Wednesday, 9 May 2012

Police probe sophisticated wine-scam syndicate

Hundreds of mainlanders and Hongkongers may have invested in vintage futures that never existed

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Guanyu 道 said...

Police probe sophisticated wine-scam syndicate

Hundreds of mainlanders and Hongkongers may have invested in vintage futures that never existed

Clifford Lo
09 May 2012

Police believe hundreds of investors have fallen victim to a cross-border scam after being promised huge returns for investing in red wine that never existed.

The investors, most from the mainland, were tricked into paying tens of thousands of dollars each to buy en primeur wines - wines that are still maturing in the barrel. They were told they would receive huge returns when the wine was bottled and offered commission to lure investors.

Police began investigating the syndicate after receiving complaints from four women, from Hong Kong and the mainland, last month.

The four invested in red wine through the company, but when their investment was due to mature they did not receive any wine and found they could not contact the agents who had sold it to them.

Officers from the Commercial Crime Bureau arrested two senior executives of a Hong Kong company in connection with the case and seized documents from its office.

Police will exchange intelligence with colleagues on the mainland, where the transactions took place, as part of their investigations.

En primeur wines, or wine futures, give investors the chance to buy into a particular vintage before it is bottled. When the wine is delivered, they can either consume it themselves or sell it on the open market. Normally, the period from purchase to delivery is two years.

A police officer said investing in en primeur wine was a “new gimmick” fraudsters use to deceive investors.

“Previously, victims were lured to buy fragrance products and health food in such investment scams,” he said. “Popular and trendy products are what fraudsters use to cheat.”

Initial investigations show the firm was based in Kwun Tong but had recruited clients in several provinces on the mainland. “They recruited a group of would-be clients in one location and then they moved and continued in other locations,” another officer said.

He said the victims were brought to Hong Kong to attend seminars or talks, at which they were briefed about their investment plans and promised huge returns. They were also offered commission in return for finding new clients for the company.

“Initial investigation showed that the events were held in rented exhibition halls instead of the offices of the company,” the officer said. “We believe most of the victims are mainlanders, but some Hong Kong residents, who live or work on the mainland, also fell into the trap.”

After a month-long investigation, police arrested a 52-year-old man at the Shenzhen Bay border checkpoint on Saturday and another man, 45, in Hung Hom the following day.

The men, both Hong Kong residents, were released on bail pending further investigations. Officers are checking the seized documents to establish how many victims were cheated and how much money was involved.