Pension and investment scams and scandals are a blight on financial services and saving for retirement. The energetic and inspired campaign by Darren Cooke of Red Circle successfully raised awareness of the problems of cold calling. But the snap general election scuppered serious traction on this and the most the government has achieved so far is to make a vague promise to talk about talking about it. But still it is not illegal, and still the scammers are scamming away merrily.
Chair of The Transparency Task Force
The Scams and Scandals team was formed as a result of inspiration by the Transparency Task Force’s Andy Agathangelou. It has attracted a group of like-minded professionals who believe passionately that a concerted effort should go into coordinating a zero-tolerance approach to scams and scandals. All members of the team are committed to producing a White Paper which can focus the minds of government ministers, regulators and law enforcement agencies on the whole problem – not just the cold calling bit.
Irrespective of which version of which political party we are talking about, the ultimate object of a successful and fulfilled life is to be happy, healthy and solvent. And this includes getting a decent education, leading a responsible and law-abiding life, and saving for a comfortable retirement. Millions of British citizens manage to achieve this goal, but sadly many thousands of them lose part of all of their retirement savings to the armies of scammers.
XXXX XXXX, one of the many pension scammers ruining thousands of victims’ lives
All these scams and scammers have caused thousands of victims to lose hundreds of millions of pounds’ worth of retirement savings. And caused untold misery – in many cases exacerbated by HMRC punishing the victims rather than the perpetrators.
The Scams and Scandals Team has a clear five-point goal:
Ban UK cold calling and fraudulent calling
We must not let this disappear off the agenda and must keep up pressure on MPs and Ministers – as well as the regulators. But this must also be extended to overseas as we already know that the UK-based cold calling outfits have made arrangements to move their operations or merely facilitate re-routing of phone numbers. However, the twilight industry of “introducing” must also be examined as this is a serious source of scam facilitation.
Support Lesley Titcomb “Scammers are Criminals”
Ms Titcomb has publicly declared scammers to be criminals
We must work with the regulators, government and law enforcement agencies to enhance existing and introduce new regulation and legislation to prevent new scams, close down known existing scams and bring those involved in conceiving, operating and promoting both to account.
Revitalise Scorpion Campaign
Fundamental to preventing scams is communication to the public of the dangers of cold calls and pension/investment scams which would include the Scorpion Campaign – but so much more as well. A key part of this exercise is the use of social media and the plan to produce a documentary and Youtube channel giving real-life examples of past and current scams. Explaining the mechanics of a scam is one thing – but showing an actual example of a victim and the scammer is bound to have even greater impact.
Write off HMRC debt where scams are proven
HMRC celebrating the tax they collect from victims of pension liberation fraud
We need the help of the government here and could do with an actuary to help us work out what the cost to the State is of taxing victims of scams. If we can demonstrate that by ruining a scam victim (who has already probably lost part or all of his pension) with the tax charge, the long-term cost of supporting the victim and his family will far outstrip the tax collected. This is especially well demonstrated in the Ark case where the victims have got to both repay the “loans” and pay the 55% tax even if the loans are repaid.
Ensure AML regs include pension scamming
TOBY WHITTAKER’S TOXIC EMPIRE WILL FINALLY BE HUFFED AND PUFFED AWAY
I would widen this to include investment scams. This is because at the heart of every pension scam there is a fraudulent investment (and/or loan). The actual pension itself is harmless as it is essentially just a box with a label on it and only becomes toxic and dangerous once you put the scorpions, snakes and cockroaches inside it. You could equally put fluffy kittens in it. It is the mis-use of the pension “box” which is the scam.
Continental Wealth Management (CWM) was a financial advisory firm based on the Costa Blanca in Spain. Headed up by Darren Kirby, there were – until earlier in 2017 – 35 people working at the firm. The firm claimed to have £50 million worth of assets under management and around 500 clients. The firm closed down on 29.9.2017.
It is feared that up to 40% of CWM’s clients may have been affected by this situation.
BACKGROUND TO CWM
CWM “advisers” acted as sharks
In mid-2011, Stephen Ward’s Premier Pension Solutions (PPS) lost the lucrative Ark pension liberation scam when the Pensions Regulator placed the scheme in the hands of Dalriada Trustees. Ward had advised 160 victims to transfer £10m worth of secure pensions into this scheme on the promise of having 50% of their pensions paid to them in cash. He also assured them these payments would not be repayable or taxable and that the pensions would be invested in “high-end London residential properties”.
In the event, neither of these assurances turned out to be true. Dalriada is now making claims to recover the 50% liberations and HMRC has issued tax demands at 55% of the cash received (and the tax will still be payable even if the liberations are repaid). The High Court called the Ark scheme a “fraud on the power of investment”.
Having ruined 160 lives, and made up to £1 million profit out of the Ark victims, Ward immediately turned his attention to his next scam: Evergreen New Zealand QROPS and his Marazion “loans”. Having seen how easily victims could be duped into transferring their safe pensions with the promise of 50% liberation, Ward appointed CWM as “introducers” to the scam.
Here is an actual account by one of the Evergreen/PPS/CWM victims of what happened to her:
Mrs. A: “I was first cold called by CWM in 2011. I first met Phil Kelman of CWM in January 2012. I was told only positive things about transferring my pensions and to be able to take 100% of my pension funds.
This, however, changed after the first meeting and I was then told that due to the government closing loopholes I would only be able to get 50% of my pension fund and that the other 50% would be in the Evergreen QROPS earning enough interest over the 5 years to cover the 50% that I could withdraw (before the age of 55) – a win win situation!
There was no mention of the 50% being given as a loan until much further down the line. This was supposed to have taken 6 weeks at the most, but it actually took nearly 10 months. I was told that the “loan application” was a paper exercise just to cover things – I obviously have no proof of these conversations! Due to the fact that in the beginning it was not a “loan” there was no talk of a 55% tax charge, also as it was QROPS I was told it wouldn’t have incurred a tax bill.
I was not given any opportunity to say what the consequences of losing my pension or gaining an extortionate tax bill would be – either in the short or long term. If I had known of the huge risk of losing everything then obviously I would not have gone ahead. I did not state that I was willing to risk everything to get the “loan”.
I was told that Evergreen was a safe place for my pension to be as Evergreen was “approved”. I was given a graph to show how my pension would not only make the 50% back up but make more on top of it.”
