The final case in a series of frauds, including wine investments, running into millions of pounds concluded at Harrow Crown Court last week. Richard Gunter has already been sentenced to five years' imprisonment for his part in the fraud. The jury was unable to reach agreement after a six-week trial of another defendant, Robin Grove. The SFO is not seeking a re-trial in this matter.
This brings to an end a series of linked investment scams to be investigated and prosecuted by the SFO. In addition to Vintage Hallmark there are:
In September 2008 four defendants (including Gunter), were convicted at Southwark Crown Court for their involvement in a similar fraudulent wine investment business, Vintage Wines of St Albans. Reporting restrictions applied to Gunter but it can now be reported that he was sentenced to 4 ½ years for his part in that fraud.
There is also a link to a third investment fraud, Tahir Tandoori Frozen Foods Limited.
Background
In the Vintage Hallmark case, Richard Gunter admitted he dishonestly obtained money from individuals mainly based in the USA and Canada using investment programmes based on various alcohol products. The investments were sold through a UK based partnership known as The Hallmark Partnership and later through a number of UK based companies controlled by the directors, including Vintage Hallmark plc (based in Peterborough initially and later in Luton). This investment scheme was similar in nature to that of a "Ponzi" scheme wherein investors are promised high returns and are lured into investing money. The money is then mismanaged by those who control the scheme. This fraud fell into three stages.
In the first phase, a "boiler room" was set up and manned with sales staff to solicit money from Americans and Canadians for "investments" in whisky, cognac and other alcoholic products. These investors were promised high rates of return over relatively short periods of time. For example a 50% return over 10 months from investments in Champagne and a 110% return over three months from investments in whisky. Before these larger investments could mature and be paid, sales staff were directed to "roll over" the value of the initial investment and the promised profit on the deal into other investments in a mechanism they described as "Product Financing". This led investors to believe their investments were successful and in some cases to them putting more money into the fraudulent scheme.
In the second phase of the alleged fraud, the sales staffs were instructed to target the investors in an effort to convert the amount owed on their investment deals into simple interest bearing promissory notes. Promissory notes are financial instruments in which one party makes a promise to pay funds to another at a later date. The Hallmark Partnership business was then sold to Vintage Hallmark Limited.
Finally, Vintage Hallmark Limited was re-registered as a UK PLC (Vintage Hallmark Plc) and investors were persuaded by sales staff under instruction to swap their promissory notes or product financing deals for shares in Vintage Hallmark Plc. A document known as a Private Placement Memorandum encouraged the investors to subscribe for shares whilst misrepresenting the true financial position of the company. Within a relatively short period of time the shares turned out to be virtually worthless and Vintage Hallmark Plc was placed into liquidation.
Nearly £30 million of investors' monies was obtained. Had it been a genuine business and had it delivered to investors (over 300 of them) what it claimed could be achieved, the £30 million was projected to have become £100 million. But it was all a sham.
Throughout the operation of the investment schemes, Gunter alone withdrew in excess of a million pounds from the business for his own benefit and spent this money to buy and lease luxury cars, personalised car registration plates and invest in shares.
Sentence:
After Richard Gunter (D.O.B 12/06/1961) pleaded guilty to his part in this fraud on 1 June 2010, he was sentenced on the same day to five years' imprisonment to run concurrently to the previous sentence in 2008. In addition, Gunter is subject to a Serious Crime Prevention Order.
Robin Grove (D.O.B 11/11/1958) was acquitted of one count of false accounting. The SFO are not seeking his re-trial in relation to further counts of conspiracy to defraud. Robin Grove remains disqualified from acting as a company director for a period of 15 years and prohibited from undertaking investment business in the UK.
SFO reaction:
Richard Alderman, the Director of the SFO, commented: " I am pleased with the outcome of the three linked cases. Over the past few years the SFO has successfully prosecuted a number of individuals connected with these frauds. This brings a close to past wrong-doing. But the SFO is keen to prevent the public from further criminal acts and this is why we apply for serious crime prevention orders wherever appropriate."
Notes for editors:
The Serious Fraud Office is a government department responsible for investigating and prosecuting serious and complex fraud. The SFO is headed by the Director (Richard Alderman) who exercises powers under the superintendence of the Attorney General. These powers are derived from the Criminal Justice Act (1987).
A third director died before proceedings were brought.
Robin Grove was subject to a disqualification order under s1 of the Company Directors Disqualification Act 1986, s1 in November 2006 and ordered by Mr Justice Chadwick not to carry on investment business in the UK contrary to s3 of the Financial Services Act 1986.
What is a Serious Crime Prevention Order?
The Serious Crime Prevention Order (SCPO) was created by Part 1 of the Serious Crime Act 2007 and they are a civil order aimed at preventing serious crime. These orders are intended for use against those involved in serious crime and the purpose of their terms is to protect the public by preventing, restricting or disrupting involvement in serious crime. They are made on application to either the High Court or, as in this case, the Crown Court upon conviction and breach of the order is a criminal offence.
Further information on SCPOs can be found on the CPS website.
