In 2006, authorities shut down the operations of two stamp dealing firms in Spain offering investment products that turned out to be fraudulent. The value of the products they sold to customers were overstated and the returns they offered could only be paid out of the investments made by new investors. This ponzi scheme was remarkable for the scale it achieved, claiming 340,000 victims, one in every hundred Spanish adults. The inattention of regulators along with the firms’ sales practices, able to tap into the respectability of stamp collecting, were key to achieving this size.

Stamps and Investing

           For decades before the Spanish stamp scandal, stamp collecting was popular in Spain. There, parks and squares could be filled with collectors buying and selling stamps. It had become more than a hobby though; some came to see in stamps a way to earn more on their money than the 3.5% maximum interest offered by Spanish banks on deposit accounts in the mid-2000s. They had reason to believe this. Data from stamp catalogues compiled by researchers Elroy Dimson and Christophe Spaenjers a few years later suggested that stamp investments achieved a 7.0% average annual return between 1900 and 2008. The postage squares had even outperformed more well-known alternative investments like art and gold.

           The most discerning collectors of stamps may appreciate this return but are usually driven to the pastime for reasons of personal enjoyment rather than profit. To others through, the potential for appreciation and diversification of their investments is the principal attraction. Stamps appreciated most during the inflation of the 1970s, when stamp values tracked in the Stanley Gibbons philatelic catalogues tripled even after accounting for inflation. They also performed well in the 2000s when double digit per-annum rates of appreciation returned after two decades of uninspiring performance.

Fórum Filatélico and Afinsa

           Fórum Filatélico and Afinsa were two stamp dealing firms active in Spain at the start of the century. They catered less to hobbyists and more to the latter group of enthusiasts, those who wanted to make money investing in stamps. Fórum Filatélico and Afinsa both offered investment products that were supposedly professionally-managed portfolios of stamps. The larger of these firms in Spain, Fórum Filatélico, was founded in 1980. By the mid-2000s, the company had 150 branches, 1,600 agents, a quarter million clients, and €3.8 billion in outstanding investment contracts. They even sponsored a Spanish basketball team.

           Its rival Afinsa was founded the same year as Fórum Filatélico by a Portuguese resident of Spain who used stamps as a vehicle to transport his wealth across the border without tax. By the mid-2000s, this company had €1.2 billion in outstanding contracts. Afinsa had 143,000 clients in Spain and, with operations outside the country, it had become the third largest firm in the collectables business after Sotheby’s and Christie’s. Afinsa owned a majority stake in the American exchange-listed collectables firm Escala Group.

           To attract investors to their products, the two companies promised returns of 6% to 12%. Investors would receive their timely dividends along with a statement showing the stamps held in their portfolios. Clients were discouraged from taking physical possession of their stamps, they were delicate after all, and so they were typically left in safes provided by the dealing companies at no extra charge.

           In any case, the typical investor was usually more interested in collecting their income than admiring the stamps anyway. To ‘guarantee’ the return of invested principal, the companies promised to buy back the stamps at the purchase price upon the end of the investment term. In any case, they usually convinced clients to simply extend their investment.

           New investors were recruited by word-of-mouth. Some of them became agents of the companies recruiting new investors. By the time of their collapse, about 340,000 investors, or one in a hundred Spanish adults, had entrusted €5 billion to the schemes over twenty years. An investigation into the firms found a shortfall of asset value relative to invested money in excess of €3.5 billion and another €1.75 billion of overdue tax.

Ponzi Scheme

           Investigations into the mammoth stamp-dealing firms were launched in 1998. Financial industry associations in Spain had raised further concerns since at least 2002, bringing these to the attention of regulators. Yet, this corner of the investment market was only lightly regulated because the Spanish Economy Ministry and the regulatory agencies it controlled did not recognize stamps as a financial product, and therefore they were not under their regulatory purview. Instead, the companies were only regulated by the Ministry of Health, which at the time also had jurisdiction over consumer rights. By 2005, even the foreign press, like Barron’s in America, were reporting on the suspicious firms and their products.

           Still, even more money was allowed to flow into the schemes. The inspections of the firms that did occur focused on tax evasion and money laundering rather than outright investment fraud. Executives of Fórum Filatélico for example had set up firms abroad to sell fictitious stamps to the company. The foreign firms invoiced for products never provided and thereby transported ill-gotten riches abroad without any income tax being paid in Spain.

           Eventually, decisive action was taken. Police raided the offices of the companies and their operations were shut down in 2006. Authorities suspected an array of illegal activities: fraud, tax evasion, embezzlement, and money laundering. They believed the companies used the funds of new investors to pay for the distributed gains of earlier investors. Portfolios were really made of stamps marked at inflated valuations or even fake stamps. The companies would assign these stamps to investors’ portfolios at prices up to 1,000% higher than they bought them for.

           The owners did try to make off with their share of the money siphoned from investors. One of the detained executives was Francisco Guijarro of Afinsa. Upon inspecting his property, an underground cache of €10 million in bags of €500 notes was uncovered. They also found sheets of fake stamps. Experts from the Royal Mint of Spain, which also manufactured stamps, doubted the authenticity of stamps sold to the investing public.


           From this moment, the beginning of the end, it seemed unlikely that investors would see a full recovery. They were also not the highest-ranking claimants on the defunct firms, they were lower in priority than the tax authorities and certain secured creditors of the companies. Making matters worse, the state was slow to resolve the matter. An agreement between Spanish public authorities on how to distribute recoveries to the affected investors was only reached in 2014, eight years after the companies were shut.

           Victims gathered at the headquarters of the two firms as soon as news of the fraud broke and demonstrations by the affected investors continued for years after the scandal. Organizations were formed to represent those who suffered losses and some of their protests saw thousands of attendees even a decade after the event. By the 10th anniversary of the schemes’ end, investors in Fórum Filatélico had recovered just 20.5% of their money and those in Afinsa just 10%.


           Billions of euros were lost by hundreds of thousand of investors in the Spanish stamp scandal. Despite the warnings, authorities took years to shut the firms responsible and years more to decide on a course of action following the schemes’ collapse. The fiasco, along with the reporting and protests that followed, undermined confidence in the state more than it did the conventional financial system. Regardless, those whose interest in stamps had nothing to do with money looked on. Those who wouldn’t dream of collecting stamps they couldn’t hold or see avoided the worst.

More from the Tontine Coffee-House

            Read about other investment frauds, including ones involving fictitious salad oil and a fictitious country. Lastly, consider subscribing to this blog’s newsletter here.  

Further Reading

1.      Berestecki, Maciej. “Investing in Stamps: A Spanish Scandal.” Finance & Bien Commun, vol. 25, no. 2, 2006, p. 19.

2.      Buyer Beware: The Stamps That Fooled a Nation. Independent Digital News and Media, 12 May 2006.

3.      Crawford, Leslie. Stamp Traders in €5bn Spanish Fraud Probe. Financial Times, 9 May 2006.

4.      Dimson, Elroy, and Christophe Spaenjers. “Ex Post: The Investment Performance of Collectible Stamps.” Journal of Financial Economics, vol. 100, no. 2, 2011, pp. 443–458.

5.      Martin, Neil A. “Spain’s ”Biggest Scam”.” The Wall Street Journal, Dow Jones & Company, 15 May 2006.

6.      Muela, Daniel. “Fórum Filatélico: Cronología De La Enorme Estafa Piramidal En España.” El País, 18 Sept. 2017.

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