Marco Floreale – former CWM “adviser” – now MD of Carrick Wealth
Mrs. A’s case was handled by CWM’s Marco Floreale (now Managing Director of Carrick Wealth) who claimed to be the managing director of CWM. Her secure, final salary, £100k Royal Mail pension was transferred to Evergreen and she was forced to sign a five-year “lock in” before receiving her “loan”. The loan agreement issued by Stephen Ward included annual interest at 8.5% compound which would mean that her £50k loan would have increased to £75k at the end of the five-year term. She was also charged more than £10k in fees.
There are now around 300 victims trapped in Evergreen as they are not allowed to transfer out. Ever. Between them they have lost £10m worth of pensions. The CWM personnel involved in this scam claimed that PPS was their “sister” company and have offered no help or compensation for the victims’ losses and terrible distress. One victim died of cancer in February 2017 and her husband is convinced that the stress of the Evergreen situation brought on the disease.
Phil Kelman, Jon Meek, Robert Pearl, Gemma Broad and Anthony Downs were among the CWM personnel who assured the victims that the transfers were in their interests as well as safe and prudent. It was, of course, later discovered that the Evergreen fund was invested in illiquid, high-risk, toxic funds – including personal, unsecured loans. Evergreen was removed from the QROPS list in November 2012 and the victims have now been told they can never transfer out.
It is not known how many other Stephen Ward/Premier Pension Solutions scams CWM was involved in, but when Evergreen got shut down CWM started acting as “advisers” to British expats in Spain and France. They were still working with Stephen Ward of PPS who provided the transfer advice. It is now thought they advised more than 500 people and that around 40% of these have suffered crippling losses to their investments.
I do not know whether CWM ever disclosed their previous involvement with Stephen Ward’s scams to the clients – although it is doubtful that any people would have felt comfortable using CWM had they known they had been responsible for the 300 Evergreen victims. Certainly, CWM did not disclose their past activities to either Trafalgar International or Momentum Pensions – had they done so they would never have been given terms of business by either firm.
From 2013 onwards, CWM invested hundreds of low to medium risk clients’ investments in high-risk, illiquid assets. CWM completely ignored the suitability issue and paid no heed to the clients’ preference for safe, low-risk investments. Clients’ signatures were repeatedly copied and once the losses started to appear, CWM assured them that there was nothing to worry about and they were “only paper losses”.
When asked why so many clients were put into professional-investor-only investments, CWM replied that the investors themselves were not the clients; but the insurance companies were the clients. When I showed CWM evidence of forged signatures on dealing instructions several months ago, there was no response then and no further communication from them subsequently.
The most important thing now is the restitution of the victims’ funds. OMI, Trafalgar and Momentum Pensions, have come to the table to try to find a solution and restore of the victims’ pensions and investments. If we can achieve an equitable settlement, this will be a first in European financial services. However, the parties who have not come to the table are life offices Generali and SEB, as well as other pension trustees including Concept, Sovereign, Pantheon, Elmo and STM. It is no surprise that STM have not come to the table, because they pulled up the drawbridge in the Trafalgar Multi Asset Fund scam, run by XXXX XXXX – now under investigation by the Serious Fraud Office.
I would like to thank all the victims for their patience so far. But it has now finally run out – unsurprisingly. The mood has darkened and victims want action. A valuable information and commentary resource is the Repdigger forum. One interesting post recently reminded contributors that it was Stephen Ward of Premier Pension Solutions who provided the initial transfer advice. Nothing changes.
Beddoe proceedings: arguably (apparently) Dalriada could have been pursued by Ark victims without MPVAs for not pursuing repayment from those with MPVAs and conversely could have been pursued by Ark victims with MPVAs. So, to be on the safe side, they spent a quarter of a million quid of the victims’ funds on the Beddoe proceedings in the High Court.
And here we need to look at the meaning of the terms – MPVA and sharp stick:
Sharp Stick: Fenner Moeran’s extremely offensive statement that Ark victims should be beaten with a sharp stick (upon which neither the judge, Sarah Asplin, admonished him nor upon which Keith Bryant, the Ark victims’ QC, challenged him)
MPVA
MPVA is an anacronym for “Maximising Pension Value Arrangements” – a euphemism for pension liberation. The rules are that if a person is under the age of 55, he or she can’t access any part of their pension without incurring an unauthorised payment tax charge of up to 55%. So all pension liberation scammers think up clever ways of fooling potential victims into believing there is a legal “loophole” to circumvent this rule.
The point of a pension liberation scam is not to provide members with a bona fide pension scheme designed to provide an income in retirement, but to make the scammers loads of money. First there is the transfer fee: in the Ark case it was relatively low at 5% – although Stephen Ward was charging an extra fee on top of that of up to £2k per transfer.
And then there are the investment kick-backs. We still don’t know how much the Ark scammers earned out of the speculative, illiquid, high-risk properties they purchased in various dodgy offshore jurisdictions. But it will have been very lucrative. In subsequent scams, the scammers earned huge commissions such as 20% from Dolphin Trust; 30% from Park First; 46% from Store First.
By the time the Ark victims realised they’d been scammed it was too late and there was no parachute
The scammers always promise spectacularly high returns on the investments with assurances such as “guaranteed 8% per annum”. In the case of Ark, the victims were told they would receive up to 9% a year on the growth of the value of “high-end London residential properties” in which the pensions would be invested. This, of course, was a lie. But by the time alarms started to ring and the victims realised there was no way out of this toxic flight with no parachute, it was too late.
But let us revert to the portion of a transfer which is liberated. This can range from 5% to 85% depending on the structure of the scam. And it is given various names or labels such as “cashback”; “thank you”; “refund of fees”; “trousers”; “loan”. The favourite word used is “loan” because the scammers claim that “loans are not taxable”. There is no intention for the money ever to be paid back – that isn’t the point of the exercise. The scammers know the victims would never be able to repay the funds.
The use of the word “loan” in some schemes is merely a marketing term used to fool people into believing they won’t be taxed on the money. And the scammers have no interest in whether the victims ever get taxed or not – because by the time HMRC gets around to sending out tax demands, the scheme will have collapsed and the scammers will be long gone and far ahead on their next scams. They never stick around to help mop up the train wreck left behind.
Often, the victims are surprised when they receive “loan” documentation and alarm bells start ringing. But the scammers assure the victims that this is “just a paper exercise” or “administration to make sure HMRC don’t try to tax the money – because loans aren’t taxable“.
