Malcolm Varrick was jailed for four years today after admitting he stole £1.16 million from investors deceived through his Durham-based financial businesses. He promised high and assured profits on options trading. He spent lavishly on himself, using some of the £4.25 million investors' funds.
Malcolm Varrick's business activities have been the subject of investigation and legal action by both the Serious Fraud Office ("SFO") and the Financial Services Authority ("FSA"). This announcement focuses on the SFO case. The fraud took place during 1999 and 2000.
Details of the FSA civil action are released by them today.
Background
Malcolm James Varrick (29) of Sacriston, County Durham , operated a number of finance businesses in Durham from 118a Front Street, Chester-le-Street, including Oakhouse Trading Company Ltd ("Oakhouse"), Charterhouse Trading Company Limited and Carrington Asset Management Ltd.
Varrick attracted private client investors from various parts of the UK through personal contacts and by recommendation. He took funds for investment amounting to around £4.25 million and gave assurances that the capital would be entirely secure. He claimed that he had developed a new computer trading programme to help make investment decisions. At least 49 investors (including four couples investing jointly) are known to have made deposits; many of them as pooled deposits through a company called Goldcard Investments Ltd which was run by business contacts Varrick had met some time earlier, when he was in the business of marketing computer software called Pointman which was designed to assist with trading on the futures market. The sums deposited with Varrick for investment, by individual clients and by pooled clients through Goldcard, ranged from £10,000 to £250,000 (though one investor, not included in the charges against Varrick, deposited £600,000). Contract notes were issued by Varrick, promising that investments would earn interest at 8% per month.
Varrick used documents purporting to be statements of accounts issued to Oakhouse by financial institutions e.g. Berkeley Futures of London, Credit Suisse of Geneva. These documents were completely false and had not been issued by the financial institutions but had been prepared by Varrick and were designed to give the impression to clients that their investments were being successfully traded on their behalf. In reality the little trading conducted had been ineffective and there was no capital growth on the clients' funds. Instead, Varrick operated a "Ponzi scheme" whereby when a client requested a payment of interest he would simply use other clients' funds to make the payment. Though around half of the deposited funds were recycled as payments to clients, just over £2 million was untraceable.
Varrick used his ill-gotten gains to pay for a certain life-style which included foreign trips and a taste for expensive cars. The investigation uncovered that in just 26 months he bought five Porsches, five BMWs, three Ferraris, three Aston Martins, a Maserati, a Jaguar and a Range Rover valued in total at nearly £1,125,000. Some he subsequently sold. Others have since been repossessed.
The period covered by the charges is August 1999 to July 2000 for the making of false documents and June 2000 to December 2000 for obtaining money by deception by falsely representing that monies invested would be repaid in full on 30 days notice.
Proceedings
Following an initial investigation by the Financial Services Authority into the activities of Varrick's scheme, the FSA commenced a civil action in the High Court and referred the suspected fraud to the SFO. In June 2001 the SFO, with the Durham Constabulary, commenced a criminal investigation. The FSA's civil proceedings resulted in the scheme being closed down. Further details of the FSA's civil action can be found in the press release issued by the FSA today.
In July 2003 Varrick appeared at Durham Magistrates Court charged with ten counts of dishonestly obtaining a money transfer by deception (Theft Act 1968, section 15(a)) and ten counts of forgery. The case was transferred to Newcastle Crown Court for trial. On 13 October 2004, ahead of trial, Varrick pleaded guilty to ten amended counts of obtaining money transfers by deception and ten amended counts of false accounting (section 17(1)(a), Theft Act 1968) and he was sentenced today by HHJ Whitburn QC to four years' imprisonment..
Notes for editors:
The Financial Services Authority has issued today a press release in relation to the High Court action taken by the FSA against Malcolm Varrick in February 2001. Details can be obtained from the FSA's press office: 020 7066 3232.
The Serious Fraud Office is a government department created under the Criminal Justice Act 1987. Its purpose is to contribute to the reduction of fraud and to reduce its cost to the economy, to deliver justice and the rule of law and to maintain confidence in the UK's business and financial institutions. It investigates and prosecutes complex and major cases of fraud. The Director of the SFO operates under the superintendence of the Attorney General. Most SFO cases are referred to the SFO by the police or by other government departments or agencies.
Serious Fraud Office
Elm House, 10-16 Elm Street, London, WC1X 0BJ
Press Office phone 020 7239 7001/7000 and Mobile 0781 807 6688
