LCF are back in the news because civil petitioners are suing in the High Court to put right what the FSA and Southwark Crown Court apparently can't:
London Capital & Finance ran a “Ponzi scheme” where money raised from UK retail investors was spent on diamond earrings, horses, shotguns and membership of Annabel’s nightclub, a court has been told.
London Capital & Finance ran ‘Ponzi’ scheme from outset, court hears
High Court case into collapse of mini-bond issuer hears LCF loans were used to buy luxury items including gold, bronze statues and Porsches.
BY
NICOLA BLACKBURN
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Collapsed mini-bond issuer London Capital & Finance (LCF) ran a Ponzi scheme and lent to entities that bought luxury items including gold and Porsches, the High Court has heard.
Proceedings began yesterday in a civil case brought by LCF administrators against the firm’s former chief executive, Michael Thomson.
In what is one of the biggest investment failures of recent years, LCF collapsed in January 2019 with about £237m of bondholders’ investments missing.
The Serious Fraud Office has opened an investigation into the individuals associated with LCF, while the Financial Services Compensation Scheme has paid out £115m in a government-led scheme to compensate investors.
Stephen Robins KC, representing LCF administrators Smith & Williamson in the proceedings, yesterday told the High Court that LCF had been a ‘Ponzi scheme from the outset’ as it used ‘new investors’ monies to pay returns to existing investors’, according to the Financial Times.
Robins said the money loaned by LCF was spent on luxury items, including gold bullion, land in Jamaica, Porsches and bronze statues. It was also used to cover private school fees and donations to the Conservative Party, he said.
LCF had told investors the funds were used to provide capital to small and medium-sized companies.
Thomson’s lawyers have denied the claims, telling the court that LCF did not engage in illegitimate business activities and lent ‘monies in bona fide transactions on commercial terms’.
They said that save for LCF’s parent company, LCF’s borrowers were not connected with LCF, according to the FT.
The FCA last week
fined LCF’s former compliance director Floris Jakobus Huisamen £31,800 and banned him from working in financial services after finding he had ‘recklessly signed off hundreds of financial promotions’.
The FCA has
not imposed a financial penalty on the £237m collapsed mini-bond issuer, ruling last year that doing so would divert funds that may be used to pay compensation to bondholders after the firm became insolvent.
The Chief Executive of the Tunbridge Wells minibond firm that collapsed owing more than £237million to thousands of investors, has been told he faces jail after spending nearly £95,000 seized by the courts on items including foreign holidays and a hot tub.
www.timeslocalnews.co.uk
What did he get for causing all this financial mayhem and misery?
TEN MONTHS JAIL - SUSPENDED FOR TWO YEARS
Maybe this should be in the Low Interest on Savings thread?
I was listening this week to the Radio 4 book of the week - about two unfortunate men who were hanged for sodomy in 1835. How times have changed!
www.blackstone.com
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