In the Ark scheme, the victims were told the amounts liberated would not be taxable because they didn’t come from the members’ own scheme, but from another scheme. And this is why 14 schemes were set up to work in pairs so that up to 99 people in each pair of schemes could swap cash from their transfers. So this was an artificial mechanism structured purely to operate the liberation – using the label “MPVA” to dress the payments up as something more glamorous and bona fide than just a dollop of unauthorised cash in a person’s trousers.
Very few of the victims were told their cash would ever have to be paid back. The MPVA agreements never once mentioned the word “loan” but did mention the word “discharge” and suggested that the MPVA would be automatically “discharged” after a period of years.
Some victims were told the MPVA would be settled or repaid out of the growth that the Ark pension would enjoy (because of the wonderful investments!). It was explained that the MPVA would grow at 3% a year but the pension fund would grow at 9%. But the member would never have to pay the MPVA off out of their own pocket.
Other victims were told the MPVAs would never have to be paid at all because of the reciprocal nature of the transfer/payment structure. It was explained thus: two “paired” members in different schemes would each have a reciprocal MPVA of – say – £50k. If they both decided they never wanted to pay the MPVAs back, they would just treat them like equal IOUs and agree to simply tear them up.
The Tolleys authoritative manual on pensions taxation by Stephen Ward
Now remember, the victims weren’t told these things by any old spivs – they were told them by Stephen Ward of Premier Pension Solutions and his various accomplices (e.g. Fraser Collins, Terry Tunmore, Paul Clarke etc). Stephen Ward was back then – and still is now – a regulated financial adviser of many years’ experience, as well as the author of the Tolleys Pensions Taxation Manual, (and Level 6 CII qualified).
The same assurances were also given to numerous victims by George Frost, of Frost Financial, a regulated mortgage and insurance broker. And the victims who received the advice on the merits of entering into the Ark scheme believed they had every right to believe and trust professional, qualified and regulated advisers who assured them the MPVAs would never have to be repaid and that their pensions would be safe and secure.
HMRC does not care whether a sum of money accessed from a pension before the age of 55 is called a loan, thank you, cash back, fee refund, MPVA or any other euphemism for “liberation”. They don’t care whether it is repayable or whether it is ever repaid or not. They don’t care whether it comes directly from the member’s pension scheme, or from somebody else’s pension scheme, or via some convoluted arrangement designed to conceal the source of the money – such as Stephen Ward’s Evergreen/Marazion pension/loan scam. If a member makes a pension transfer and receives a sum of money as a result – irrespective of where it comes from – HMRC will issue a tax demand of up to 55%.
To illustrate how pension liberation scams range from the very simple and transparent to the highly complex and opaque, here is an example of one arrangement which Stephen Ward and his merry men, Alan Fowler and Bill Perkins, were involved with in 2013 – after Ark, Evergreen, Capita Oak and Westminster pension scams had all been suspended:
Thanks to you both for your understanding…. Am unused to non delivery! The arrangement I heard about today works like this as an example (ignoring fees) and this is the simplistic version …
Client borrows 16k or thereabouts (this is available in the package)
He gets a non recourse loan (which will not be repaid) of £84k
He buys shares in Xco for £100k. These are listed on the CISX (name is Elysian)
Transfers £100k to James Hay SIPP
SIPP pays member £100k for the shares
Member repays the 16k and trousers £84k
My IFA connection has done 40 of them so far. Advice to transfer to the SIPP is from an FCA regulated IFA. James Hay and Suffolk Life know the full structure and are happy with it.
Regards Stephen
The FCA-regulated IFA to whom he was referring was Angela South of Magna Wealth. She soon made a hasty exit from the collaboration with Stephen Ward when victims realised this was a scam and threatened to report her to the Serious Fraud Office. Victims who participated in this scam have now received tax demands from HMRC and Elysian Fuels is now worthless.
SHARP STICK
Dalriada’s QC, Fenner Moeran, seemed like a very sharp cookie. His skeleton argument (which we never got to see), and his opening speeches, started with the assumption that the MPVAs were definitely loans; that there was no question that they were loans and that the members knew and accepted that they were loans.
The judge, Sarah Asplin, accepted this without question and there was no debate on the subject. Kim Goldsmith’s QC, Keith Bryant, sat as quiet as a corpse and made not one single interjection or objection – even though he was sitting next to Kim who knew perfectly well – and must have told him – that the victims were not aware the MPVAs were loans. Indeed, they were categorically assured that the MPVAs would never have to be repaid.
Even more astonishing was the fact that Dalriada was aware the victims never knew the MPVAs were loans. Dalriada’s Sean Browes and Brian Spence, as well as Pinsent Masons’Ben Fairhead and Ian Hyde, had attended various meetings with the Ark Class Action and gone through this issue numerous times. They were also fully aware that one victim was horrified when she was subsequently told the MPVA was a loan and she immediately called Dalriada and asked to repay it. But Dalriada had refused.
Furthermore, dozens of Ark Class Action members had completed HMRC’s 10-point questionnaire (the Q10) which specifically asked about the arrangements and what they had been told about the need to repay the MPVAs. This is evidenced at HMRC’s question 8:
8: “DETAILS OF WHAT YOU WERE TOLD ABOUT THE NEED TO REPAY THE LOAN”
Here is a typical response to this question by one of the victims:
“I was told that although on paper it would be an official 25 year loan, that because of the nature of the way the loans were set up, i.e. the quid pro quo arrangement, whereby as one person received their monies from the other members scheme and vice versa, if there was a request for any monies to be repaid in the future from each member, each would tear up each other`s IOU and be quits, so to speak, as already stated.”
Stephen Ward – BA (Econ), ACII, APFS, APMI, ex examiner for the pensions management institute and for the CII, confirmed that the Ark scheme was designed by specialist pensions lawyer Alan Fowler – head of pensions at Stevens and Bolton.
Ward went on to explain how the MPVAs worked: “The best way to understand this is in terms of my lending you £100 and you lending me £100. If I do not repay you and you do not repay me then we are both in an equal position. Conversely, if I repay you and you repay me then the position is identical to that which would arise if neither party had repaid the other”.
These statements have been made to HMRC by Ark victims on countless occasions – and Dalriada has always been perfectly well aware of this. And yet Fenner Moeran used his sharp stick to knock these evidenced facts completely off the table – so that the judge was never made aware of them. Mind you, Keith Bryant QC was no better – because he didn’t bring them to the judge’s attention either.
