The oil scammer drilling for my money

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A risk-free chance to invest in black gold sounds unbeatable, but unfortunately the only gushing is coming from the cold-calling fraudster.

As the prize fund on Premium Bonds crashes again to 1.3% (and I have still not won a single penny from my £38-worth bought in the 1960s), my thoughts turn to higher returns.

So what about I invest £12,750 and, a year later, I still have that money plus I have earned a further £17,400 paid in convenient monthly instalments of £1,450? And, as lawyers love to say, "for the avoidance of doubt" those returns are based on "conservative estimates".

For those struggling to balance returns on savings with inflation, let alone an income, this sounds like the answer to their prayers. And when Benny, the guy who cold-called me with this deal, told me that it had nothing to do with volatile shares and that I would not have to send my money overseas, it seemed all my birthdays and Christmases had arrived at once.

Now the reality check. You don't have to pinch yourself too hard to know something that sounds too good to be true is sure to be too evil to invest in – especially when cold-called.

Green lights and gushing spiel
Benny told me he had just been "given the green light" (a popular phrase with boiler rooms) to release this amazing investment. I was exceptionally fortunate in his call – he could have phoned the major investment institutions he claims he deals with every day instead. Except, of course, he would not have got past reception.

Benny's gushing prose led to a share in a gusher, a contractual right of ownership to a fraction of a US oil well. With some wells lasting over 30 years, this was the investment that would give and give.

He reassured me that "all wells are checked" (which is comforting!). But Benny would not be the best of actors as it was all too obvious he was reading from a script.

This seemed an odd way to invest in anything, let alone an oil well five or six thousand miles away. Benny told me that the Contractual Right of Ownership involved the investor gaining half the proceeds with the other half going to purchase a new well – he did not specify who would own the next well.

Nor did he mention that ownership included a share of costs as well. That was in the badly written paperwork I was immediately sent – all I had to do was to sign and send it back with my cheque.

All's not well with this well
There may be high returns from oil exploration offshore or in very hostile territories but I find it impossible to believe that I could get more than 100% return on my investment year in, year out. Yes, there is a well but who knows what it will produce – perhaps nothing or very little, which may explain why it has yet to be exploited.

Still, back to Benny's world. This was such a great investment, I was told, that I would be limited to one contract which would give me 1.3% of the well's activity for my £12,750. Benny assured me that he "would only make money when I made money" and all he would take was 1.5% of the profits. "I'm not greedy, my commission won't change my life," he said.

Now I know if I had a sure fire way of earning the promised returns, I would not be on the phones touting for cash – the London phone number leads to a "virtual office" with ownership in the United Arab Emirates, well away from UK regulation, although there are two intermediate UK companies. So how would my money stay in the UK when the promoter was in the Middle East and the oil wells in the US? Because I would initially send my cheque to a UK bank branch in a Welsh border town.

Nevertheless, how could I doubt this because Benny has already bought a contract for his three-year-old daughter?

Every line in the scammer's book
"The salesperson has personally invested in the venture" is one of the classic lines used in boiler room selling, according to an oil investment warning from the North American Securities Administrators Association (NASAA).

Other sales pitches from the NASAA list that I was subjected to include:
  • You will have an interest in a well that cannot miss;
  • The risks are minimal;
  • The promoter has "hit" on every well drilled so far;
  • This is a special private deal open only to a lucky chosen few investors;
Only a few contracts remain so send in your money at once to secure the purchase of an interest.
At the best of times, oil exploration and production are volatile, as is the price of oil itself.

The only place this level of returns is possible is in Cloud Cuckoo Land! And if I was really interested in this high risk investment, I found another organisation offering the same oil well contract for £10,000 – and with lower, more realistic dividend expectations.

Revealed: The 10 most common scams

Revealed: The 10 most common scams