£70m-a-year scam smashed in Spain - Tuesday 12th of July 2005

A worldwide con run from post offices around Málaga in Spain has defrauded thousands of victims, including Britons, of what is thought to be more than £70m a year.

Before it was broken up, the network was run like a multinational company, with bank accounts in 45 countries, according to Spanish police. More than 300 people have been arrested.

Victims were tricked into paying thousands of pounds each for a promised share in anything from a winning Spanish lottery ticket to Saddam Husseins familys secret savings.

Some were even offered a share of money supposedly recovered from the rubble of the World Trade Centre.

Typically, a victim received a letter saying he or she had won a prize worth hundreds of thousands of pounds in the world-famous El Gordo lottery, which pays out £1.2bn in prizes every Christmas, or some other Spanish lottery.

Those who replied were told they needed to pay up to £2,000 to have the prize released. Anyone tricked into sending money was then asked to send more.

"The idea was to squeeze as much as possible out of them," said José Luis Oliveros, head of Spains crime squad.

The names and addresses of victims were gathered from the internet or commercial mailing lists.

The biggest spenders were invited to Spain, put up in expensive hotels and shown chests full of fake dollar bills.

At its peak the network was posting 18,000 letters a day in post offices in and around Málaga in Andalucia.

About 1,000 people around the world reported falling for the scam last year, each losing an average of £7,000, police said, although they estimate the actual number of victims at 10 times that.

The gang was spending more than £4m a year on postage, paper and envelopes, and its total costs are estimated at more than £7m a year. "No criminal group can have costs above 7% to 8% of their profits, otherwise it is not a business for them," said Mr Oliveros.

Police estimate that 40,000 people a year believed the letters, and that a quarter of them would have sent money. "That means that, at the very least, the fraud would have been above the €100m [£70m] mark," a spokesman said.

Victims were spread across 45 countries, with the US, Canada, Japan, Australia, Saudi Arabia and the Gulf states especially targeted. FBI and US postal agents went to Spain to help the police operation. There are known to be dozens of victims in Britain, with the Office of Fair Trading reporting losses of up to £25,000 by individuals.

"You should always be suspicious if you are contacted regarding winning a prize when you have not actually entered a lottery," the OFT chairman, John Vickers, warned last year. "No bona fide lottery, such as El Gordo, would demand upfront fees. And never give out your personal bank details in response to an unsolicited call or mailing."

Spanish police said they had intercepted 150,000 letters in Málaga provinces postal service in just nine days.

The 310 people, many of them Nigerian nationals, who were arrested this week brought to more than 700 the number detained in operations against so-called "Nigerian frauds" in Spain since 2003.

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