In a significant legal development, the High Court has held five men accountable for a fraud that has been dubbed the “largest Ponzi scheme in British history.” The court's judgment demands that these individuals repay nearly £400m. Two directors of London Capital & Finance have been found liable for £180m, while three others who provided “dishonest assistance” are responsible for £211m. This case, with its roots in Sussex, has sent shockwaves through the financial world.

Key Players and Their Liabilities

Directors of London Capital & Finance

Mr. Justice Robert Miles stated that it is “very unlikely” that these defendants will be able to meet the substantial repayment amount. LCF raised £237m from over 11,600 investors by issuing mini-bonds between 2013 and May 2018. Investors were under the impression that their money was going into UK small and medium-sized businesses. However, Mr. Justice Miles concluded that the raised funds were misappropriated to pay those connected to the company. The scheme operated as a Ponzi structure, using new bondholders' money to pay off old ones before the company entered administration in 2019. In November, a hearing found CEO Michael Thomson and associate Spencer Golding liable for breaches of their director duties, and the judge on Friday confirmed their liability for £180m. John Russell-Murphy from Eastbourne, Paul Careless, and Robert Sedgwick were also found liable for £211m. Previous court documents revealed that the directors used the money to purchase property, acquire supercars, fund luxury travel, and make donations to the Conservative Party.

Surge Financial and Its Role

Surge Financial, based in Brighton, took a 25% commission from LCF to market the mini-bonds nationwide. The court heard that this company, run by Careless, received between £60m to £65m from LCF. Stephen Robins KC, representing the claimants, emphasized that without Surge Financial, the fraud “wouldn't have happened at this scale.” He further stated that Careless' “greed” drove LCF to become the largest Ponzi scheme in British history. Owen Curry, representing Careless, argued that his client was not aware of all aspects of the fraud and therefore should be liable for a lesser amount. Defendants typically have 14 days to pay before administrators can take enforcement action.This case serves as a stark reminder of the importance of due diligence in the financial sector and the potential consequences of fraudulent activities. It highlights the need for stricter regulations and oversight to protect investors and maintain the integrity of the financial system.