I would go so far as to observe that Fenner Moeran should have used his sharp stick to point the judge to these evidenced facts – and Dalriada should have made sure he did so. By omitting to do so, both Fenner Moeran and Keith Bryant allowed the judge to come to the incorrect conclusion that:
“members who received the MPVA loans agreed to repay them. That’s the point of a loan. It’s not a gift. They cannot now complain about having to repay them. They can complain about having to repay them earlier, but that’s a cashflow issue which is vastly overwritten by the capital harm that is suffered by the non-recipient members”
Fenner Moeran merely leaned on his sharp stick and did nothing to correct the judge. As I was sitting behind him, I couldn’t see whether he was smirking – but I have a feeling he might have been. The judge was wrong on three counts:
The members with MPVAs did not agree to repay them – they were told they would never have to
They can most certainly now complain about being asked to repay them as they were never told they would have to and did not budget to do so
The capital harm suffered by members without MPVAs was mostly caused by Dalriada who did not reject their transfers after 31.5.11 but allowed transfers to continue right up until the end of August 2011
Having glossed over the facts smoothly, and directed the judge to her incorrect conclusion, Fenner Moeran then addressed the issue of ascertaining whether the Ark victims were in a position to be able to afford to repay the MPVAs. And then he produced, with a confident flourish, his pièce de résistance:
“The chances of getting ascertainably or enforceably more accurate information increases when you have the sharp stick of litigation behind it. If we want to see if we’re actually going to get any of this money back, the chances are that we’re going to have to wave a very large stick“
Fenner Moeran ought to be an intelligent person. In the full knowledge that a few feet to his right sat Kim Goldsmith, an Ark victim who had gone through six years of hell courtesy of Stephen Ward and George Frost and all the other scammers, and that a number of other victims were sitting at the back of the courtroom, he still made such an unbelievably stupid and offensive statement. He apologised later “I deeply and sincerely apologise for any misunderstanding or upset caused”.
But the damage had already been done – and you can’t un-say what has been said – especially when every word is recorded and transcribed. On behalf of Dalriada Trustees, he had deliberately misled the judge, and then proceeded to demonstrate clear contempt for the suffering of the Ark victims.
Interestingly, the judge had not remonstrated with Moeran for his crass comments – and Keith Bryant had not objected to the stupid and insensitive words. Throughout the rest of the proceedings, the judge remained – in my view – dominated and steered by Moeran. No attempt was ever made to disclose the truth about what the victims were told about repayment of the MPVAs by Stephen Ward, George Frost, Andrew Isles or Alan Fowler. And no explanation was ever given as to why Dalriada had not pursued these parties for having duped, misled and defrauded the Ark members.
This may seem like a completely off-topic piece of this report, but please stick with it – it will be worth it because it is the whole point of this report. Nearly 18 months before the Ark/Dalriada/Beddoe proceedings in the High Court, another case was heard: Royal London v Hughes. A pension scammer had tried to do exactly what the Ark scammers had done so successfully and profitably for nearly a year: transfer hundreds of secure pensions into a pension scam. But one ceding provider – Royal London – had blocked a transfer request. They strongly suspected the receiving scheme was a liberation scam – unlike the many ceding providers in the Ark case who handed over hundreds of transfers willy-nilly without question or due diligence – the worst of which was Standard Life.
Hughes complained to the Pensions Ombudsman that her transfer request had been blocked by Royal London. The Ombudsman did not uphold her complaint because he agreed with Royal London that the receiving scheme had all the classic hallmarks of being a scam – including the fact that the scheme had been registered as an occupational scheme and Hughes was not genuinely employed by the sponsoring employer. Exactly the same as Ark (and many of the subsequent scams).
Counsel for Royal London argued that “Hughes had to be an “earner” to be able to transfer”. He tried to support the Ombudsman’s view that the legislation required Hughes to be an earner in relation to a scheme employer”. This counsel obviously knew well that victims were made all sorts of promises and assurances and often not told the truth about the arrangements within pension scams.
Royal London’s QC would have been aware of the Ombudsman’s concerns that pension liberation may well have been behind Hughes’ enthusiasm to transfer her pension. And he will have known only too well that potential victims were systematically lied to and probably told that their “loans” (or whatever euphemism was used) were not repayable. And he would have known that the intended liberation “loans” were never intended to be repaid and that the victims would be told that the loans never needed to be repaid.
This QC will have been thoroughly briefed by his clients, Royal London, and may even have consulted with the Pensions Regulator who would have given him thorough details on how pension liberation scams worked.
So this particular QC had intimate, first-hand knowledge of how pension liberation schemes worked in general and represented Royal London in their quest to defend their right to prevent further victims of pension liberation scams. He also knew intimately how Ark worked in particular.
Fenner Moeran of Wilberforce Chambers
He knew perfectly well that the victims were told they never had to repay their loans (or MPVAs/cash backs/thank you’s/trousers). And he knew that the Ark MPVAs were supposed to be “discharged” from growth in the schemes and NOT from the victims’ own pockets – as reported by Justice Bean. But he failed to bring this to the judge’s attention.
Who was this QC? I will give you a clue – he had a big, sharp stick. Perhaps he should have gone to Specsavers and read the MPVA agreement where this was clearly stated.
Regulators have got to do some effective regulating
Regulators and scammers; cops and robbers; cowboys and indians. Each has their role: cowboys fire their six shooters and dodge the injuns’ arrows valiantly; cops drive their police cars at breakneck speed to corner the robbers in a dark alley; regulators waggle their flaccid willies and watch the scammers walk all over them.
In the week my great friend had his appendix out (somewhat hurriedly as it happens) I thought I would write a slight variation on the Three Sausages poem:
Regulation, regulation, regulation, Three scammers went to the station, One got crushed, one got killed, And one got a huge operation.
The sizzling scammers need to be put behind bars – and the keys need to be thrown away.
Now, I am not suggesting I want the scammers crushed or killed – nor even that they suffer the same pain and discomfort that my mate has gone through in hospital this past week. But I do want them stopped from harming more victims and destroying more life savings. And, of course, put behind bars where the only thing they can scam is the soap on a rope.
WHAT DO REGULATORS NEED TO DO AS A MATTER OF URGENCY?
