In 2013 the top story on REDD-Monitor was the carbon credits as investments scam. All of the top ten posts on REDD-Monitor were about this story, which involves companies (largely UK-based) pushing carbon credits onto unwary retail investors.
REDD-Monitor’s first post about this story was a Financial Services Authority warning that explains “why you should be wary about investing in the carbon credit market”.
The first part of the scam involves Boiler Room companies cold calling individuals, using high pressure sales techniques to sell carbon credits, promising large returns. The carbon credits are nearly worthless and there are no secondary markets for voluntary carbon credits. The second part of the scam is the Recovery Room, in which companies offer a deal to sell the carbon credits, for an advance fee.
In 2013, REDD-Monitor featured 65 posts about the carbon credits as investments scam. But I’m still only scratching the surface. Expect more posts about carbon credit scams in 2014.
During 2013, there were 274 new posts on REDD-Monitor. Most visitors came from the UK, ahead of the USA, Indonesia, Germany, Australia and Mexico.
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- MH Carbon: Another boiler room scam? (January 2013)
MH Carbon claimed to be “One of the UK’s fastest-growing participants in emissions spot trading within the voluntary carbon credit market.” Of course this was nonsense, and a few months later MH Carbon went into voluntary liquidation. The post received more than 400 comments.
- Advanced Global Trading: Another boiler room scam? Or a Ponzi scheme? Or both? (May 2013)
Advanced Global Trading was based in Dubai and sold carbon credits (minimum “investment” US$25,000). It offered a “Trading Platform”, on which the price of carbon just kept going up. The story was picked up by Farah Halime, a business journalist based in Beirut and Cairo, who found out that AGT’s license was about to expire. Richard Smith at Naked Capitalism also wrote about AGT, focussing on the fact that AGT was a team partner of Lotus F1 Team.
- How much does a carbon credit cost? “There is no such thing as a generic price,” says ClimateCare’s Edward Hanrahan (January 2013)
ClimateCare sells carbon credits, but not as investments. ClimateCare’s carbon credits are to offset your greenhouse gas emissions. ClimateCare will sell you a carbon credit for £7.50, a higher price than many of the boiler room scams. But ClimateCare sells quality carbon credits (known in the trade as “gourmet carbon”) and the price, according to ClimateCare’s Edward Hanrahan, “is a blended portfolio price that represents an averaged cost of the credits in the portfolio.” Hanrahan explains that “there is no such thing as a standard ‘price’ for a VER carbon credit”.
- MH Carbon in liquidation: What to do if you bought carbon credits from MH Carbon (May 2013)
Between September 2010 and May 2013, when the company went into voluntary liquidation, MH Carbon managed to sell carbon credits to more than 500 people, at a total cost of £18.7 million. A Norwich-based company called Parker Andrews is dealing with the liquidation process. Parker Andrews posted some information on its website on 15 May 2013. Tony Hetherington at the Daily Mail picked up on one of my comments following this post.
- Another response from Advanced Global Trading: “We see no utility for our clients or stakeholders in corresponding with you again” (May 2013)
A response from Ian Hainey, AGT’s PR Director, in response to REDD-Monitor’s questions to Charles Stephenson, AGT’s CEO. Needless to say, Hainey didn’t bother answering the questions.
- “Beware when an investment involves Carbon Neutral Investments,” warns the UK’s Financial Conduct Authority (April 2013)
A warning from the Financial Conduct Authority about another of Paul Seakens’ companies: Carbon Neutral Investments, which sold carbon credits as investments. This post describes the split of Carbon Neutral Investments into three different companies. After the split, FCA updated its warning to include another of Seakens’ companies: Gemmax Solutions.
- Investors file formal complaint against Advanced Global Trading – could this raise questions for AGT’s partners the Lotus F1 Team? (July 2013)
REDD-Monitor sent some questions to the Lotus F1 Team about its relationship with AGT. The questions are here. Six months later, I’m still waiting for a response.
- Carbon-ex S.à r.l.: Carbon trading “industry-leader” or just another boiler room scam? (March 2013)
Yet another company involved in selling carbon credits claiming to be an “industry leader”. The only part of the company’s website that it worth reading is the warning at the bottom of each page:
Carbon Credit prices can go down as well as up. It may be difficult to obtain true market process for VERs as many are transacted “over the counter” and as such values may vary from reseller to reseller. There may be a big difference between the buying and selling price of carbon credits. You may in extreme cases lose your total investment amount trading in carbon credits.
- Green collar crime: Prison sentences for two men behind a UK carbon credit boiler room scam (April 2013)
On 18 April 2013, Ian David Macdonald and David John Downes became the first people to be sentenced to prison for their role in a carbon credit boiler room scam. They defrauded UK “investors” out of a total of US$9 million. Macdonald was sentenced to eight years and Downes to four and a half years.
- No one investing in carbon credits has made any money: Financial Conduct Authority survey
No one investing in carbon credits has made any money according to a survey carried out by Financial Conduct Authority. “[M]any investors have told us they are not able to sell or trade the carbon credits they have bought,” FCA states on its website.