This site uses cookies; by continuing to use our site you agree to our use of cookies. More details in our privacy policy. Close

 

 

Financial adviser jailed for £12m Ponzi scam 22 April 2010

Whitehead, a former Burns Anderson adviser, duped his victims through a Ponzi pyramid scam and falsely used the name of charitable organisation Salvation Army. 

Whitehead, 47, from Essex pleaded guilty to 49 charges of fraud and deception and a further eight offences were taken into consideration, he has been sentenced to ten years.

Sentencing Whitehead at Chelmsford Crown Court last week, judge Christopher Ball, QC, said Whitehead’s actions damaged the reputation of the industry. He said that despite a number of warning shots being fired in Whitehead’s direction, he had "pressed on" with his £12m pyramid fraud scheme. Judge Ball said: "If our system is to work properly, with financial advisers, what a terrible name you have given them."

Between 2004 and his arrest in April 2009, Whitehead had conned his 46 victims into investing in two fake schemes. In one scheme, clients thought their money was being invested in high-interest-bearing loans and bonds with Credit Suisse while in the other scheme, clients believed they were investing in short-term bridging loans for the Salvation Army to buy property in the UK. 

But the money was being dispersed into Whitehead’s own bank account or the bank account of a family member, which was in turn being used for his own interest, including funding property purchases in South Africa and Essex and a lavish lifestyle.

Whitehead claimed that the Salvation Army had asked his company to manage a property investment scheme on behalf of the organisation. However, the Reliance Bank, owned by the Salvation Army, controls all property purchases.

The financial adviser claimed that investors in the scheme would see returns of around 12 per cent for a seven to eight-week short-term loan. He said the attractive returns were a result of the Salvation Army acquiring property at up to 40 per cent below market value. Whitehead claimed that the Salavation Army had asked his company, Woodbridge Financial Services to manage its property investments. However, Reliance Bank, owned by the organisation, controls all property purchases. 

In the Credit Suisse scam, Whitehead claimed to be investing client money in accounts and bonds with the bank, promising high rates of return and no risk. However, he was using the bank’s name and logo to create fake monthly statements and other communications while siphoning off client money.

In total, investors put £11.95m into what the prosecution described as a "pyramid fraud" scheme and Whitehead paid out £4.7m in interest to investors to maintain the charade. The smallest loss suffered by an investor was £7,000 and the largest loss was £2.5m on a £5m investment.

Victims have of the Ponzi scam have indicated that they are appealing to the Financial Ombudsman to determine if they can lodge a complaint regarding monies lost.

 

 

 

blog comments powered by Disqus