All regulators in all jurisdictions where has been a history of scamming and mis-selling need to work closely with governments, tax authorities, financial crime units, ombudsmen and the press. There has to be a “zero tolerance” attitude to scams and scammers – and all those responsible have to be brought to justice. And publicly so. It is clear that most regulators – including the FCA – are limp, lazy and useless and this has to change. Here are some examples of regulators’ failures in each jurisdiction:
Allowing unregulated firms to provide financial, pension and investment advice freely and without sanction in the UK. Sometimes these firms have an insurance license – sometimes none at all
Not sanctioning regulated firms for clear breaches and/or fraud – such as Gerard Associates which was introducing Ark victims to Stephen Ward of Premier Pension Solutions as far back as 2010, and was then providing “advice” to Ward’s London Quantum victims
Ignoring firms such as Fast Pensions who have defied 37 Pensions Ombudsmen’s determinations
Failing to coordinate criminal prosecutions against the scammers behind numerous scams who ruined thousands of lives and cost hundreds of millions of pounds’ worth of life savings
Failing to use existing legislation provided by FSMA 2000 to prosecute advisors (regulated and/or unregulated) overtly contravening the ban on communicating invitations to retail clients to invest in Unregulated Collective Investment Schemes
Announcing ineffective crack-down plans by newly-appointed government minsters who have failed to grasp the enormity of the pension scamming industry and the desperate plight of thousands of pension scam victims
Failing to police and sanction negligent pension trustees such as STM Fidecs for accepting members introduced by an unlicensed adviser: XXXX XXXX of Global Partners Ltd/The Pension Reporter – who was also the fund manager for the UCIS that all the victims had their pensions invested in and which is now being wound up
Refusing to communicate with members on the progress of the winding up of the Trafalgar Multi Asset Fund which had been run by XXXX XXXX
Omitting to take action against STM Fidecs for its role in the Cornerstone Friendly Society investment scam
Taking no action against Trustees, Integrated Capabilities Malta Ltd (ICML) for accepting retail members from an unlicensed firm in the Czech Republic and knowingly permitting investments in Nunn McCreesh’s UCIS: Blackmore Global, as well as Malta-licensed fund Symphony – a sub-fund of the Nascent Platform that is licensed only for professional investors
Not sanctioning Customs House Global, that runs the Nascent Platform, for inadequate due diligence and accepting unscrupulous sub-fund managers (such as XXXX XXXX, investment manager of failed TMAF and later, the recently wound up Symphony Fund) that exploit the platform for the sole purpose of pension scamming
Allowing an unlicensed firm – Square Mile Financial Services – to operate freely in the EU, providing pension and investment advice with only an insurance mediation license
Ignoring insurance companies which accept investments in UCIS funds and professional-investor-only instruments for retail investors
Failing to recognise those registered Closed-Ended Investment Companies whose true nature is as a Collective Investment irrespective of their form, such as Blackmore Global (registered number 010221V), that intentionally circumvent the stricter regulations imposed on collective investments, specifically to hide their financial accounts and the sub-funds which invariably include unsigned loan notes and high-risk hare-brained projects
Failing to act against a pension liberation scam – Evergreen Retirement Benefits Scheme – run by Simon Swallow who was working with Stephen Ward of Premier Pension Solutions and operating Marazion “loans”
Ignoring Concept Trustees (Guernsey) who offered retail investors the EEA Life Settlements UCIS and then accepted investment instructions from unlicensed, un-insured Stephen Ward of Premier Pension Solutions
As always, Pension Life would like to remind you that if you are planning to transfer any pension funds, make sure that you are transferring into a legitimate scheme. To find out how to avoid being scammed, please see our blog:
London Quantum is a pension scheme whose trustee was a firm called Dorrixo Alliance run by our old friend Stephen Ward. That name will, of course, send a chill down the spines of many pension scam victims. Since 2010, Ward had been involved – either at the top or the bottom of the pond – in numerous pension scams. He eventually decided to “go straight” and declared that Ark was history – although Ark was far from history for his hundreds of victims who are now facing financial ruin.
Ward’s version of “going straight” was London Quantum. He had learned from the Capita Oak and Westminster scams that the value in getting involved in a pension scam comes from the investment introduction commissions. So he set about building a portfolio for the London Quantum victims which was based purely on how much wonga he could earn – rather than what was right, prudent and appropriate for an occupational pension scheme.
So what were the investments and why weren’t they right for a pension scheme?
The Scheme purchased shares in a unitised currency investment fund which traded in the top ten major currencies. The fund was regulated by the Central Bank of Ireland.
The fund was regulated but according to a regulated investment advisor the fund was inappropriate in terms of risk for the Scheme.
The fund prospectus did not specify a predicted rate of capital growth. However the scheme sponsor had previously stated a predicted return of 12%-15% per annum – an astonishing amount by any stands. But in practice, the fund performed poorly and fell over the period of the investment.
Dalriada Trustees (who replaced Stephen Ward’s Dorrixo Alliance and was appointed by the Pensions Regulator) received advice that, due to the high-risk nature of the fund and, notwithstanding the fall in the value of the investment, the Trustee should exit the fund at the earliest opportunity – irrespective of potentially heavy losses.
In 2014/15, the Scheme purchased nine corporate loan notes. Dolphin specialise in the purchasing of derelict and listed German property. The property is then sold off plan to German investors who take advantage of a specific German tax relief which allows for the recovery of renovation costs through tax allowances when purchasing units within a listed building.
The corporate loan notes were for a period of 5 years with no early exit options. The loans were due to be repaid at various dates between 9 October 2019 to 27 April 2020 depending on when the loans were made.
The loan notes had varied rates of return ranging from 12% to 13.8% per annum. All interest is rolled forward and paid at the end of the 5 year period.
This is an unregulated investment and is high risk in nature. There is no guarantee that the capital and interest will be fully repaid at the end of the relevant 5 year period. Dalriada had received advice that the investment is illiquid and inappropriate for the Scheme and early exit is recommended.
London Quantum One Limited
The Scheme had purchased shares in London Quantum One Limited (“LQOL”). LQOL holds rights to a social media application called VIP Greetings which provides personalised messages with the use of celebrity endorsement. The original trustees paid for the LQOL shares from the scheme funds.
The underlying investment in VIP Greetings was long term and no returns were expected for several years. No early exit options exist and there is no evidence of a secondary market to sell the investment.
The returns from VIP Greeting application are highly speculative. These is no guaranteed minimum return or definitive payment date. Investors hold no security over any physical asset.
A number of valuations in relation to the VIP Greetings investment were received prior to the appointment of Dalriada Trustees. The valuations appeared highly speculative. In addition, the valuations were not made at the time that the Scheme purchased the investment.
