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White Collar Crime & Investigations 2022 SFO enforcement round-up: individuals and corporates

Posted on 21 December 2022

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New investigations: individuals and corporates

Arena Television

In what has been a quiet year for the SFO, only one new investigation has been announced.

On 23 February 2022, the SFO announced an investigation into Arena Television Limited, a broadcasting company that collapsed in late 2021. In its press release, the SFO indicated that three sites had been searched, with support from the National Crime Agency, and two individuals had been arrested and questioned. The SFO did not disclose the nature of the investigation, saying only that it related to "the business practices of individuals associated with Arena Television and its linked entities".

The investigation is ongoing.

Ongoing matters:

There are several cases that are still currently under investigation by the SFO. The following investigations were opened in 2021 and are largely focused on suspected fraud and money laundering.

Gupta

The SFO’s investigation, launched in May 2021 continues into companies within the Gupta Family Group Alliance.

Raedex Consortium

The SFO is investigating suspected fraud in the period 2012 to 2021 in relation to the activities of the Raedex Consortium (including the companies Buy2Let Cars, PayGo Cars, Wheels4Sure and Rent2Own Cars). The investigation by the SFO came after the Financial Conduct Authority imposed a number of restrictions on Raedex Consortium in February 2021, requiring the firm to cease conducting regulated activities because of concerns about its finances. Raedex Consortium offered car leasing schemes where investors were given the chance to invest in cars which would be leased out through Buy2Let Cars and Rent2Own Cars.

In April 2021, the SFO raided two properties, arrested one individual and conducted interviews of two suspects. In October 2021, the SFO arrested and interviewed a suspect.

Gavin Woodhouse

The SFO is investigating suspected fraud and money laundering in relation to the conduct of business by Gavin Woodhouse and individuals and companies associated with him. The conduct currently under investigation by the SFO relates to investments offered in care homes and hotels between 2013 and 2019.

In August 2021, the SFO asked investors based in the UK to complete a questionnaire to assist it in establishing the circumstances of the investments offered. The SFO has since conducted a number of interviews.

Alpha and Green Park

The SFO is investigating the Alpha and Green Park group of companies for suspected fraud in relation to the companies’ student accommodation and holiday park developments across the country. The companies sold investments into leasehold units between 2014 and 2019, promising over 1,500 investors 8-10% returns on their investment over the first 10 years. An estimated £150 million was invested into the schemes as a result, but all stopped receiving the guaranteed returns in 2018. It is thought that the directors of the companies made around £20 million from their schemes. It is suspected that the companies of fraudulently misled investors into purchasing leaseholds for student and holiday accommodation.

Fraud prosecutions

Global Forestry Investments

On 31 May 2022, a jury convicted two directors of Global Forestry Investments, Andrew Nathaniel Skeene and Junie Conrad Omari Bowers, of three counts of conspiracy to defraud and one count of misconduct in the course of winding up a company.

Around 2,000 investors were defrauded by Skeene and Bowers, who established three teak investment schemes in Brazil. Global Forestry Investments claimed to offer secure, ethical investments which would help protect the Amazon rainforest and support local communities. In fact, Skeene and Bowers were paying investment funds into their own bank accounts, with the majority of investors seeing no return on their investment.

Skeene and Bowers were sentenced to 11 years' imprisonment and disqualified from serving as company directors for ten years. Confiscation proceedings will likely follow.

The successful prosecution of two individuals represented welcome positive publicity for the SFO in 2022, a year in which it has been embroiled in enquiries into the collapse of other high-profile prosecutions.

Harlequin Group

On 3 August 2022, David Ames was found guilty by a jury of two counts of fraud by abuse of position, having failed to offer any evidence in his defence.

Ames was found to have deceived over 8,000 UK-based investors in the Harlequin Group, a hotel and resorts development venture. Victims were led to believe that they were making secure investments into properties. The proposed model relied on investors paying a 30% deposit to purchase an unbuilt villa or hotel room, half of which went toward fees for Harlequin and relevant salespeople, while Harlequin put the remaining 15 per cent toward construction.

Investors were fraudulently told that the builds would be further funded by external financial backing. Such funding was not in place and without it three properties needed to be purchased to finance just one of the luxury accommodation units.

This led to the exponential expansion of the scheme, the diversion of investor money between resorts and ultimately a funding shortfall of over £1.2 billion by 2012. The SFO stated that this exposed investors to a near 100% risk of loss. Thousands of victims lost their pensions and life savings, while Ames gained around £6.2 million from the scheme.

