14 aliens in stock scam arrested

Authorities arrested on Friday night 14 foreigners who are suspected members of an international syndicate operating a global investment scam in the country.

The foreigners were arrested in Makati City by agents of the Philippine National Police (PNP)-Criminal Investigation and Detection Group (CIDG), the Bureau of Immigration (BI) and the Securities and Exchange Commission (SEC).

CIDG director Chief Superintendent Nestorio Gualberto said the foreigners were members of the syndicate operating Mendez Prior Europe, an allegedly fraudulent stock brokerage that has supposedly victimized at least 87 investors from different countries.

Police identified the foreigners as Derek Richard Warner, Kevin Peter Turpin, Jonathan Herbert Dodon, Geoffrey Missenden, Christopher Copeland, Grayson Scott Buckley, James Steven Fallon, Bruce Daroy Gabor, Matthew Carter, Hannah Sutherland and Dionne McLarty, all British nationals.

Also arrested were former Italian policeman Massimo Proveza, Martin Patrick Totton of Canada and Helena Yizkova of the Czech Republic.

Gualberto said the foreigners were arrested at the offices of Mendez Prior Europe at the second and fourth floors of Montepino building at Gamboa and Adelantado streets in Salcedo Village, Makati City.

Upon questioning, the foreigners denied involvement with Mendez Prior Europe and claimed that they were simply awaiting to be interviewed for a supposed job vacancy.

They also claimed that they learned of Mendez Prior Europe through advertisements in newspapers and the Internet promising jobs that would pay from $75,000 to $100,000 within six months.

But police said the foreigners are being detained for suspected violation of the country’s immigration and securities regulation laws.

The Czech and Lithuanian governments have also communicated with the SEC to determine whether the group had any links to large scale financial scams in their countries, police said.

The foreigners were all transferred to the BI detention center in Intramuros, Manila yesterday afternoon after they were questioned at the CIDG headquarters at Camp Crame.

The arresting team included agents from the CIDG, headed by lawyer Virgilio Pablico; BI, headed by Mario Coronel; and SEC, headed by lawyer Virgilio Ilagan.

Coronel said the foreigners are under investigation for allegedly fraudulent trading of securities, working in the country without permits, and economic sabotage.

"All of them are tourists and have no working permits," Coronel said. "Four of them could not even produce papers to warrant their stay here."

Local authorities uncovered the international investment scam after it was determined through the Interpol network that the syndicate had set up fly-by-night stock brokerages in Indonesia, Taiwan and the Philippines.

Mendez Prior Europe is suspected to be one of several fraudulent stock brokerages which were set up in Southeast Asia to use the regional boom as a "come-on" for potential victims shortly before the Asian financial crisis, police said.

Police said South African businessman Pietro Lioni was among those the syndicate victimized. He allegedly lost some $135,000 to the Mendez Prior Europe.

Lioni claimed that sometime in 1991, a certain Diana Davis introduced herself as an international stock broker with Mendez Prior Europe and solicited him to invest in stocks which are listed in legitimate bourses.

Davis allegedly persuaded him to invest some $10,000 dollars and invested another $135,000 after Davis was able to show that his investment had grown after one year.

But Lioni later uncovered the scam after Davis and her group reportedly ignored his attempts to collect his investment and its profits.

According to Lioni’s American lawyer Matthew McEvily, the syndicate’s modus operandi involves initially setting up "telephone sales rooms" in an Asian country, like the Philippines.

They then hire locals and expatriates to solicit "investments" from prospective victims in other English-speaking countries by convincing them to invest in the Asian region, which was known as the most economically-dynamic region in the world before the Asian financial crisis.

McEvily said the victims are made to transfer funds to a Philippine bank to take advantage of the country’s lenient banking laws.

"All the while, the victims were made to believe that their money is being invested wisely and gaining profit," McEvily explained when he was in the country to provide information to authorities.

Moreover, victims do not usually file charges once they uncover the scam because of the difficulty of prosecuting a crime in another country. Authorities are also reluctant to prosecute the syndicate because of the absence of a complaint.