Dalriada suspects that the investment holds little, or more likely, no value. They are not confident that any return will be made to the Scheme.
Between 2014 and 2015 the Scheme purportedly invested in 17 car parking spaces in a car park near Glasgow Airport. The investment was offered by Park First Glasgow Limited who lease parking spaces to investors, in this case the London Quantum, and then sub lease the parking space back.
The investor enters a lease for a period of 175 years (the maximum allowed under Scottish law). The parking spaces are then sub-leased back for a period of 6 years. The sub-leases can be terminated by Park First after 2 or 4 years, or at any time with not less than 10 days notice if it has found a substitute sub-tenant.
There is a ‘guaranteed buy back’ policy which outlines under what circumstance Park First will buy back the parking spaces. Park First has full discretion in this regard and is under no obligation to buy back the spaces at any point. In short, there is no guaranteed exit option.
The investment offers a guaranteed rate of return of 8% per annum for the first 2 years. To date payment in line with the 8% return had been received. £27,200 was received in February 2015 and a further £27,200 was received in February 2016. No payment was received for February 2017.
This is an unregulated investment. Park First operate the car parking space on behalf of the investor for an annual fee. The parking spaces generate income which is ultimately passed back to the investor each year.
Dalriada received advice that the investment was illiquid and inappropriate for the Scheme and early exit was recommended.
Dalriada have tried to recover the monies paid to Park First arguing that the legal documentation was never fully completed by the previous trustee and that the contracts were ineffective. Park First has rejected this request and is insisting that the contracts are valid and that there is no scope for Dalriada to be refunded.
On 20 August 2013 the Scheme invested in an unsecured loan note issued by the law firm Malletts Solicitors Limited.
The loan note had an investment period of 6 years with an obligation for the note holder to redeem 25% of the note per annum after year 2. No early exit options existed.
The loan note purported to return 8% per annum payable half yearly.
Interest or redemption payment have not been made by Mallets. To date the Scheme should have received payments totalling £3,280.00 as per the contractual documentation.
Loan notes have been issued by Mallets in an attempt to raise funding for an internal ‘legal hub’ project. The loan note was unsecured.
Dalriada contacted Malletts to obtain additional information in relation to the investment. Mallets have refused to explain how the Scheme came to be invested with them and have only provided minimum details
Dalriada had received advice that the investment is illiquid and inappropriate for the Scheme and early exit is recommended. They sent Malletts a number of formal requests to exit the investment however Malletts did not respond.
Malletts Solicitors Limited went in liquidation on 11 November 2016. Dalriada submitted a proof of debt respect of the loan note but the fact it has gone into liquidation suggests prospects of recovery are poor.
On 31 January 2015 the Scheme invested in a corporate bond with Colonial Capital Group Plc. Colonial operates in the distressed US social housing market and have issued a number of bonds.
The corporate bond is for a period of 3 years. No early exit options exist. The bond has a fixed return of 12% per annum. Interest will be rolled forward and paid at the end of the 3 year investment period.
This is an unregulated investment. Dalriada has received advice that the investment is illiquid and inappropriate for the Scheme and early exit is recommended.
Dalriada sent Colonial a formal request to exit the investment. Colonial responded and confirmed that an early exit was not available as Colonial may only redeem all or part of the bonds on a pro rata basis for all investors. It would therefore not be possible to facilitate an early exit for the Scheme.
Colonial Capital Group Plc was then placed into administration on 8 March 2017. Dalriada has issued a proof of debt in relation to the corporate bond but, again, the fact the company has gone into administration suggests prospects of recovery are unpromising.
The investment is in hotel rooms in a hotel development by The Resort Group. The hotel has recently been completed in Cape Verde and investors purchase a right to benefit from the profits and interests of specific pieces of the development. Investors do not own the land nor do they have a charge over it. An investor has simply a right to share in any profit generated from the hotel rooms.
The investment could not be exited prior to completion of the hotel rooms. Now that these have been completed they can be sold on the secondary market.
Before completion of the hotel rooms a guaranteed return is paid. After completion the return is based on room occupancy. The expected returns have been paid to the Scheme.
This is an unregulated investment. Dalriada has received advice that the investment is illiquid and inappropriate for the Scheme and early exit is recommended.
The Resort Group offered to repay the amount transferred to it by the Scheme. That offer was to release one plot every two months from 31 October 2016 subject to completion of legal agreements. Dalriada agreed to this offer and signed the agreements in December 2016.
The Reforestation Group Limited
The purported nature of this investment is that the Scheme has purchased ‘land rights’ to 21 plots of Brazilian farm land that is to be used for growing eucalyptus trees. The investment term is 21 years as it covers three cycles of seven years, which is the projected time period to grow and harvest the trees. The investment purportedly offers returns of 28-32% compounded over each seven year cycle.
The crop cycle of the eucalyptus tree is seven years. Accordingly, with the investment being made in 2014, the first return on any of the Land Rights Agreements (”LRA”) would not be realised until around 2021.
The estimated return after 7 years is £19,000 per hectare, which is a 90% return. There are a number of issues with this development which Dalriada finds concerning and are being investigated.
Dalriada has received advice that the investment is illiquid and inappropriate for the Scheme and early exit is recommended.
Dalriada, through the Scheme’s legal advisers, has written to Reforestation to seek further details regarding this investment and to seek justification for the apparent high level of returns promised.
The investment consists of 11 Bonds over three different series and made between 27 October 2014 and 15 May 2015. The Bonds mature after four years from issue but can be redeemed early after three years (upon six months’ notice) or otherwise with ‘the express consent of the directors of ABC Alpha Business Centres Limited’.
Investment returns depend on the series of the Bond and range from 8.11% to 8.25% with and additional bonus if the Bonds are not redeemed early.
In relation to the two series of Bonds, the Scheme has elected not to have ‘rolled up’ interest. This means that interest is due and payable to the Scheme on a quarterly basis. These payments were made until Q4 2016 but stopped when ABC Alpha Business Centres UK Limited and ABC Alpha Business Centres VI UK Limited went into administration on 20 January 2017.
The Bonds are corporate bonds in ANC UK Limited. ABC UK Limited is the capital raising vehicle for the investments. ABC UK Limited is wholly owned by a United Arab Emirates (UAE) entity, ABC LLC. ABC LLC owns and operates the investment portfolio of real estate investments.
ABC LLC is wholly owned by another UAE entity, the Property Store. The Property Store purportedly provides security of 200% of the value of the invested funds.
