*Names have been changed for privacy
In 2017, when an investment brokerage firm based in Tokyo made a phone call to a New Zealand-based Westpac customer offering shareholdings in companies listed on the NASDAQ, he decided to make an investment.
The customer, Henry*, was looking for an opportunity to boost his retirement savings and in 2017 invested around $10,000 NZD via the offshore company.
The shares he invested in were well known public companies and he was given an account number and login details to monitor his stocks.
“I chose a 16-character password, but three months later I noticed they had been changing my shareholdings without telling me,” Henry said.
“They told me it was because of the time difference between New Zealand and Tokyo. I also realised that I had never been given the serial numbers of the shares either,” he said.
Stocks are coded by the International Organisation for Standardisation (ISO) for security, which is also called the International Securities Identification Numbering system (ISIN).
Henry soon realised that this had been a scam and he became resigned to the fact that he had lost the money he had given to the fraudulent investment firm.
In November 2018 he received another phone call, this time from a company in Hong Kong.
To his surprise, this company said they had a list of the shareholdings that Henry thought he had lost.
They also sent him an email confirming the shares he had bought in 2017, along with convincing US Securities Registrations and Review Commision statements attached.
“I was hopeful that I would get my money back, plus my profits, because the company used a letterhead with the US Security Registration and Review Office stamp from New York,” Henry said.
However, there was another catch, they now wanted an insurance fee to release his funds.
"They initially wanted me to pay another $3,860 USD ($6,145 NZD) of insurance fees but I said I didn’t have that kind of money,” Henry said.
The scammers soon called back and told Henry he could split the insurance fee over two payments, the first one being $2,000 USD and then he could pay the rest several months later.
It took Henry a few months to save up the initial $2,000 USD ($3,182 NZD) and he made the payment in March 2019, in the hope of retrieving the original funds as well as the insurance fee.
The money was transferred through a New Zealand transfer agent, which didn’t raise any alarms for Henry.
It was Henry’s second payment installment of $1,860 USD ($2,960) in August 2019 that raised alarms with Henry’s bank, Westpac NZ.
Westpac’s fraud monitoring system was alerted and within five minutes of Henry’s deposit, he received a call from the bank’s Auckland-based Financial Crime Prevention team.
“Westpac stopped the payment and the fraud investigation department called me immediately and froze my bank account so they could investigate.
“They asked for all the emails relating to the case and they confirmed that I had been a victim of a very sophisticated scam,” Henry said.
“A week later the fraudulent company was calling me again and asking why the second installment hadn’t been paid.
“I also received a call from a law firm in New York, claiming that the original investment firm had gone into liquidation and I could file a claim to get my money back... which would of course cost legal fees.
“Westpac’s Financial Crime Prevention team confirmed that the named law firm was a legitimate law firm in the past, but they closed down in 2016 so it was the attempt of another scam using an old official business name,” he said.
Henry was saved from making any further payments to the scammers but was conned out of thousands of dollars between 2017 and 2019.
His advice to others is to say no to any investment company that calls out of the blue and wants foreign transactions.
“Go through your local New Zealand registered brokerage or financial adviser or invest through the people who handle your Kiwisaver,” he says.
"That way you are covered by New Zealand law and the company is registered in New Zealand,” he says.
Westpac NZ’s Financial Crime Prevention team says all customers should “be cautious when investing online and always consult with a trusted financial advisor”.