Five men have been jailed after using overseas independent financial advisors to attract investments in a supposed commercial property loans business.
Operating under the name Prudential Commercial Investments ("PCI") the scheme was a fraud from inception. Around £1.93 million was defrauded from 56 investors.
The investors were predominantly British ex-pats retired or living abroad. They believed on the basis of advice from their independent financial advisors ("IFAs") 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.
Two of the defendants pleaded guilty. Verdicts on the other three were returned at Worcester Crown Court yesterday and HHJ McCreath, Recorder of Worcester, passed sentenced on all five. [See Proceedings below]
The PCI operation
The PCI group of companies has no connection with the well known Prudential Assurance Company, although a number of the victims thought that the companies were linked. PCI Ltd was incorporated in Belize, PCI Inc in the Seychelles and PCI Admin in the UK.
The Seychelles company was the one used for marketing and its bank account received the investors' monies. No promotion was undertaken by PCI directly with investors; instead PCI approached IFAs operating in the ex-pat investment sector. Many of the IFAs had their own established client base and PCI relied on the IFAs to pull in the business.
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. PCI offered the IFAs a commission incentive of between 4%-6% and relied substantially on the trust that investors had in their IFAs to advise them on their financial affairs. The IFAs were told by PCI that it had a five-year trading track record, that it worked with well-known and reputable service providers and that it had a portfolio of some US$20 million.
Those IFAs who agreed to promote the PCI scheme were unwitting pawns in this designed fraud. Not all IFAs approached were persuaded by the PCI sales pitch but some were taken in and ultimately some were brought down when the fraud was discovered and lost the trust of their clients.
During the course of the investigation the SFO and West Mercia Police saw witnesses from around the world. The SFO sent out over 50 letters of request to different jurisdictions and received considerable assistance from a number of countries, particularly the Czech, Malaysian and Australian authorities. Witnesses travelled from Pakistan, Brazil and the Far East to give evidence at the trial in Worcester. An unusual feature of this case, for a fraud investigation, was the use of aliases by the Roope twins and Matthews. This led to the West Mercia Police Identification Team travelling to Kuala Lumpur to undertake identification procedures in accordance with the provisions of the Police and Criminal Evidence Act.
The defendants
Two pleaded guilty to conspiracy to defraud;
Peter Roope (d.o.b 14/04/57), and Gareth Matthews (d.o.b 19/06/57)
Both men were resident in Prague and had been extradited in order to stand trial. Roope used the alias Paul Reid and Mathews used the alias James Williams in order to disguise their true identities. They were respectively the number one and two in the fraud and played a key role in persuading the IFAs that this was a genuine investment product. 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.
Three found guilty of conspiracy to defraud
Charles Frisby (d.o.b 12/03/44), Douglas Miller (d.o.b 07/08/59) and John Roope (d.o.b 14/04/57).
The jury were unable to reach a verdict in relation to a sixth defendant, David Usher (d.o.b 02/05/57), and were therefore discharged.
Frisby, based in Yorkshire, 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 (twin of Peter and 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. Usher ran the administration office in Ludlow and looked after the bank accounts.
Four other persons were named on the indictment but not proceeded against (either deceased, not extraditable or played a junior role).
Investigation and Proceedings
The scheme operated between March 2003 and March 2004 and came to an end when 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 scale of the damage could have been much greater had the operation not been interrupted by the prompt intervention of West Mercia Police's Economic Crime Unit.
The investigation commenced in March 2004 and the defendants were charged in June 2008. The trial opened on 5 October 2009, with Peter Roope and Matthews pleading guilty on 28 September 2009.
The five were sentenced to prison terms as follows:
Peter Roope to seven years reduced to four years and eight months due to his early plea
Gareth Matthews to six years reduced to four years due to his early plea
Charles Frisby to four years and six months
Douglas Miller to three years and six months
John Roope to two years
Confiscation of assets is to be sought. The SFO will ask the Court to compensate the victims of the PCI investment scheme from any assets that are recovered from the convicted.
