At Worcester Crown Court today
- John Wilfred Clark was sentenced to five and a half years imprisonment.
- David John Saull was sentenced to four years imprisonment.
- Jasbir Sing Mudhar was sentenced to four years nine months imprisonment.
A fourth defendant, was severed from proceedings part way through the trial on medical grounds, but is due to stand trial in 2004. There are reporting restrictions in relation to this fourth defendant and possible re-trial.
Clark and Saull were disqualified from being company directors for ten and seven years respectively.
The total sum lost by the investors as a result of the fraud was in excess of £1.1 million.
From 1994, Clark through a number of business fronts set up by him, was engaged in the promotion of so called high-yield investment schemes to clients in the UK and Sweden. He sometimes used the name John Thomas.
In 1997, Clark entered into a similar business relationship with Saull. Together they promoted investment schemes, this time to include victims in Canada and the USA. Saull was registered as a director. Clark described himself as a "consultant." Mudar, an accountant by training, played an important role as an "introducer." Investments lost by clients amounted to approximately £550,000.
The defendants were not authorised to conduct investment business or act as intermediaries, as required by law relating to the financial services sector. Even so, they described themselves as "facilitators"; able to make special introductions for clients to financial trading houses and banks. They set out to persuade potential clients to invest money in supposed short-term, high yield investment programmes. Assurances were given that the invested monies would be secured by bonds and/or insurance or some other form of security. The individual sums invested varied hugely. One victim parted with £350,000. In some cases, clients were told that they could arrange loans for them.
Clients would sometimes be invited to participate in a pooled scheme whereby the collective sum would be large enough to "leverage" a short-term trading programme on the financial markets that would reap quick and substantial profits.
The reality behind these claims was that client monies were not in fact invested. There were no bank trading programmes. (See note 3). Instead clients' funds were used by the defendants and by others who introduced the clients for their own benefit. The promised risk protection did not exist. The bonds were fake and the indemnity insurance worthless.
Though they had a London accommodation address, the fraudulent operation was orchestrated in Droitwich, usually through meetings with clients in smart hotels in the area or in Birmingham. To give the impression of success, the defendants would sometimes arrive at these meetings in hired expensive cars. Once persuaded, victims would be sent contractual documents and correspondence so as to maintain the façade of a legitimate and professionally run business.
Investors who expressed concern when the promised returns were failing to materialise were fobbed off with excuses that parties on the other side of the deal were not performing adequately. Only when clients threatened to complain to the authorities, would some of the invested sums be returned. However, in September 1999, acting on a complaint from a victim, the West Mercia Police made some initial enquiries. When questioned, the defendants' explanations about the details of the investment strategy and the returns on investment were different. The case was referred to the SFO, who commenced an investigation in February 2000.
Clark, Saull and Mudhar were charged in October 2001. The prosecution case was presented by two indictments:
- Count 1 related to Clark alone for his conspiracy (with others who were not charged (see note 1) to defraud investors between 1 January 1994 and 31 December 2000.
- Count 2 related to Clark, Saull, Mudhar and another for conspiracy (with others who were not charged (see note 2) to defraud investors between 1 January 1997 and 31 December 2000.
The trial at Worcester Crown Court opened on 17 February 2003. On 4 June a defendant was discharged and may be tried but cannot be named for legal reasons.
The jury gave their unanimous guilty verdict on 27 June 2003. Clark was found guilty on both counts and Saull and Mudhar were found guilty on the single count against them.
Notes for editors:
On count 1, other named conspirators are Ulf Ruden, Johan Botha, Lawrence Smith, Paul Goby, Marc Kantano, Karl Dieter Muth and Rajiv Patel. None were charged.
On count 2, other named conspirators are Ulf Ruden, Harold Eugene McDowell and Joseph Mottley. Another named conspirator cannot be identified here for legal reasons as he is facing proceedings in another case.
"High-yield, low-risk" investments do not exist. The reality is that the higher the potential yield, the greater will be the risk. There is no incentive for a borrower (in this context, an investment bank) to pay investors a high return for using their money when there is no, or little risk, in their being able to repay the money. In the real world of investment, in order to pay investors a high yield, the investment bank would itself have to take investment risks, but where there is genuinely no risk, the bank will be able to borrow the money more cheaply elsewhere. Even where "leveraged investments" exist (that is where an investor borrows money to increase the pool of money available) the potential loss, as well as the potential gain is magnified. A lending bank would require security before agreed to any loan. In this particular fraudulent case, no genuine security was available in relation to any of the transactions.
There are two separate reporting restrictions on this case. One relates to a defendant and company that can not be named. The other relates to a person named on one of the indictments.
Jasbir Sing Mudhar's disqualification as a company director is to be considered at a hearing on 24 November 2003.
DC Paul Randall and Lorraine Costello of West Mercia Constabulary were highly commended by HHJ Matthews for their thoroughness and professionalism on the investigation and prosecution.
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