GP Noble Trustees pension fraud trials
12 July, 2012 | News Releases
The conviction last year of the GP Noble director and his imprisonment for eight years can now be published.
With the conclusion today of the trial of two other defendants, reporting restrictions have been lifted over other trials conducted last year in relation to a £52 million pension fund fraud.
In the first trial, which concluded in July 2011, Graham Pitcher (D.O.B 03/04/61) of Bury-St-Edmunds, Suffolk, was convicted of conspiracy to defraud for his involvement in the misuse of pension scheme funds managed by GP Noble Trustees Limited (“GP Noble”), a UK based pension trustee company. He was sentenced to eight years imprisonment. Another defendant, Gary Cordell, the former operations director of GP Noble, who was tried alongside Pitcher, was acquitted of any criminal involvement.
In a separate trial Quentin Russell (D.O.B 18/08/57) of Haslemere, Surrey was convicted on 30 September 2011 of fraud and forgery offences. He was sentenced on 3 January 2012 to 15 months’ imprisonment.
The trial of Anthony James Morris and Peter Malmstrom for their alleged involvement in the fraud concluded today. Both men were acquitted on all counts.
GP Noble (now in liquidation) was an independent trustee company registered in the UK and based in Nottingham. At the time of the offences, its principal director was Pitcher. GP Noble administered a large number of occupational pension schemes. Many of the schemes related to companies which had become insolvent and/or had gone into liquidation.
In August 2007, Pitcher removed £30 million of six of these schemes’ funds from reputable UK based investment houses and reinvested the funds in a British Virgin Island (BVI) company, Fareston Limited, which had been formed immediately beforehand. This was done without consulting the other directors of GP Noble, who would not have sanctioned this conduct had they known. These funds were used by Pitcher and others for fraudulent purposes, including the payment huge unwarranted fees and loans.
In April 2008, a similar manoeuvre was performed, removing funds to a value of £22 million from seven schemes in favour of three-year bonds issued by Multiple and Unilateral Financial Futures Limited (“MUFF Limited”), a company also registered in BVI. MUFF Limited used these funds for high risk speculative investments including investment in property developments in Thailand and funding for a film finance company. The bonds issued by MUFF Limited were virtually worthless to the pension schemes. There was little recourse for the pension schemes should the investments made by MUFF Limited have failed. The terms of the bonds offered no guarantee or security to the pension schemes.
As with the funds invested in Fareston Limited, significant sums of money invested in the MUFF Limited bonds were swallowed up in loans and fees.
In July 2008, as soon as it became aware of the transfers, The Pensions Regulator removed GP Noble as trustee of all the schemes it administered (see note 1). The case was referred to the SFO by the regulator on 17 July 2008 and accepted for investigation seven days later. The SFO’s investigation was conducted in conjunction with Nottinghamshire Police. (Addendum on 23 July 2012: Of the £52 million unlawfully removed from the fund, over £35 million has now been recovered by the SFO and civil lawyers acting for the independent trustee company appointed in place of GP Noble.)
The role of Graham Pitcher
As trustee of the impacted pension schemes, Pitcher played a critical role in the transfer of the funds to Fareston Limited and MUFF Limited in complete breach of his duties to safeguard the interests of the schemes’ members. He dishonestly concealed the fact of these transfers from other GP Noble directors and broke industry rules by failing to inform the pension authorities of the dramatic change in investment strategy for the pension schemes. Pitcher effectively handed over control over the pension funds to entities with no assets or track record and without any form of security to ensure repayment. The SFO successfully argued that the dishonest reason for this was clear. During the trial, the jury heard evidence that Pitcher received substantial personal benefit for his role in the fraud and expected to receive a further £1 million per annum from MUFF Limited.
Commenting on Pitcher’s conviction and sentence, SFO Case Manager Jane de Lozey stated, “Graham Pitcher held a position of enormous responsibility. He abused his position as a guardian of other people’s money and his dishonest actions left pension funds completely unprotected. The lengthy sentence handed down by the Court reflects the severity of the fraud perpetrated.”
Role of Quentin Russell
Russell had been employed to provide investment advice as apparent independent justification for the extraordinary programme of investment by GP Noble in Fareston Limited and MUFF Limited. He was far from qualified to fulfill that role, being neither FSA registered, nor experienced in giving pension investment advice. Despite this, in return for substantial payment, he provided a series of fraudulent letters setting out his belief that the investments in GP Noble and MUFF Limited would be beneficial for the pension schemes.
On 3 January 2012 Russell was sentenced to 15 months’ imprisonment.
Notes for editors:
- The Pensions Regulator is to publish details of its involvement in the case on its website.
- Amendment dated 23 July 2012: The status of Mr Cordell at GPN Noble was operations director, not operations manager as originally stated.