Pictures from the movie The Boiler Room where salesmen pushed questionable stocks.

London is facing a growing problem of salesmen working from boiler rooms pretending to be investment companies offering impressive returns on items ranging from diamonds to bamboo targeting unsuspecting consumers.

In a report investigators have found boiler room cons take on average 1.25 million pounds before disappearing without a trace. “We never had this type of criminality a few years back,” said Detective Inspector Teresa Russell in charge for this case.

These fake investment companies offer staggering returns to their clients to lure them to invest in products that quite often don’t exist or are heavily overpriced. They build their credibility through glamorous names and virtual offices in prestigious locations luring victims into their elaborate scams.

Contacts of potential victims are purchased from companies selling data, they are then contacted by skilled telemarketers offering them deals which appear very lucrative. The conmen are usually young, loud and very confident, said one of the victims. British investors in last year are believed to have lost 1.73 billion pounds through cons of this type.

One of their victims, 78 year old Peter Hodgson, lost around 70,000 pounds “buying” colored diamonds. Firstly he invested just 2,000 pounds, but when he was called after a few days with news that the price of his diamond had doubled he couldn’t resist buying more. He went to an appraisal at Hutton Garden and found his diamonds were worth just 5% of the value he was told.

The increase in this kind of activity has alarmed London’s Police Department and caused them to setup Operation Broadway. The first step they took was engaging undercover contacts in the financial district of London to keep an eye on suspicious companies and service providers. Office lenders are being pressured to require documents to identify customers renting offices giving police an easier method to track the conmen and bring them to justice. 16,000 flyers have also been handed out to public in 25 different locations of London warning people of what is going on and how to report these kinds of crimes.