Spanish police, working with their British counterparts, last week raided a flat and garage, and seized a Bentley Continental, a Ferrari and a Maserati, along with a false British passport.

Thirteen alleged members of a British gang that carried out Europe’s biggest “boiler room” fraud have been arrested.

The gang swindled at least £20 million out of victims by persuading them to buy shares in a company that had never traded. Police traced at least 80 victims, but believe the gang cheated hundreds.

The alleged leader was known to operate from Barcelona, a location favoured by boiler-rooms, so called because of the pressure to sell. Ambitious young people are promised what appear to be glamorous jobs in Spain selling shares, but soon realise they are working for fraudsters.

A 28-year-old Briton, said to be the head of the gang, was arrested in Sweden on suspicion of conspiracy to defraud and conspiracy to launder money. City of London detectives arrested eleven other people in Northumbria and one in Manchester.Spanish police, working with their British counterparts, last week raided a flat and garage, and seized a Bentley Continental, a Ferrari and a Maserati, along with a false British passport.

All those arrested in Britain have been released on bail. The 28-year-old is understood to have been extradited to the UK.

British police have frozen bank accounts and seized sports cars in the UK, Spain and Sweden.

The investigation is centred on a company called BFS Corporation, which has a registered address in Mayfair, London, but which has never traded.

The gang is said to have targeted investors accustomed to gambling on the stock market, promising large returns. They were repeatedly telephoned by the fraudsters, who claimed their investments were doing well and asked them to invest more.

Detective Chief Superintendent Steve Head, from the City of London Police Economic Crime Directorate, said: “We believe this is one of Europe’s largest boiler room frauds, with hundreds of people having lost a combined total that runs into millions of pounds.” The arrests in the UK happened in December but the raids by Spanish police were carried out last week.

A City of London Police source said: “Spain is a particular problem for us with regard to these boiler room frauds. People are lured to work in places like Barcelona with jobs that seem at first to be legitimate but when they realise they are not, they just carry on, attracted by the lifestyle.”

Today, the first person to be extradited from Spain to the UK for a boiler room fraud will be sentenced over an unconnected case. Thomas Knudsen, 30, from Denmark will appear before Croydon Crown Court.