Legal

Eight Men Convicted, Sentenced In UK For Running Collective Investment Scam

Tom Burroughes, Group Editor, 2 June 2015

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The UK's financial regulator has announced the convictions and sentences imposed on a group of eight men who ran an unauthorised collective scheme.

A group of eight individuals who operated an unauthorised investment scheme, costing 110 investors a loss of more than £4.3 million, have been convicted and sentenced, the UK’s financial regulator announced yesterday.

In a case brought by the Financial Conduct Authority, Scott Crawley, Dale Walker, Daniel Forsyth, Brendan Daley, Aaron Petrou, Ross Peters, Adam Hawkins, and Ricky Mitchie were convicted and sentenced.

The convictions of Crawley, Walker, Forsyth, Petrou and Peters have to date led to sentences totalling 26 years’ immediate imprisonment, the FCA said in a statement.

Crawley was sentenced to a total of eight years’ imprisonment; Walker to five-and-a-half years’ imprisonment; Forsyth to two years’ imprisonment - 15 months of which was for lying to the FCA in a compelled interview; Daley to 15 months’ imprisonment, suspended for two years, with an electronically monitored curfew for four months; Petrou to five years’ imprisonment; Peters to five-and-a-half years’ imprisonment; and Mitchie to four months’ imprisonment suspended for 18 months.

The sentencing of Hawkins was adjourned until a later date. Walker, Forsyth, Petrou, and Peters were disqualified as directors for periods ranging from five to 10 years. Crawley and Daley had already been disqualified as directors following action taken by the Insolvency Service.

“The FCA will take strong action, through both the civil and criminal courts, against those who operate illegal investment schemes and those who assist them like solicitors. People put their homes and retirements at risk on the back of promises of high returns that were never going to be realised. The severity of the sentences shows how seriously the courts view this kind of offending,” Georgina Philippou, acting director of enforcement and market oversight at the FCA, said.

The sentencing of Crawley, Walker, Forsyth, Petrou, Peters and Daley took place on 27 April 2015 and 29 April 2015 but can only be reported now due to the convictions on 29 May 2015 of two other individuals, Adam Hawkins and Ricky Mitchie, in the same case. Mitchie was sentenced yesterday and Hawkins will be sentenced at a later date. Confiscation proceedings are being pursued against all defendants, the FCA said.

The scam
Between July 2008 and November 2011 the defendants were involved in the operation of an unauthorised collective investment scheme through three companies: Plott Investments Ltd, which changed its name to Plott UK Ltd; European Property Investments (UK) Ltd; and Stirling Alexander Ltd.

Salesmen for the companies cold-called potential investors to sell them agricultural land that the companies had bought for minimal amounts as well as land the companies did not own. Using sales scripts, misleading promotional material, and high-pressure sales techniques they lied about the current and future value of the land. People were persuaded to purchase land at a vastly inflated price, on the false promise of a substantial profit. The scheme extracted at least £4.3 million from investors and none of them have seen a return, the FCA said.

The defendants were convicted of various offences including conspiracy to defraud, breaching the general prohibition by conducting investment business without FCA authorisation, aiding and abetting a breach of the general prohibition, possessing criminal property, and providing false and misleading information to the (then) FSA in a compelled interview. Peters also admitted being in contempt of court by breaching a restraint order obtained by the FSA. He breached the order by, among other things, dissipating over £237,000 from bank accounts and disposing of Rolex watches and two racehorses.

The solicitor to the scheme, Dale Walker, received nearly £900,000 of the proceeds of crime into his accounts, and was described by the judge in sentencing remarks as having “deliberately frustrated and delayed the FCA’s investigations”.

The judge said that Walker’s conduct was worse because he was a solicitor.

In sentencing, Judge Leonard QC described the scheme as a “very substantial and deliberate fraud on the public.” He stated that the operation was “a subtle and cruel fraud because it involves the concept of owning land, a commodity that the public are bound to think has value and on which they cannot lose and on which they can easily be persuaded that they can make very substantial profits.”

Operation
The investigation, Operation Cotton, is one of the largest undertaken by the FCA to date and involved the use of the FCA’s civil powers against two of the companies through which the scheme operated. When the defendants continued with the scheme through a different company, the FCA brought an end to the scheme by taking criminal action.

The FCA was assisted in the investigation and prosecution by a number of other law enforcement and government agencies, including the City of London Police and the Insolvency Service, and by those who invested in the scheme.
 

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