Just a day after it released its yearly report announcing it imposed almost £100 million (around $163 million) in fines during 2010-11, the UK Financial Services Authority has secured its first successful criminal conviction for boiler room fraud against David Roger Griffiths Mason.

Boiler room fraud involves aggressively selling shares, often by cold-calling investors, that cannot be sold on, for significantly more than they are worth.

In the case in question, Mason coordinated the cold-calling and sale of shares in investment firm EduVest between November 2008 and May 2009. In total, 32 people were duped out of £270,000 in the erroneous belief that EduVest would be listing on the PLUS stock exchange in the near future, the FSA said in a statement.

However, share certificates were never issued, EduVest never listed on the PLUS market and investors’ funds were never used for EduVest business.

As well as setting up EduVest and arranging the deals for the boiler rooms, Mason also laundered the proceeds of the boiler room operation.

Mason pleaded guilty to 13 counts of carrying on a regulated activity without authorisation; one count of making false or misleading statements, promises or forecasts; and three counts of money laundering. He was sentenced to two years in prison and disqualified from being a director for six years at London’s Southwark Crown Court.

The sentencing Judge, HHJ Rivlin QC, said the scheme could not have operated without Mason’s involvement, adding that the defendant had “acted with blatant and...ruthless dishonesty which was thoroughly reprehensible".

In a related regulatory action, the FSA also fined David Sinclair of Axiom Capital £68,000 and prohibited him from holding any significant influence function in the future. Sinclair unwittingly allowed Mason to use a bank account under his control to channel investors’ money to himself and his fellow boiler room fraudsters. The FSA took no regulatory action against Axiom.

“This sentence sends a clear message that the court takes boiler room offences seriously and will hand down significant sentences to those involved in them,” said Tracey McDermott, acting director of enforcement and financial crime at the FSA. “We will continue to crack down on all types of unauthorised business, such as boiler rooms, and seek the severest penalties where possible.”

The regulator said it has secured full compensation for all investors.