Dalriada has received advice that the investment is illiquid and inappropriate for the Scheme and early exit is recommended. An offer was made to buy back the Bonds subject to a 10% reduction. As noted above, interest payments stopped, and the offer was withdrawn when ABC Alpha Business Centres UK Limited, and ABC Alpha Business Centres VI UK Limited, were put into administration on 20 January 2017. Dalriada has prepared a proof of debt in relation to the investment but, as with others above, there is a risk that recovery prospects will be poor.
This unregulated investment consists of a “lease” on 7 car parking spaces in a new office development in Dubai taken out between 1 October 2014 and 17 April 2015. Under the Operator’s Agreement, there is 5 years guaranteed rental income
The Scheme is liable to pay the car park operator, The Property Store, 10% of any income greater than the guaranteed rental income. Once the guaranteed income period comes to an end the Scheme must pay The Property Store 10% of any income that is received from the car parking spaces.
The guaranteed rental income is paid monthly. It had been paid on time up to Q4 2016 when an issue with car park operator meant payments were stopped.
All of the car parking spaces that the Scheme has leased are located at Churchill Towers, Dubai. NCP Ltd owns the freehold of these car parking spaces. The contractual position is not clear due to incomplete documentation however it would appear that the investment operates as follows:
NCP Ltd owns the freehold and has assigned full commercial rights over the car park spaces to Horizon Properties SA; Horizon Properties SA has granted the Scheme a 99 year lease over each of the seven car park spaces; the Scheme has entered into an Operator’s Agreement with The Property Store with no set term for each of the seven car parking spaces.
Dalriada has received advice that the investment is illiquid and inappropriate for the Scheme and early exit is recommended.
An offer was made to buy back the car parking spaces subject to a 10% reduction. The £189,000.00 investment would return £170,100.00 plus the income received (£13,165.20 – 6.97% return). The offer was within a range that might have been acceptable however before it could be accepted Best Asset Management Limited removed the offer from the table. Dalriada is corresponding with Best in relation to the options for the investment.
So, in other words, a load of old rubbish. But then what would you expect from Stephen Ward who has destroyed thousands of victims’ life savings since 2010. He may be a highly qualified “pensions expert”, and the author of the Tolley’s Pensions Taxation Manual, but that doesn’t mean that he should ever be allowed anywhere near people’s pension savings.
The other questions that should be asked are:
why did HMRC allow the pension scheme to operate in the full knowledge that Stephen Ward was the trustee?
why has FCA-registered Gerard Associates, who were “advising” the victims not been removed from the register and sanctioned?
why did the ceding providers (including the trustee of the Police Pension Scheme) not do their due diligence and question the transfer requests?
Scammers are loathed by victims, regulators, police, ombudsmen and financial services professionals whose professional reputations are compromised by the nefarious practices of the scam merchants. But however damning the hard evidence is about the scams and the various promoters, introducers, advisers, administrators behind them, the scammers still protest their innocence.
Even when there are announcements and articles in the public domain confirming criminal investigations, winding up petitions, arrests, Pensions Ombudsman’s determinations, regulatory intervention and sanctions, the scammers still try to protest that they are innocent and that the damage done to the victims is everybody else’s fault but theirs.
But as soon as I publish something on the Pension Life blog, to inform and warn the public, the scammers’ solicitors swoop like vultures with their cease and desist letters – threatening defamation proceedings. Never mind the £ millions lost to hundreds or even thousands of victims – many of whom are worried sick about losing their pensions; never mind the tax demands which are driving the victims to complete despair and could result in HMRC making them bankrupt; never mind the heart attacks, strokes and other fatal illnesses brought on by stress and sleepless nights. The scammers’ solicitors pull out all the stops – even going so far as to threaten the Pension Life web host and complain to Google about Pension Life’s website blogs.
I’ve been through this with – among others – Stephen Ward of Premier Pension Solutions – who actually took me to court for upsetting his “picky” clients (Ward didn’t even turn up); Paul Baxendale-Walker, the disgraced former barrister (struck off) and porn star; XXXX XXXX of Global Partners Ltd and The Pensions Reporter (now under investigation by the SFO);and now Peter Moat of Fast Pensions (see Sam Brodbeck’s article of 1.7.2017).
In fact all these solicitors – including DWF, Mishcon de Reya, Carter Ruck, Manleys Law, Molins & Silva et al, all bleat that the Pension Life blogs are harming their clients by “causing reputational damage generating huge financial damages and danger of losing business interests and opportunities”. But not so much a squeak about the huge financial damages the scammers they represent cause to the victims who are in danger of losing their homes.
And not a word about the crippling financial damages the scammers they represent cause to the victims who are in danger of losing their homes.
Below is the email exchange between Peter and Sara Moat’s solicitor Monica Caellas and me dated 27th June 2017. Worth noting she has not responded. Perhaps her website, email and telephones have been hit by the same virus as appears to afflict the Moats and Fast Pensions?
Ms. Brooks:
We hereby contact you in name and on behalf of our clients, Ms. Sara Grace Moat and Mr. Peter Daniel Moat, in connection with the statements set forth in the article “Peter Moat and Sara Moat – Fast Pensions” (hereinafter, the “Article”) included in the website https://pension-life.com/peter-moat-sara-moat-fast-pensions/ since May 18, 2017. I am enormously relieved that you have contacted me and would be most grateful if you would be kind enough to act as intermediary in relation to many hundreds of victims who have been scammed out of their pensions. As you can imagine, this is an extremely worrying time for these people and some of them are now receiving tax demands from HMRC as the Moats were operating pension liberation fraud as part of the “package”.
Some of the statements of the Article are extremely serious and could be constitutive of various crimes sanctioned by the Spanish Criminal Code; among them, serious offences of defamations and calumnies. I do not agree that the Moats’ actions include defamation and calumnies – but they certainly involve pension, tax and investment fraud.
FAST PENSIONS is a UK Limited Company licensed by HMRC. No it is not. HMRC do not license companies in the UK. HMRC registers pension schemes, but this implies no approval or license.
Ms. Sara Moat is the sole Director and the sole shareholder of FAST PENSIONS. Her husband, Mr. Peter Moat is the owner and administrator of Blue Property Group, a Group of corporations that has nothing to do with FAST PENSIONS. From a corporate point of view you are correct, however, Peter Moat was the controlling mind behind the company and has been masquerading as “James Porter” in his communications with the victims to attempt to conceal his involvement. Also, I think you will find that Blue Property Group has gone bust and owes money to creditors all over the Costa Blanca.
