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Sunday, 19 December 2010

Even as police investigate £80m P/onzi scheme, some ‘victims’ can’t believe it

Even as police investigate £80m P/onzi scheme, some ‘victims’ can’t believe it

Fraud squad detectives have embarked upon a unique attempt to break the stranglehold that a group of suspected fraudsters holds over hundreds of investors. Clients of Business Consulting International (BCI), a Knightsbridge-based investment firm accused of running an £80 million Ponzi scheme, are being invited to public meetings by City of London Police to be told how their money was lost.  Yet some of those investors appear not to believe they have been victims of a crime at all. Three investment consultants have been arrested over the alleged bogus scheme, which allegedly operated in a similar way to that run by Bernard Madoff, the jailed American financier, by paying high returns from money invested by new clients.

Police are seeking to recover money invested by the men around the world — including accounts in Dubai and the Cayman Islands — and last week seized eight high-performance cars leased by the suspects. The vehicles included two Ferraris — a 612 Scaglietti and F430 Spider — two Bentleys, a Lamborghini, a Rolls-Royce and a Maserati. Detectives have also seized jewellery, watches and cash, but their inquiry is being hampered by the refusal of a large number of BCI’s 600 investors to accept that they may have been victims of a fraud. Some of the firm’s clients, who include a 1960s pop star and a number of sports personalities, believe that they can still recover their investments.

They have been told that BCI loaned money to “distressed” companies in need of cash and that their investments would be recouped. Detective Superintendent Bob Wishart, of City of London Police, said that many alleged victims could not accept that people they trust may have cheated them. “Some of the victims point-blank refuse to believe that they may have been victims of a crime,” he said. “They think these people are their friends and they have placed complete trust and have given over a lot of … information and it is very difficult to break that link of trust.

“Consequently, we get this situation where we find they do not believe us. Even though they have been arrested and we have searched their homes and offices and closed them down, the victims still do not believe anything is wrong.” Police say that the alleged Ponzi scheme ran between 2007-08 and was marketed by word of mouth between friends and relatives, who were told that they could earn returns of 6 per cent and 13 per cent annually. Several investors are said to have lost their homes, others have been declared bankrupt and some have attempted suicide. Two families lost large sums of money that they had saved to help to pay for the long-term care of disabled children.

At the meetings, held at a City police station, many investors reacted with disbelief as police explained that most of their money could not be traced and they were unlikely to see it again. Some people angrily turned on officers and accused them of provoking the collapse of the fund by freezing assets and making arrests. One woman, aged in her late twenties and from North London, asked: “How can £80 million just disappear?” Another woman said that she had lost £50,000 saved from benefit payments that was being put aside for the care of her son, who has cerebral palsy.

The woman, 48, said: “We had been saving for about 13 years; it was going to be a deposit for a flat or for an annexe to our house. The worst thing is the abuse of trust. We invested the money in stages from March last year onwards. Because we got some back we then invested more.” Three men have been arrested and questioned on suspicion of conspiracy to defraud, money laundering and fraud by misrepresentation. Kautilya Nandan Pruthi, 38, Kenneth Peacock, 40, and John Anderson, 43, were released on police bail.

Source: Times

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