Alan Richardson, a Lincolnshire financial advisor, was sentenced to six years imprisonment today after he admitted his money lending business lost £1.2 million of investors' funds through trading fraudulently. His business, MFC Finance Ltd, was touted as a high-yielding investment vehicle. Instead he diverted the funds as loans to businesses he owned
Alan Joseph Richardson of Wellingore, Lincolnshire (d.o.b. 22/09/50) is a former Independent Financial Adviser (IFA).
Background
The case relates to the affairs of a company called MFC Finance Ltd ("MFC"). It was managed and run by Mr Richardson from 1998 until its collapse in 2004. It started out as a money-lending business or finance company. The object or business plan of the company was to lend money to "high risk" borrowers at very high rates of interest.
MFC obtained lending capital from individual private investors who were promised by Richardson high rates of return of over 18% interest and a safe return of capital. The idea was that MFC would make a profit on the margin between the rate of interest paid by MFC to investors and the rate charged to borrowers.
Richardson recommended MFC to many of his IFA clients as a business they should invest in. A number of elderly and vulnerable clients invested their life savings based on his advice and assurance. Many investors were unaware that Richardson owned MFC and the high risk nature of the business.
Unfortunately for investors, enough profitable borrowers for MFC failed to materialise and the "money lending" business was a failure. By 2002 MFC was insolvent but Richardson dishonestly continued to attract new investors whilst existing investors were unaware of the true state of the company. He continued to assure investors their money was secure, providing them with false and misleading account valuation statements.
MFC financially collapsed in early 2004 owing over £1.2m to the private investors who had lent money to MFC. The main borrowers from MFC were primarily other companies owned by Richardson. One of these Richardson-owned companies was Watson Truck Services, a vehicle repair business which collapsed owing over £400,000 to MFC.
Proceedings
The Serious Fraud office and Lincolnshire Police Economic Crime Unit commenced a joint investigation in March 2006. Richardson was charged on 6 May 2008 with various counts of fraud and the matter was sent to Lincoln Crown Court by Grantham Magistrates on 14 May 2008. The defendant entered not guilty pleas on 17 October 2008 at Lincoln Crown Court and the case was listed for trial. However, on 2 March this year he admitted to two offences of fraudulent trading contrary to s.458 companies Act 1985.
Richardson was today sentenced to a total of six years imprisonment (for count one, six years, for count two, twelve months to run concurrently), after pleading guilty at a previous hearing on the 2 March. He was also disqualified from acting as a company director for ten years.
Passing sentence, HHJ Heath said of Richardson, "you behaved dishonestly and despicably towards a large number of people, they trusted you with their money. Many were naïve, vulnerable and elderly and lost a considerable amount of money, in some cases their entire life savings." The judge commended SFO Investigators David Harris, Gordon Hutchins and Susannah Berzins and Detective Constables Simon Munn and Chris Jarvis of Lincolnshire Police. He said, "a prodigious amount of work went into the investigation, the work done by the SFO and Lincolnshire Police has been impressive, indeed excellent."
SFO Director Richard Alderman said, "this is an impressive result obtained with the partnership of Lincolnshire Police, for the numerous elderly and vulnerable victims who lost their life savings as a result of Alan Richardson's fraudulent activities. I am delighted we have been able to bring him to justice."
Confiscation
The Serious Fraud Office has commenced confiscation proceedings against the defendant. The hearing in relation to this issue will take place at a later date.
