Five men have been jailed after using independent financial advisers based offshore to attract investments for their fraudulent commercial property loans business, the Serious Fraud Office said today.
The announcement came after a Worcester Crown Court jury yesterday found three of the men guilty of conspiracy to defraud, ending a trial that began in October. The other two defendants pleaded guilty in September. The jury was unable to reach a verdict in the case of a sixth defendant.
Operating under the name Prudential Commercial Investments (PCI) the cross-border scheme had been “a fraud from inception,” according to the SFO, which said 56 investors lost around £1.93m by investing in it. An effort to confiscate assets "will be sought".
The investors were predominantly British ex-pats retired or living abroad.
‘No connection’ to Prudential
According to the SFO, a number of the victims mistakenly thought PCI was connected to Prudential Group, the insurance giant. One PCI entity, PCI Ltd, was incorporated in Belize, another, PCI Inc, in the Seychelles and PCI Admin in the UK.
Of these, the Seychelles company was the one used for marketing, and its bank account received the investors’ monies, the SFO said.
“The PCI website, its business and sales literature were produced to a high standard, intended to impress IFAs and investors alike that PCI and its commercial loans business was a safe and attractive investment opportunity,” the SFO said.
These investors “believed on the basis of advice from their independent financial advisers that their funds would be channelled into a lending scheme for commercial property buyers in the UK, secured by mortgages, and would reap high returns.”
Instead, “the fraudsters diverted investors’ funds to offshore accounts for their personal benefit.”
The SFO said those IFAs who agreed to promote the PCI scheme had been “unwitting pawns”.
Far East tip-off
The scheme, which operated between March 2003 and March 2004, came to an end after West Mercia Police received a tip off, via the Metropolitan Police, from an IFA based in the Far East “who believed the scheme was too good to be true”, the SFO said.
It noted that the damage could have been “much greater” had the West Mercia Police’s Economic Crime Unit not intervened when it did.
Pleading guilty in the case were Peter Roope and Gareth Matthews, who had been resident in Prague and had to be extradited in order to stand trial, according to the SFO, which said they used the aliases Paul Reid and James Williams.
Respectively “the number one and two in the fraud”, both Roope and Matthews “had previously worked in the financial service industry and used their experience and knowledge to help them dupe the IFAs into believing that this was a legitimate scheme”, the SFO said.
Found guilty in the court case were Charles Frisby, Douglas Miller and John Roope, the twin of Peter.
Frisby, based in Yorkshire, had helped to set up the PCI business, drafting its business documents and marketing literature. Miller, of Nottinghamshire, worked with Frisby and produced the PCI website and literature.
John Roope, who used the alias John Rogers, lived in Australia and, along with Gareth Matthews, promoted PCI in South East Asia. He too was extradited to face trial.
David Usher, the defendant about whom the jury had been unable to reach a verdict, was said by the SFO to have run an administrative office in Ludlow and looked after bank accounts.
Sentences
Peter Roope was given a seven year sentence, reduced to four years and eight months for his early plea; Matthews received six years reduced to four for his plea.
Frisby was given four years and six months, Miller three years and six months, and John Roope two years.
Further details about the case may be found on the SFO’s website, sfo.gov.uk.
