High Court Rules on Liability in “Largest Ponzi Scheme in British History”

A High Court judge has determined that five individuals involved in a fraud, described as the “largest Ponzi scheme in British history,” are responsible for repaying nearly £400m. The High Court of Justice in London established that two directors from London Capital & Finance are liable for £180m, and an additional three men, who offered “dishonest assistance,” are liable for £211m. Mr Justice Robert Miles commented that it was “very unlikely” the defendants implicated in the fraud, which originated in Sussex, would be capable of settling the sum. Between 2013 and May 2018, LCF acquired £237m from over 11,600 investors through the issuance of mini-bonds. According to the High Court, investors believed their funds were being directed towards small and medium-sized businesses within the UK. However, Mr Justice Miles determined that the capital collected was instead misused to provide payments to individuals linked to the firm. LCF functioned as a Ponzi scheme, using funds from new bondholders to pay existing ones, prior to entering administration in 2019. A hearing held in November established CEO Michael Thomson and associate Spencer Golding as liable for failing in their directorial duties. The judge on Friday declared their liability to be £180m. The court also heard that John Russell-Murphy, from Eastbourne, along with Paul Careless and Robert Sedgwick, were found liable for £211m. Earlier court filings indicated that the directors utilized funds for acquiring property, supercars, financing luxury travel, and making contributions to the Conservative Party. Surge Financial, located in Brighton, received a 25% commission from LCF for promoting the mini-bonds nationwide. The court was informed that this company, managed by Careless, obtained between £60m to £65m from LCF. Stephen Robins KC, who represented the claimants, informed the court that the fraud “wouldn’t have happened at this scale” without Surge Financial. Mr Robins KC stated that Careless’ “greed” propelled LCF to evolve into “the largest Ponzi scheme in British history.” Owen Curry, acting as Careless’s representative, argued that his client was unaware of all facets of the fraud and therefore should have been held liable for a lesser amount. Typically, defendants are granted 14 days to make payment before administrators are authorized to initiate enforcement proceedings.