Two hundred thousand 'lose out in EUR80m stamp fraud'
9 May 2006, MADRID — Two hundred thousand rare stamp investors across Spain were the victims of an alleged EUR 80 million fraud by two auction houses.
9 May 2006
MADRID — Two hundred thousand rare stamp investors across Spain were the victims of an alleged EUR 80 million fraud by two auction houses.
Armed police yesterday carried out raids at the offices of Forum Filatelíco and Afinsa Bienes Tangibles, which is the world's third-biggest collectibles firm behind Sotheby's and Christie's.
Six workers were arrested.
About 100 angry investors, most of them pensioners, gathered outside the offices of both companies in Madrid to demand answers about their missing savings which totalled thousands of euros in some cases.
The Forum Filatelico and Afinsa are allegedly involved in a pyramid–type fraud based on over-priced stamps and other collectibles.
Both businesses are said to be facing allegations of public tax offences, laundering capital, dishonest administration and false documentation.
Afinsa operates a 'no-lose' stamp-sales scheme for investors in Spain and Portugal.
Many of the investors, who are said to have lost out, are pensioners who paid in an average of between EUR 150 and EUR 400 each.
Afinsa guarantees a return of 6 percent to 10 percent over a fixed period, with a money-back guarantee when the contracts expire.
But in a recent report by the financial magazine Barron's, some stamp experts have expressed doubts about the value of stamps, which may be worth less than what Afinsa charges for them.
Pyramid schemes pay high returns to investors by using the money from new investors, rather than from revenue generated by any real business.
Both companies would trade in anything from the rare Spanish Dos Reales stamps of 1851 to the British Penny Reds and Penny Blacks.
Afinsa is not officially classified as a financial institution in Spain so does not come under the same regulatory guidelines affecting other companies.
Under Spanish law they simply act as intermediaries to buy investments for investors.
This means investors do not have exactly the same rights to gain access to their investments as if they had bought shares or put their money in a bank account.
But collectibles firms have to submit their accounts to the tax authorities and clients in the normal way.
Afinsa and Forum Filatelico yesterday denied any wrong-doing.
Forum Filatelico was set up in 1979, has more than 200,000 clients in Spain and recorded profits of €84.2 million in 2004.
[Copyright EFE with Expatica]
Subject: Spanish news