Britain convicts Madrid-based boiler room conmen

(Adds quote from SFO, further details)

By Kirstin Ridley

LONDON, June 4 (Reuters) - Two men who tricked hundreds of British investors into buying inflated or worthless shares in a 70 million-pound ($120 million) "boiler-room" scam were convicted in a London court on Wednesday.

After a three month trial, a jury found Jeffrey Revell-Reade, a 49-year-old Australian, and 58-year-old Anthony May guilty of conspiracy to defraud in connection with the Madrid-based scam that duped at least 1,000 investors.

Boiler room scams are typically unregulated overseas-based telephone sales operations, often run from cramped conditions, that tend to target elderly or vulnerable victims and bully them into buying fake or overvalued stock with high-pressure sales tactics.

The convictions, that come after a seven-year investigation, are a coup for Britain's Serious Fraud Office (SFO), the independent government department which has been struggling to persuade critics of its fraud-busting capabilities despite a budget set at a fraction of some British police forces' funds.

Six people have already been jailed for up to seven years as a result of the investigation, code-named Operation Steamroller, while a 62-year-old woman was handed a suspended jail sentence. Reporting restrictions on these convictions were lifted on Wednesday.

But the latest verdicts include the so-called "controlling mind" of the operation, rather than just the sales team - a key but often elusive target for prosecutors.

Revell-Reade and May, who lived in Switzerland before moving to Spain, will be sentenced on Friday.

The hustle targeted British-based investors, including professionals, with some losing their entire life savings. One 'invested' $1.2 million.

Revell-Reade set up the scheme, under which sales teams in Madrid sold shares in U.S.-listed companies on a fraudulent basis. Investors bought "restricted" shares, which they were unable to sell for 12 months. These turned out to be worthless and in shell companies or firms which were not operating.

The UK Financial Conduct Authority warned consumers in 2013 about restricted stocks that, while not always part of a scam, are often difficult or expensive to trade.

Revell-Reade took a 35 percent cut of profits, buying property in London, Austria, Spain and Australia, chartered private flights and yachts, bought fine wines, flash cars and two paintings by Rolf Harris, the artist and entertainer who is currently on trial in Britain on indecent assault charges.

The two paintings by Harris (Frankfurt: HRS.F - news) , also an Australian, were named "Blue Landscape" and "Aboriginal Man" and were worth almost 73,000 pounds ($122,000), prosecutors said.

"This case illustrates that key attributes required in an SFO investigation are determination and persistence, qualities necessary to follow the complex money flows and elaborate company structures in numerous jurisdictions," said the head of the SFO, David Green. The SFO said it had worked closely with London police and authorities in Hong Kong, the United States and New Zealand. ($1=0.5969 British pounds) (With additional reporting by Matt Scuffham; Editing by Greg Mahlich)