Case Study Example
Three British directors of an American mining operation deliberately concealed personal interest in a new share issue..
Two of the three guilty men were Board members of the mining company. Due to their professional involvement, they should have declared their personal stakes in the company when new shares were being issued on the London Stock Exchange - but they did not. The flotation was presented as a 'chance to strike gold'. A consultancy firm produced an attractive report on the company's prospects. However, the value of precious metals and base ore to be extracted from the mine workings at the company were overvalued and the shares soon tumbled in value.
The resulting gains made by the fraudsters out of the flotation, over £60 million, were hidden in an intricate network of offshore companies. This was only discovered during a raid on a Jersey accountancy firm.
A joint investigation between the SFO and the City of London Police followed. The paper trail, which had started in Jersey, led investigators to Hong Kong, New Zealand, Monaco, France, Switzerland and Canada as well as where the company was located in the USA, in order to unravel the ownership of a web of offshore companies.
An eleven-month trial finished with the conviction of three out of four men on conspiracy to defraud charges in relation to a gold, silver, lead and zinc mining business in the USA
