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U.K. Case Shows that the Ponzi Epidemic Spans the Globe

Two British accountants are awaiting a jury verdict in a case involving a Ponzi scheme that robbed more than 200 investors on both sides of theAtlantic of more than $50 million.  Their case reveals the scope of the Ponzi epidemic that plagues the globe. After initially claiming that the investigation by the U.K.’s Financial Services Authority was a case of the [...]

Two British accountants are awaiting a jury verdict in a case involving a Ponzi scheme that robbed more than 200 investors on both sides of theAtlantic of more than $50 million.  Their case reveals the scope of the Ponzi epidemic that plagues the globe. After initially claiming that the investigation by the U.K.’s Financial Services Authority was a case of the government run amok,  Shinder Gangar and Alan White claimed at trial that they truly believed that the scam was a legitimate investment. 

According to British prosecutors Shinder and White lured investors into the scheme by telling them that famous Britain’s had invested.   Penny Sukhraj of Accountancy Age reports:

Shinder Gangar and Alan White of Nottingham-based Dobb White & Co are alleged to have lured investors by saying Lord Andrew Lloyd-Webber and Sir David Frost had put their money in, when neither had.

In an earlier story, Sukhraj reported:

Witnesses described in court this week how they were allegedly duped. Elizabeth Watson, whose parents, sister and aunt were also caught up, said Gangar had ‘impressed’ her when she first met him in 2001.

‘He seemed to be dealing with well-known celebrities and was doing well. He gave me the impression he was a globetrotter…

When I met Shinder Gangar, he showed me a contract signed by Andrew Lloyd Webber…I understood Lloyd Webber had invested in his scheme,’ said Watson. Gangar later told her Lloyd Webber had invested £1.2m in his scheme, and that Terry Brady had also invested an amount of £10m.

‘He told me he worked with top people… that the Queen’s lawyers, Farrers, were his solicitors and that he was connected to Merrill Lynch, Emerging Markets Securities and Wells Fargo,’ Watson said.

According to federal prosecutors in Virginia,  the scheme began in April 1998, when American Terry L. Dowdell began marketing a purported investment program that involved the trading of short and medium term debentures through Vavasseur Corporation, a Bahamian investment firm by Dowdell.

Although neither Lloyd-Webber nor Frost invested in the scam, several highly-accomplished professionals did.  The London Telegraph reports that the victims include “hundreds of businessmen and professionals, including accountants, solicitors, doctors and architects.”  Many of those professionals invested on the advice of their financial advisers.

Ponzi’s are the same the world over.  Readers of Investor’s Watchblog will recognize the reliance on supposed investments by famous people as a typical lure to prospective investors.  The targeting of successful professionals is also a common theme.

From my reading of the stories about this case, the U.K  Financial Services Authority did a terrific job on this case.  If they learn today that they have prevailed at trial, though, they will have no time to celebrate.  As in the United States, there are more  Ponzi schemes awaiting them than they can possibly handle. 

Investors in the U.K., then, should follow the advice that Investor’s Watchblog gives American investors — secure an SEC-trained analysis of any proposed unregistered investment, or be prepared to testify at the trial of those who steal your  nest egg.

 

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