Executives of ‘ponzi scheme’ London Capital & Finance liable for damages
Former executives of LCF are liable in the sum of £180m in damages to investors following a court ruling last month that called it a 'ponzi scheme'
Former executives of the collapsed London Capital & Finance (LCF) are liable in the sum of £180m in damages to investors following a court ruling last month that called it a ‘ponzi scheme’.
Businessmen Spencer Golding, Michael Thomson, John Russell-Murphy and Robert Sedgwick were informed by the High Court on Friday that they are liable for £180m in relation to the civil lawsuit.
Former police officer Paul Careless was ruled to be liable for 75 per cent of that figure in the high-profile scandal.
In addition, Careless and Russell-Murphy were found to liable of dishonest assistance claim in the sum of £211m.
The investment company collapsed in January 2019 once the Financial Conduct Authority (FCA) intervened following a discovery it was marketing unregulated mini-bonds and misleading promises of returns.
It resulted in a scandal with several high-profile investigations into the firm including by the HM Treasury, the Financial Reporting Council (FRC) and the Serious Fraud Office (SFO).
A 20-week trial kicked off in the High Court in February after the administrators took civil action, five years after the firm collapsed.
Last month a judge ruled that Thomson, Golding, Surge, Careless, Russell-Murphy all knowingly participated in the fraudulent conduct.
The judge went as far to conclude that LCF operated as a Ponzi scheme as it frequently paid funds from new bondholders to borrowers, which subsequently returned these amounts to LCF.
LCF sold around 16,000 bonds to around 11,600 bondholders, with a total amount of over £237m.
According to court transcripts from Friday’s hearing, a draft order between the parties was agreed. However, the judge did note that “it’s very unlikely that the various defendants would be able to meet claims”.
The judge added that “certainly none of the defendants have disclosed assets anywhere approaching” [the amounts] the administrators were trying to recover.
Partners Mike Stubbs, Barry Coffey and Danny Davis of law firm Mishcon de Reya acted for the LCF administrators from Evelyn Partners who are working to recover funds for those investors.
