Jail for fraudster who ran a £14.5 million Ponzi scheme
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A man has been sentenced to six years in prison after pleading guilty to running a Ponzi scheme, in which 55 victims were defrauded out of over £14.5 million.
A man has been sentenced to six years for defrauding 55 victims out of £14.5 million in a Ponzi scheme.
The money was used to fund his gambling habit, as well as paying for holidays abroad and his children’s school fees.
The investments made by victims varied, between £20,000 and £750,000 per person.
Today (30 July 2018) a man has been sentenced to six years in prison after pleading guilty to running a Ponzi scheme, in which 55 victims were defrauded out of over £14.5 million.
Freddy David, 49 of Hartfield Avenue, Elstree, Borehamwood pleaded guilty to obtaining a money transfer by deception and fraud by abuse of position at Southwark Crown Court. David was also disqualified from being a director of a company for 10 years.
An investigation by the City of London Police’s Fraud Squad found that between 2005 and 2017, David had been running a Ponzi scheme through wealth management company HBFS Financial Services Limited (HBFS), of which he was managing director.
The case was referred to the City of London Police, the national lead force for fraud, by the Financial Conduct Authority (FCA) who became suspicious of the HBFS bank accounts. Following the referral, the City of London Police worked closely with the FCA to investigate the affairs of HBFS.
This fraud was running in parallel with legitimate HBFS business, with David using the company’s name as a means to defraud victims out of vast sums of money. 55 victims invested a total of £14,545,494.48. The investments made by victims varied, between £20,000 and £750,000 per person.
David would convince victims, some of whom he knew personally as friends, that their funds were being held in a high interest bank account which were offering between four and eight percent interest annually. David would tell victims that they could obtain interest each month and they were advised that their money was locked in for varying amounts of time, between three months and five years.
The investigation found that victims were transferring large sums of money into the HBFS business accounts, under the impression that they were investing in high interest accounts. It was found that large sums of money were being transferred into David’s personal bank accounts for his own use as well as being used to pay other investors their “monthly interest”.
A review of David’s personal bank accounts showed that once he had received transfers from HBFS related accounts, he used this money to fund his gambling habit, as well as for paying his children’s school fees and holidays abroad.
The investigation found that David was using client money for his own purposes, including the funding of his online gambling habit. Between January 2005 and November 2017, David spent £15.6 million on gambling websites and £240,000 in one day alone.
Victims were provided with forged bank documents which supposedly confirmed that the investments had been made and that interest was being accrued each month.
Police Staff Investigator, Katie Watkins, said:
“David took advantage of individuals who placed significant trust in him. He abused his position and as a consequence this has had a devastating impact on the victims and their families, both financially and psychologically.
“David was a well-respected member of his community who exploited this in his position as a managing director of a recommended financial advisory firm to gain trust from unsuspecting investors.
“This fraud has caused significant emotional distress and financial harm to the victims involved, many of whom invested their life savings in HBFS. Some victims are retired and are not in a position to recover the money lost.
“The City of London Police has worked tirelessly to investigate this case and to ensure that David was brought to justice for his despicable crimes. We worked closely with the Financial Conduct Authority to stop David from committing more fraud and to stop him in his tracks.
“Today’s sentencing reflects the severity of this fraud and should serve as a warning to those who think they can get away with such calculated and callous acts.”
Mark Steward, Executive Director of Enforcement and Market Oversight at the Financial Conduct Authority, said:
“Freddy David abused the position of trust he had as managing director at a regulated firm to run this appalling fraud. The FCA have been working closely with the City of London Police throughout and will now be carrying out its own enforcement action against David on the back of the criminal conviction to prevent him working in financial services again.”