Scot Says He Was Ripped Off in Investment
An aggressive cold-caller from Switzerland-based Papillion Associates persuaded Tom McHenry last year to purchase 20,000 shares for $79,000 in Future Power Industries, a research-and-development company in Costa Rica.
But more than a year later, McHenry, a 61-year-old from Scotland, believes he is the victim of a boiler room scam, a con that peddles worthless shares to unsuspecting investors.
McHenry said his first clue that something was awry was when he discovered the company that first sold him the shares, Papillion Associates, had closed up shop and disappeared.
“Papillion told me all sorts of lies, which Future Power Industries (FPI) was aware of,” he said. “They told me FPI was about to list on the stock market – that was early 2007 – and they had some big business backers and I would make a killing. The truth is they disappeared and they were selling their shares at highly inflated prices.”
Representatives of FPI, which operates in Heredia north of San José with the blessing of parts of the Costa Rican government, insist theirs is a legitimate company and that McHenry just needs to remain patient.
They acknowledge there is no guarantee of return because McHenry’s shares are venture capital, a high-risk, high-reward investment in a company that has not yet created a product.
“We don’t understand why McHenry is hurting us, especially because he holds shares with us,” facility manager Karina Bucher told The Tico Times. “We’re asking him to be patient. We’ve improved a lot in the last two years and we have six patents pending in the United States. But we don’t know for sure how good or how bad it will go.”
FPI, Bucher said, is attempting to develop prototypes for a “solar concentrator” and a “hydrogen generator” to generate alternative energy for homes and businesses.
She said FPI retained Papillion to help raise capital. But FPI terminated its relationship with Papillion after discovering the now-defunct company was selling stocks in “ghost,” or nonexistent, companies.
“We believed (Papillion) to be unscrupulous and dishonest,” Bucher said. “McHenry was made aware of this by us immediately but apparently did not believe us.”
Some irregularities with FPI have surfaced, however. Three of the patents the company claims to have with the U.S. Patent and Trademark Office for hydrogen devices are not in FPI’s name.
Francis Giroux, the original inventor of some of pending patents claimed by FPI, said he has never heard of FPI.
“I designed and sold the rights to Hydrogain Technologies in Pompano Beach, Florida, in 2005,” said Giroux, who lives in New York. “I got $1,000 and shares (in Hydrograin), but the company later disappeared and I could no longer get in touch with any of their representatives.”
As of deadline, Bucher did not respond to inquiries about Hydrogain. The Tico Times was unable to locate Hydrogain.
Who’s Watch-Dogging It Here?
Kattia Castro, spokeswoman for Costa Rica’s Superintendency of Securities (SUGEVAL), said FPI has been on its “investor’s warning” list, posted on its Web site, since July 2007 after the Chief Prosecutor’s Office began an investigation of the company.
“We became aware this company was making offers of goods and services without being authorized to do so,” she said. “The offering of goods without the authorization of SUGEVAL is a violation … and the case was referred to prosecutors after a complaint was filed. The investigation concluded there were elements that could (constitute) a violation.”
Bucher, however, insists SUGEVAL has no authority over her company because the company’s shares are not traded publicly.
The Costa Rican Investment Board (CINDE), a nonprofit, attracted FPI here allegedly from New York in 2007, and the Foreign Trade Promotion Office (PROCOMER), an agency charged with promoting exports since 1996, signed an accord with the company the same year to allow it to operate in the country’s free-trade zones.
The Costa Rican agencies have given varying and often conflicting statements about FPI, and they are handicapped by the country’s Free-Trade Zone Law, which grants companies a one-year grace period to ready a product for export.
CINDE spokeswoman Andrea Centeno said her agency’s role is to attract companies, not to police them.
“We’re worried about the recent developments, but it’s out of our hands,” she said.
“Once we attract them, we’re no longer in the loop, and we have no control over them.” PROCOMER spokeswoman Maricela Retana provided The Tico Times with an email from the agency’s boss, Emanuel Heff, who wrote he was unaware of any problems with FPI and that he believed free-trade zone companies don’t have to comply with SUGEVAL requirements.
Non Grata in Britain
Heff ’s assertion he has no knowledge of any problems with FPI is at odds with a statement from the British Embassy, which looked into McHenry’s and others’ allegations against FPI.
“We have received several inquiries from British nationals asking about their investments with Future Power Industries,” wrote an embassy official in an e-mail to The Tico Times. “We have informed PROCOMER about these queries as the appropriate national authority that deals with companies in the country’s free-trade zones.”
As a constituent service, British Embassy officials scheduled a meeting with FPI earlier this year to view their prototypes and facility in Heredia. But the company then canceled the meeting, and British officials never viewed the prototypes.
The Foreign Trade Ministry (COMEX), which oversees and signs off on all PROCOMER deals, declined comment.
The Sunday Mail, a Scottish weekly newspaper, reported in March that Interpol, London police and the United Kingdom’s Financial Services Authority (FSA) are investigating McHenry’s allegations against FPI. McHenry said he believed in FPI for a while but became suspicious when they announced that Seisma Oil Research, a Florida-based company, had purchased 15 million shares of FPI.
“(FPI representatives) then tried to get me to invest in Seisma, but something did not seem right with (that company),” he said. “Seisma does not have an office at their listed headquarters.”
McHenry shared with The Tico Times a letter from detective J. Simons of the Boca Raton Police Department in Florida.
“My research determined there to be no evidence that this business is either operational or exists at (their listed address),” states the letter.
Seisma is also on FSA’s list of unauthorized companies, meaning it cannot legally offer goods and services in the United Kingdom.
McHenry said he is not giving up on getting his money back.
“I want my money back or the management of (FPI) charged with fraud,” he said. “I’ve talked with CINDE, PROCOMER and the British Embassy, but nobody seems to be able to help me. It seems like nobody wants to shut down these boiler room scams.”
The Scotsman said he also wants to warn other people.
“If you receive a cold call like this, hang up or it could cost you dearly.”
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