The victims - most with some investment experience - were hit with a slick marketing campaign and repeated cold calls. The pair sold fake shares in 50 dormant, publicly-traded firms since 2005.

Robert Weber, head of the investigation for the US Immigration and Customs Enforcement (ICE) Agency, said, 'These two criminals demonstrated a callous disregard for the hard-earned money of individuals who thought that they were legitimately investing in their futures.'

DCI Robert Wishart, head of the money laundering unit at the City of London Police, added: 'Criminals may think that because they are laundering money through a number of foreign jurisdictions, they will not be caught.

This action today demonstrates how effective the law enforcement community can be in ensuring there is no hiding place for criminals or their money.'

Figures from the Financial Service Authority (FSA) show that the average victim of a boiler room scam loses £20,000. Older male investors, with some investment experience, are more likely to be targeted.

What are boiler room scams?

Boiler rooms are defined as illegal share selling operations using unregulated shares. They usually involve a few telemarketers sitting in cramped, low-rent office spaces with little more than desks, laptop computers and phone banks. They call certificate shareholders on the phone and try to persuade them to buy shares in a company using unfair, dishonest sales tactics. In the majority of cases, the shares being sold are worthless and the boiler room vanishes, leaving the investor out of pocket.

Are they legal?

They are not authorised by the FSA, or other national regulators, to sell shares or give investment advice. Often the shares they sell don't exist or they turn out to be worthless.

Where are they based?

Owners of these telemarketing firms rarely stay in one location for more than a few months, and may even have to pack up overnight if a formal complaint about their operation is lodged.

They are usually based abroad, in places such as Spain, the USA, Switzerland, Eastern Europe and even Japan. They tend not to be based in the UK as they can be faced with prosecution, due to Britain' strict share dealing laws.

How do the fraudsters persuade their victims?

The telemarketers use dishonest sales tactics and high pressure techniques to reach their quotas. They never stop at the first rejection and many victims have been subjected to repeated calls until they give in and agree to hand over their money. The telemarketers berate their victim for passing up such a lucrative investment, and they can use strong language as intimidation.

The victim isn't given an opportunity to examine a prospectus or verify any of the claims made by the caller. They are given little time for consideration and the victim must make a decision on whether to invest in the proposal by the end of the phone call.

Who usually falls for the scam?

Their victims are usually the elderly or retired investors, and the FSA's statistics have shown that the majority of victims are men over 50 who live in London and the South East.

It's not just the inexperienced that get caught out. According to the FSA, nearly half of the victims have been investing for over ten years. Only 12 per cent have never purchased shares before.

What should I do if someone calls me offering cheap share investments?

Take the call with a pinch of salt, but if you want to find out whether the call is genuine, then ask yourself the following questions:

• Have I been contacted by these people before? If the offer sounds too good to be true, then it probably is!
• Is the firm authorised by the FSA? Contact their consumer hotline on 0845 606 1234 to check if they’re genuine.
• Have they a proven track record that can be verified by an independent party? Where are they based? Are they a member of a trade association? Don't just trust a flashy website as evidence of legitimacy.

Do as much research into a share that the broker is proposing as possible and don't send any money unless you're sure of the risks.

Can I get my money back if I've been a victim?

No. The bad news is that there is little chance of redress. Because the fraudsters are not authorised by the FSA you cannot go through the normal channels to get your money back.

Further information
Get tax-saving tips on your shares and investments with Lawpack's book '101 Ways to Pay Less Tax'
Protect yourself from identity theft with Lawpack's Identity Theft Kit