may have been two.
Certainly no more than two days, and we didn't see them again.
We would be on the phone asking Matthew where the builders were,
what was happening.
They left us with a big hole outside the kitchen
and a little plank to walk over.
We had no internal wires. We had no lights.
We had nothing. No floor.
Martin Bruton, a Trading Standards officer with Gloucestershire
County Council, first heard about CMD Construction Services in 2005.
It was a fairly straightforward complaint coming in,
people reporting that a builder hadn't finished the job.
But what was unusual in this instance,
is we had two or three following on fairly close to each other.
They were starting the job, they were taking substantial deposits and
leaving with very little work done, or lots of work left incomplete.
Joanna and Michael, Helen and Debbie,
had all been talked into using CMD Construction Services
by the company's silver-tongued salesman, Matthew Higgins.
Their quotes had ranged from £25,000 to £36,000,
and all had paid very substantial deposits upfront.
But shortly after work began,
CMD Construction began demanding more money,
hoping that the desire to get their work finished
would encourage people to cough up.
"We need more money". I said "What for?" He said, "The roof joist".
I said, "We've already paid that."
He said, "No, that's gone on other things."
They asked for a further 2,700 or just over £2,000 cheque.
Almost...not threatening, but he was wondering why
I was questioning why they needed the money.
"You could affect the bill, we're ready, we want to get bricks done,
"we want to push it through, you've told us timing's important."
"Are you going to pay us?" I said, "I need to talk to my husband,"
and he said, "Obviously we can't carry on the work if you don't."
I accepted his argument for that and gave him a cheque.
An ugly pattern was developing.
CMD Construction Services would ask for thousands of pounds,
which customers would grudgingly pay.
Some workmen would then turn up
and do a small amount of work before disappearing again
and demanding more cash.
With little to show for their money, customers began to get desperate.
I eventually wrote to them and said, "We want our money back.
"We don't want to deal with you, this has been going on for some time.
"We don't feel that you're up to the work,
"so we'd like the money back."
They came up with excuses about the weather,
and this, that and the other,
and that if we pulled out, we'd be in breach of contract,
and we'd have to pay the full amount.
Debbie, Helen, Joanna and Michael
all turned to their solicitors for help but were given a nasty shock.
The contract they'd signed with CMD Construction Services
had a cleverly-worded clause,
which said building delays were not a sufficient reason to cancel.
Not wanting to risk legal action against them for breach of contract,
they were in a miserable Catch 22 situation,
and felt they had to keep paying out thousands of pounds.
But in the end, the quality of the work was just too poor to ignore.
We knew when they put the floor up, it was wrong.
We knew when they started to try and do the roof, it was wrong.
Some of the work wasn't just wrong, it was downright dangerous.
Where the flue was on the wall, they'd built the roof over it,
so all the fumes going from the house, from the boiler,
were actually pumping into the roof of the extension.
I think that's when we said, didn't we, "Enough's enough".
We were then basically saying, "Bring it on,
"we're at a point where we're not going to pay you any more money."
But although CMD Construction Services threatened legal action,
they didn't follow it through.
After all, they'd extracted thousands of pounds
from their customers, and by turning up and doing the bare minimum,
they'd kept the police at an arm's length.
If they had taken deposits and left the site without any work done,
that might have been a theft and that would prompt other action,
but by starting work, it meant the consumers were in a situation
where the trader had breached the contract, so it was a civil dispute.
So it was quite a clever strategy of avoiding very close attention.
Martin and the Trading Standards team began their investigation,
and soon learned that there were three main men
behind CMD Construction Services Ltd.
Nicholas Harris, Mark Dixon and smooth talking Matthew Higgins.
Trading Standards' first task was to try and stop the company
from doing any more work.
Using the Enterprise Act, they asked the three men
to sign court undertakings
that would ban them from this type of trading.
But the court undertakings were only the first step of the solution.
Trading Standards thought there was enough evidence for a criminal case
so they presented their findings to the police,
who launched an investigation.
It must be incredibly distressing to have to live with a building site
for a long period of time, when you've chosen those people
to come into your home. That must be just so demoralising.
But it was the staggering sums of money that CMD Construction Services
prised from their customers that made this such a vicious scam.
Helen and her husband handed over a shocking £32,000,
and were left with work that had barely been started.
We did think about getting someone in to value the work,
but we could see for ourselves, there was no way the money
we'd paid them matched what we had on site.
Debbie and her partner paid £15,000.
How on earth did I do that? How did I get there?
And Joanna and Michael had borrowed nearly £20,000 to pay for their work.
The house was in a state of panic,
and we were unfortunately at each other's throats.
It was very, very stressful.
In late 2010, the three men main behind CMD Construction Services Ltd
went on trial for conspiracy to defraud.
And with 65 unhappy customers in total,
there were plenty of people willing to testify.
I had to give evidence back in September last year...
on my birthday.
A whole four hours of gruelling questioning.
I was so pleased that they got the sentence that they got.
Mark Dixon got seven years.
Nicholas Harris, eight years...
..and Matthew Higgins, six years.
But that's small comfort to their customers,
who've had to swallow the cost of this crime.
The extension is complete now.
We limped along for about 18 months and completed the work ourselves.
I was lucky that I could find at least some of the money,
and go ahead and have it done, and now I've got a lovely extension,
I'm very happy with it.
We accepted that we'd lost a lot of money,
and we just wanted it out of our heads, really.
Put it down to a very, very expensive, bad experience, didn't we?
For further advice on how to protect yourself against scams go to...
Before we say goodbye, I want to tell you
about two of the latest scams that are doing the rounds right now.
I've come to meet an expert from the National Fraud Authority.
Today we're looking at scams which target you
when you're buying things online.
First up, online ticket sales.
With laser scanners, and the printers that we have available today,
it is so easy to copy the genuine thing.
The first thing that you know that you're a victim
is when you try to get into that concert and your ticket won't scan through the door.
So, if you do want to see your favourite band, ask the venue
or the promoter who the authorised ticket agents are
and only buy from them.
Next - online auctions.
Being given a chance to buy an item you missed out on first time round.
The second chance scam, how does that work?
It's targeting you
because you've been disappointed that you haven't won that auction.
You bid for this item, it's now become available again,
pay this amount and you can have it.
But that e-mail would've gone to 10, 15 other people.
Everyone pays for it and the goods have genuinely been sold
to the guy that won the auction.
The best advice here is to only buy things within the confines
of the auction website.
That way, if things go wrong, you've got them on your side.
Scammers will keep coming up with new and devious ways
to get hold of our cash.
But, armed with a little bit of knowledge,
you can be one step ahead.
Stay safe. I'll see you next time.
Subtitling by Red Bee Media Ltd
Matt goes to see retired IT manager Mick, who mixed business with pleasure by investing in wine and ended up losing thousands of pounds to conmen. Plus the builders who were put behind bars after duping innocent homeowners out of millions of pounds, and the scam that targets aspiring models.