Afinsa and Forum Filatelico (page appears to be down at the moment), two Spanish asset management firms specializing in investment funds based on assets comprised of rare and valuable stamps, have been charged with defrauding some 250,000 investors between 1998 and 2001.

Lest you hastily surmise that stamp collecting is small potatoes, a word about the two multinational firms involved. Afinsa is the world's largest stamp dealer, a world leader in the sale of tangible assets and the third largest fine collectibles firm after Sotheby's and Chrisitie's. Afinsa also owns a majority stake in U.S.-based auctions house, Escala. Forum Filatelico, for its part, is one of the top 100 companies in Spain, with revenues in excess of 600 million euros a year.

Nine have already been arrested and 21 homes have been raided in the government probe of the two firms. How much money changed hands is not yet known, but it is speculated by Spanish authorities that the con went something like this:

"Potential investors were offered high returns from the purchase and management of a stamp fund, which was apparently made up of overvalued - or even fake - stamps and whose returns did not apparently come [from the fund] but from money received from new clients"

More on the story here, via BBC News. And for a little background to this whole debacle, try this Motley Fool story from November of last year along with this Barrons piece from last May.

-- MDT