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Guest Post: The carbon credits sold to private individuals as investments are worthless

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2015-06-04-161426_1680x1024_scrotIn a post last week, I described the carbon credits sold by boiler room scammers to retail investors as “near-worthless”. Following the post, “XYZ” left a comment. “Near-worthless implies not 100% worthless,” he wrote. “Are you saying there is some worth in my carbon credits and if so who will buy them?”

It’s a good question, so I passed it on to a few carbon market experts. I got a response from a commodities and financial market professional. It turns out I was wrong to describe the carbon credits as near-worthless. I apologise if I raised anyone’s hopes. The carbon credits that boiler rooms sold as investments are worthless.

This guest post author has nearly 30 years market experience including 10 years within the carbon market, he is also an Associate of The UK Economic Crime Directorate’s Training Academy for Economic Crime and Fraud and provides Expert Witness Evidence and training in relation to alleged fraud involving carbon credits.

    The carbon credits sold to private individuals as investments are worthless

     
    In my professional opinion the credits sold to private individuals in the boiler room cases I have reviewed are worthless, I am not aware of a single individual in my 10 year career within the carbon markets that has sold on, for any economic worth, the VERs purchased from “boiler rooms” as investments. Furthermore given the nature and mechanics of VER market I am unfortunately confident that any future outlook for these VERs will be negative and as such and paradoxically they become even more worthless as time moves on.
     
    I have come across numerous companies offering investors the opportunity to “exit” their VERs. Sadly all these companies are part of the well structured boiler room model, they are “Recovery Boiler Rooms”. The tag line is typically, “buy some more VERs to lower your average price and increase the size of your portfolio as this will be attractive to a large corporate buyer we are working with”. In reality no such corporate buyer exists and this is just a well tried and tested method of extending hope for the original investor while, at the same time extracting further monies.
     
    The voluntary carbon market has reported an over 100% rise in demand in VERs since 2008. It is now believed that the vast majority of this rise has been down to boiler rooms buying the cheapest available VERs and selling them on as “investments”. To put this in to context, it is believed that over 100 million tonnes of VERs are being held by private individuals as investments, nearly all these VERs were of negligible worth when purchased and with no prospect of re-sale.
     
    The VER market has moved forward at a revolutionary pace as opposed to the standard evolutionary pace of business, this means that projects developed today are drawing upon greatly updated scientific data and project design.
     
    A simple analogy would be that early VERs are like the first mobile phones which reached the market, the bulky Motorola for example, many of today’s projects are producing VERs which would be considered similar to the iPhone in terms of technology and qualitative value.
     
    Companies would not, indeed never in my opinion, elect to buy VERs from private individuals when there is a ready supply, far exceeding current and predicted demand available directly from project developers. Furthermore national and international regulations such as the UK Bribery Act and The US Foreign and Corrupt Practices Act force companies to meet strict standards or face unlimited fines and possible criminal action. A company purchasing VERs would need to show they have complied with such acts and/or received such assurances from the seller.
     
    A VER transaction in the genuine market, can take months and in my experience, some cases over a year to complete as the necessary legal work and due diligence are carried out. Boiler Rooms convey the image that VERs are bought and sold in the same fashion as shares on a Stock Market, they are not.
     
    So it is with deep regret that I can state that VERs held by private individuals are worthless, there is no secondary market and even if there were, buyers would not entertain or indeed need to purchase from those held by private individuals.
     
    Any company or individual offering the opportunity to exit a VER holding will be a Recovery Boiler Room, you will at some point, be asked to hand over more money to ensure and exit which will never happen.
     
    Given the option of trying to find a VER exit strategy and searching for The Holy Grail I would see the latter having a slightly greater possibility of success.
     

 

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  1. Thanks Chris – it was worth a try! Changing my focus to hunting for the Holy Grail!!!

    BTW I was defrauded by the Group of companies – New Frontier Advisory/Eco-Synergies/Citadel. It has been almost one year since I was asked to send copies of all relevant documentation to the UK Insolvency Office, and to Baker Tilly/Abbott Fielding the joint liquidators. Since then I have heard absolutely nothing. I believe the “take” by this group was 19 million (can’t remember pounds or dollars). Has ANYONE heard anything about the ongoing investigation? Thanks to all,

    XYZ

  2. XYZ,

    The insolvency office will simply close the company from an investigative point of view you do need to contact ActionFraud and report details (http://www.actionfraud.police.uk/report_fraud).

    Action Fraud as you can imagine are inundated with alleged fraud, their system cross references information and where the size of the fraud and or number of victims reaches a significant level (I don’t know the exact numbers) then an investigation is triggered.

    I would not hold out much hope of receiving much more than a letter informing you the company or companies have been closed. In many cases HMRC are owed substantial amounts of VAT and are first in line. And given that the money taken by boiler rooms is often spent within hours of receipt on luxury items and vary rarely hard assets, there is very little if anything that could be recovered.

    I would strongly encourage anyone to use the simple online reporting form from ActionFraud, if the quantum of the fraud is as you state around £19mm then is should be on their radar already.

  3. Chris my friend has handed over thousands of pounds to a company called G.E.C they have told him that his carbon credits have been sold in Russia and he is now awaiting his payment just reading a following from which says they are worthless and it’s all a scam he is old and believes they are telling him the truth could they be any truth in this or is he in for a very big loss

  4. Please can anyone tell me if there has been a sale in Russia to sell vers carbon credits a man. Now from GEC said he has sold them through another man called Simon is there any chance at all , there could be any truth in this awaiting a reply. the sale was approximately 9 weeks ago now

  5. Thank you Chris it’s my friend who is taking some convincing he has now told them he is selling his farm I am very concerned now

  6. @Jobey (#6) – I’m not sure how you can convince your friend that he or she is being scammed. But that is certainly what is happening. If s/he spoke to Action Fraud, or the local police, they would confirm that this is a recovery room scam. At least then, s/he wouldn’t lose any more money.

  7. Very useful. I think a new trick is now started by the “recovery boiler” companies, now telling they can convert VERs to Certified which will get more money! Where to report?

  8. Hi – has anyone been contacted by an individual claiming to be from the Bank of China? Someone called Li Jun contacted my father claiming to be the CEO of the Taiwan branch of the Bank of China who is interested in buying his carbon credits. This, to me, is yet again a massive scam, but he’s so desperate to get his money back (he lost everything) that I’m terrified he’s going to send these bastards money. Anyone else been contacted?

  9. @WT – You are correct, this is a ridiculously obvious scam. There is a man called Li Jun who works at the Bank of China. He’s the Chairman of the Board of Supervisors. There is no way that the Chairman of the Board of Supervisors at one of the biggest state-owned commercial banks in China is cold calling people in the UK who have been scammed into buying carbon credits.

    Did the man calling himself Li Jun give you a phone number, or an email, website or any other details? Has he said where he wants the money to be sent? Please report this to Action Fraud (0300 123 2040).