David Austin, Susan Dalton, Alan Barratt and Julian Hanson used cold-calling and scam websites to convince people to transfer their pension savings into one of 11 schemes operated by Friendly Pensions Limited (FPL).
Victims were told that if they transferred their pension pots to the schemes they would receive a tax-free payment commonly described as a “commission rebate” from investments made by the pension scheme.
Investors were told that their funds would be put into assets, bonds and HM Revenue & Customs-compliant investments to meet the target return of 5% growth a year.
On Tuesday, the High Court ruled that Austin, Dalton, Barratt and Hanson should repay millions of pounds they took from the schemes between 2012 and 2014.
The Pensions Regulator (TPR) had asked the High Court to order the defendants to repay the funds they dishonestly misused or misappropriated from the pension schemes – the first time such an order has been obtained.
International Adviser contacted TPR to ask why this was the first instance in which it had requested a restitution order, which has been available since the Pensions Act 2004.
A spokesperson said: “We must consider when it is appropriate and proportionate to use any of our powers. Amongst our considerations is whether there is a swifter and more effective way of getting the result we are looking for.
“In this case the evidence of misappropriation meant it was clear to us that it was appropriate for us to pursue a restitution order to enable [an independent trustee] to recover as much of the victims’ funds as possible.
“It has involved a great deal of time and work by TPR staff but the refusal of the scammers to accept they were responsible for the misuse of the funds has meant it has been necessary to secure the restitution order.”
Austin laundered funds from the schemes into his bank account and the accounts of family members in the UK, Switzerland and Andorra through a number of businesses that he had set up in the UK, Cyprus and the Caribbean, including FPL.
He even used the bank accounts of his dead father-in-law and elderly mother-in-law to move around hundreds of thousands of pounds.
TPR showed the High Court evidence of how members of Austin’s family had lived a life of luxury using the money – using social media to show off their spending on expensive goods, ski holidays and trips to Dubai and the Mediterranean.
Dalriada, the independent trustee appointed by TPR to take over the running of the schemes, will now be able to seek the confiscation of the scammers’ assets for the benefit of their victims.
International Adviser also asked the TPR spokesperson if criminal proceedings were being launched against the four fraudster.
The spokesperson said: “While preparing the case, further evidence came to light that supported this action and which could support a criminal prosecution.
“We are considering the appropriate next steps in this regard and cannot comment further at this stage.”
Stripping the scheme bare
Nicola Parish, TPR’s executive director of Frontline Regulation, said: “The defendants siphoned off millions of pounds from the schemes on what they falsely claimed were fees and commissions.
“While Austin was the mastermind, they all took part in stripping the schemes almost bare. This left hardly anything behind from the savings their victims had set aside over decades of work to pay for their retirements.
“The High Court’s ruling means that Dalriada can now go after the assets and investments of those involved to try to recover at least some of the money that these corrupt people took. This case sends a clear message that we will take tough action against pension scammers.”
In his judgment, judge Mark Pelling ruled that Austin had been the “mastermind” behind the scam and that all four of the defendants had acted dishonestly.
He ruled that Austin and Barratt were jointly and severally liable to pay £7,713,317.71 plus interest.
Austin is also jointly and severally liable with Dalton for £5,900,947 plus interest and with Hanson to pay £122,937.37 plus interest.
The judge also ordered that they pay the costs of TPR and Dalriada on an indemnity basis.