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Five sentenced to 17.5 years for £2.8m Investment Fraud

10th September 2018

Five sentenced to 17.5 years for £2.8m Investment Fraud

Last week, five individuals involved in a share fraud resulting in the loss of £2.8m in investors’ money were sentenced to a total of 17.5 years. However, the sixth and main instigator and beneficiary of the fraud, Michael Nascimento, is still awaiting sentencing, expected to take place on Thursday this week.

Fraud Overview:

Between 2010 and 2014, members of the public were cold-called and persuaded using high pressure sales tactics to purchase shares in a company that owned land in Madeira. The share fraud was carried out through a series of boiler room companies.

Over 170 members of the public invested, many of whom were elderly or vulnerable, having been told that the value of shares would increase substantially and having been promised guaranteed returns of between 125% and 228%, however none were ever paid. Instead, the investors’ money, totalling over £2.8m was used to maintain the fraud and primarily fund the lifestyle of Mr Nascimento.

FCA Investigation:

The investigation into the share fraud, known as Operation Tidworth, has been the FCA’s second largest ever criminal prosecution to date.

Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, commented on the case last week by saying:

“These fraudsters callously targeted investors who were often elderly and vulnerable, lying to them to get them to part with significant sums of money. Despite efforts to conceal and destroy evidence, the FCA, in one of its largest ever investigations, was able to ensure that these criminals faced justice and ended up behind bars.

Applications under Proceeds of Crime legislation remain on foot and the FCA is determined to recover as much money from these defendants as possible for the benefit of investors.”

This has been one of the FCA’s most complex fraud investigations to date as well as the first FCA prosecution of an offence of perverting the course of justice. In overview, the investigation involved:

• 4 separate search operations and one unannounced visit
• Seizure of over 100 computers and other digital devices
• 4 million documents and (after de-duplication) over 1.4 million documents ingested into the FCA’s Evidence Management System requiring evidential assessment and review.
• 142 witnesses
• 287 witness statements (2,406 pages)
• 3,682 exhibits (23,642 pages)
• 3 defendants remanded in custody for breach of court bail by committing further offences.

The Price of Fraudulent Behaviour:

The FCA charged six individuals with offences of conspiracy to defraud, fraud, money laundering and perverting the course of justice, in addition to breaches of the Financial Services Markets Act. Those charged either pleaded guilty or were convicted by the jury.  The five individuals that have received their sentences are:

Charanjot Sandhu, a senior broker that often used bullying sales tactics and false name, received 5.5 years’ imprisonment.

Hugh Edwards, who recruited and trained brokers as well as drafted and sent misleading brochures to potential investors in addition to personally pitching products at senior brokers using false names, was sentenced to 3 years 9 months imprisonment.

Stuart Rea, who fronted one of the companies as well as recruited and managed sales brokers and circulated misleading promotional material, was sentenced to 3 years 9 months imprisonment.

Jeannine Lewis, a PA of Mr Nascimento who assisted him to lauder the proceeds of fraud through various bank accounts including her own as well as hiding and destroying documents and computers to prevent them from falling into FCA investigators hands, was given 2.5 years imprisonment; and

Ryan Parker, who fronted two of the boiler rooms for Mr Nascimento as well as allowing his personal bank accounts be used as a conduit for some of the money, was given a 2 years’ imprisonment sentence. This sentence was suspended for 18 months, due in part to his young age (25 years old) and he was also ordered to carry out 180 hours of unpaid work. It seems the judge found that Mr Parker had been “exploited in a significant way by Michael Nascimento”.

It should be noted that the three individuals who received the longest sentences so far were also made subject to Serious Crime Prevention Orders, and are prohibited from any involvement in financial services or the sale of any form of investment for a period of 5 years after release from prison. All those, apart from Ms Lewis, are also banned from being company directors for periods of between 7 and 14 years.

Given the main instigator and beneficiary of the fraud is still awaiting sentencing, it will certainly be interesting to hear details of this come Thursday.

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