In September 2022, Ames was sentenced to 12 years' imprisonment, with the court noting the devastating impact of the fraud on thousands of victims, as well as Ames' failure to respond to at least eight warnings about the Harlequin businesses from business associates, financial professionals and authorities.

Axiom Legal Financing Fund

On 9 August 2022, former solicitor Timothy Schools was found guilty after trial of five counts of fraud, fraudulent trading and money laundering. Schools was jailed for 14 years.

The SFO's investigation into Axiom and Schools began in 2014. Schools set up Axiom in 2009 purportedly to provide loans to law firms pursuing no-win-no-fee cases. The fund secured over £100 million from approximately 500 investors, who were promised a secure return. Jurors at Schools' trial were told that the fund had made loads in 2009 only to a firm owned by Schools, which he used as a "personal cash machine". He also used investment funds to pay for an estate in Cumbria, a personal trainer and a corporate box at Blackpool FC's ground.

School's co-defendant Richard Emmett was acquired of one count of fraudulent trading and one count of facilitating the use of criminal property. The jury could not reach a verdict on a single count of fraudulent trading against a third co-defendant, David Kennedy, who will face a retrial in March 2024.

Bribery and corruption prosecutions

Glencore Energy (UK) Ltd

On 21 June 2022, Glencore Energy (UK) Ltd pleaded guilty to seven counts of paying bribes to secure access to oil and gas projects. The criminal conduct took place across multiple jurisdictions including Cameroon, Equatorial Guinea, Ivory Coast, Nigeria and South Sudan. The SFO’s investigation revealed Glencore had paid more than $28 million in bribes to secure preferential access to oil. Glencore has also pleaded guilty in two separate criminal cases in the US.

This marked the SFO's third corporate conviction under the Bribery Act 2010, with the SFO under current Director Lisa Osofsky having more regularly turned to deferred prosecution agreements for corporates accepting criminal liability. This was also the first conviction for substantive bribery offences for a company, meaning senior individuals at Glencore authorised the bribery instead of simply failing to prevent it. Glencore has also committed to a programme of corporate and compliance reform.

In November 2022, Glencore was ordered to pay £280,965,092.95, the largest financial penalty to date for an SFO investigation following conviction. This sum included a fine, a confiscation order for the profit it obtained from bribes and the SFO’s costs in full.

The SFO's investigation into individuals at Glencore is ongoing.

GPT Special Project Management Ltd

Following an investigation which had been opened in August 2012, GPT Special Project Management Ltd ("GPT"), a former subsidiary of the European Aerospace Group, pleaded guilty at Southwark Crown Court on 28 April to one count of corruption contrary to Section 1 of the Prevention of Corruption Act 1906. The investigation had been opened by the SFO in August 2012 and centred on a £2 billion contract to supply telecommunications capability to the Saudi Arabian National Guard between 2007 and 2012. In sentencing, the Judge ordered the company to pay a fine of £7,521,920 and costs of £2,200,000.

Jeffrey Cook, the former Managing Director of GPT and John Mason, the financial officer and part owner of foreign-registered subcontractors to GPT were also charged with corruption. Mr Cook was also charged with misconduct in public office between 2004 and 2008 in relation to his employment with the Ministry of Defence. Terence Dorothy was charged with aiding and abetting that offence, but was too ill to stand trial. The jury in the trial of Mason and Cook was discharged in July 2022, with a retrial due to commence in January 2023. As there will be a retrial, the judge imposed reporting restrictions, meaning that the reason for the collapse of the trial is not public knowledge.

Confiscation proceedings

Saunders Electrical Wholesales Ltd

Michael Strubel was convicted in 2016 of conspiracy to defraud investors. Along with two co-defendants, he was found to have enticed wealthy investors to invest in Saunders Electrical Wholesale Limited. Strubel made various dishonest claims to investors, including that he was supplying services to the 2012 Olympic village in London.

On 27 May 2022, the SFO confirmed that Strubel had been imprisoned for six years and seven months for failing to pay the confiscation order issued following his conviction. In 2019, the court had ordered Strubel to repay £2,131,362.30, over £1.4 million of which remains outstanding.

Emma Luxton, Head of Proceeds of Crime and International Assistance at the SFO, said: “We won’t let fraudsters refuse to make amends for their crimes. The SFO has relentlessly pursued the recovery of criminal funds from Mr Strubel since his conviction in 2016. Today’s outcome sends a message to others who are found guilty of fraud that they will be held accountable for their crimes.”

 

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