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Cold call pension scammers ordered to repay £13.7m

Prosecution results in four individuals being forced to pay back £13.7m to members of an occupational pension scheme.

 
Cold call pension scammers ordered to repay £13.7m
 

Four individuals behind an occupational ‘pension scam’ have been told by the High Court to pay back £13.7 million to their victims following a prosecution led by The Pensions Regulator (TPR).

Around 245 individuals were convinced to invest in one of 11 pension schemes operated by Friendly Pensions Limited via cold-calls, TPR  said.

The four people behind the scheme, David Austin, Susan Dalton, Alan Barratt and Julian Hanson, have been ordered by the High Court to pay back £13.7 million to their victims. According to TPR this is the first time an order like this has been made by the courts.

Many of the victims of the scheme were lured by the prospect of receiving tax-free ‘commission rebates’, however now they face the prospect of ‘significant tax penalties because the sums received by them were at least arguably "unauthorised payments"’, judge Mark Pelling said in his ruling.

David Austin, described by TPR’s prosecuting barrister as the 'ring leader’, ‘laundered funds from the schemes into his bank account and the accounts of family members in the UK, Switzerland and Andorra through a number of businesses’, TPR said.

The High Court was then shown evidence of how Austin and his family ‘had lived a life of luxury using the money – including showing off their spending on expensive goods, ski holidays and trips to Dubai and the Mediterranean on social media sites’.

The independent trustee Dalriada, which was appointed by TPR in 2015 to take over the schemes, has now been issued with a confiscation order meaning it can claims back assets for the victims.

How the scheme operated

According to TPR 245 members were the subject of cold calls between 2012 and 2014 which encouraged them to move their pensions into one of the 11 schemes run by the individuals involved.

These members were attracted by ‘rebate’ payments.

In the High Court judgement the judge noted how instructions were given via email that client commissions should not be mentioned to any IFAs ‘otherwise case will be dead’.

A Spain-based introducer called Select Pension Investments was used to generate leads. Around £1 million was paid to introducers or agents who used cold calls, TPR said.

‘More than £10.3 million was transferred to businesses owned or controlled by Mr Austin, including the current accounts of Friendly Pensions Limited and Friendly Investments Company,’ TPR said.

Around £3.2 million of funds was invested, and out of this £2 million went to a St Lucia property development called Freedom Bay.

Nicola Parish, TPR’s executive director of front line regulation, said: ‘The defendants siphoned off millions of pounds from the schemes on what they falsely claimed were fees and commissions.

‘While Austin was the mastermind, they all took part in stripping the schemes almost bare. This left hardly anything behind from the savings their victims had set aside over decades of work to pay for their retirements. The High Court’s ruling means that Dalriada can now go after the assets and investments of those involved to try to recover at least some of the money that these corrupt people took. This case sends a clear message that we will take tough action against pension scammers.’

2 comments so far. Why not have your say?

David Andrews

Jan 24, 2018 at 17:16

I read the judgement but would like to know the likelihood of any money being available to seize . That apart , why no mention of jail-terms ?

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horshamtim

Jan 25, 2018 at 06:13

@David Andrews Very unlikely it appears - as the full press release makes clear the scams all took place in 2014 or earlier, and the money has been moved around, including abroad, and a lot spent.

This underlines the simple fact that you can get as many judgements and orders as you like in the UK civil courts, but your chances of getting paid always depend on there being sufficient assets within reach. Even if they have been awarded costs, the winner's lawyers will need to be paid before any money is reclaimed.

There was no mention of jail terms for the simple reason that this was a civil case not a criminal one, and the use of the term "prosecution" is just slipshod reporting by Citywire.

It's not clear whether any of the individuals have been prosecuted in the criminal courts in the interim - the full case transcript is not yet available.

For those interested in the correct summary of the case, this is the link:

http://www.thepensionsregulator.gov.uk/press/pension-scammers-ordered-to-repay-137m-they-took-from-victims.aspx

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