With the Article you have caused serious confusion against third parties and it is hurting my clients and their companies. I regret that neither the victims nor I will have any sympathy whatsoever with any hurt your clients are experiencing. They have hundreds of victims’ pensions in limbo – and despite numerous Pensions Ombudsman’s determinations, no transfers out (which is a UK citizen’s legal right) have been facilitated. The victims of this scam include several deaths whereby the deceased pension member’s family has not been able to benefit from the pension fund as required by law in the UK.
In particular, the Article expressly and roundly states “There have been a number of Pension Ombudsman determinations which expressed concerns about the maladministration of the unlicensed firm [Fast Pensions] owned by the Moats”. Yes. This is in the public domain on the Pensions Ombudsman’s website.
In this sense, you claimed that a number of very distressed and worried members of the Fast Pensions scheme had contacted you, while those four hundred worried members have not directly contacted FAST PENSIONS itself. I cannot comment on how many worried members have directly contacted Sara and Peter Moat (masquerading as “James Porter”) direct. Many may have attempted to do so but the Moats have made this impossible by disabling their website and emails and not answering their phones. Their claims that the website, email and phone number have all been hit by a “mystery virus” are simply not credible.
As a consequence of the alleged existing claims you contacted Mr. James Porter, the person in charge of leading with any pension queries for Fast Pensions and that has nothing to do with Mr. Moat, despite your suggestions of identifying them as the same person. That is not correct. Peter Moat contacted me, pretending to be “James Porter”.
Anyhow, and after being correctly assisted by Mr. Porter, you claimed that he takes days to respond and you interpreted that as a “deliberate attempt to make it difficult to contact anyone at Fast Pensions”, which is untrue, since all queries have been responded to and dealt with quickly. I am afraid you do not know the facts. Numerous victims have attested to the fact that their desperate pleas to transfer out have been ignored.
If there were clients with concerns they would contact FAST PENSIONS in the First instance to get these resolve. Why don’t you try contacting Fast Pensions and let me know how “fast” they respond? A journalist tried to contact them just now and got this response: Your message wasn’t delivered to james.porter@fastpensions.co.ukbecause the domain fastpensions.co.uk couldn’t be found.
Moreover, in the Article you have made several statements that make Mr. Peter Moat, Ms. Sara Moat, FAST PENSIONS and all of Mr. Peter Moats companies look like a scam. Then I have done my job properly. They are all a scam.
For example, by trying to link Mr. and Ms. Moat as well as FAST PENSIONS to Mr. Sthephen Ward. Also, and more seriously, you stated that you are afraid that the professional environment of Mr. and Ms. Moat “has undeniably got all the hallmarks of a typical, bog standard scam”. And you insisted: “It looks, feels, smells like a scam”. And I stand by all of that. And so does the Pensions Ombudsman.
As a consequence thereof, there are actually a huge number of parties affected by the Article, Peter Moat and his associated companies, Ms. Moat and FAST PENSIONS. The unjustified reputational damage caused by the Article is generating huge financial damages and is putting Mr. Peter Moat and his companies in danger of losing business interests and opportunities. Perhaps you would like to ask some of the victims how they feel about poor Mr. and Mrs. Moat losing business interests and opportunities?
Based on all the foregoing, and without prejudice to the express reservation of legal actions that correspond to my clients, through this communication you are FORMALLY REQUIRED TO IMMEDIATELY REMOVE THE ARTICLE FROM THE WEBSITE AND STOP DISSEMINATING IT THROUGH INTERNET. I will happily reach an agreement with you Monica: you get Sara and Peter Moat to return all the victims’ pensions to them immediately – in full plus interest – and I will remove the article.
Otherwise, we will be forced to exercise the corresponding judicial actions, especially criminal ones, to protect our clients in defense of his freedom and other rights that protect them. I hope you will exercise criminal judicial actions against your clients who have scammed hundreds of victims out of their pensions. Meanwhile, a little friendly advice – as a Spanish lawyer you clearly do not understand UK law, so please tread very carefully. You clearly do not know the facts and are in danger of defending a party which has clearly contravened UK law and compromising your own standing as a legal practitioner in Spain.
The Ark victims’ QC rolls over as he is quashed by Dalriada’s counsel
DALRIADA V ARK VICTIMS: “ABUSE OF VULNERABLE MEMBERS OF THE PUBLIC”
The Beddoe proceedings of Dalriada (tPR-appointed independent trustees) v Goldsmith (representative beneficiary for the Ark members) kicked off on 20th June 2017 in the High Court. It was a sweltering day in central London – humid and dusty at the same time. The Ark victims were about to discover that the warning about anomalous and unjust outcomes made by Justice Bean in the High Court in November 2011 was going to be ignored.
Dalriada and their solicitors, Pinsent Masons, and their QC Fenner Moeran sat on the left in the airless courtroom. Mrs Goldsmith and our solicitors, Trowers and Hamlins and QC Keith Bryant, sat on the right. Justice Asplin sat on the bench and prepared to rule on whether 348 Ark victims would have to repay their MPVA loans – and whether Dalriada could use the members’ funds to pay for the recovery proceedings. A group of Ark, Capita Oak and Salmon Enterprises victims and I sat at the back. The only thing we all had in common was that everybody was sweating profusely from the heat.
To put this into context, the Ark victims did indeed all sign loan agreements. However, the loans were intended to be paid back out of the members’ 25% tax-free lump sums available at age 55 – so the term of each loan agreement was calculated to be for the number of years it would take each member to reach 55. By which time, the pension was predicted to have grown by at least 8% per year and would be sufficient to repay the loans. Or so the story went.
Conspicuous by their absence were the various introducers and advisers who sold the Ark schemes and accompanying MPVA (Maximising Pension Value Arrangements) “loans”. By far the most assertive and prolific of these was Stephen Ward of Premier Pension Solutions who sold over £10 million worth of transfers to more than 160 victims. Ward was followed by those who aspired to be as successful as him and these included:
Julian Hanson £5.3m
James Hobson (Silk Financial) £2.3m
Jeremy Dening £2.2m
Michael Rotherforth £961k
Richard Davies £805k
Geoff Mills £794k
Andrew Isles £584k
Amanda Clark £227k
Many of these went on to operate further pension liberation scams – some of which are now also in the hands of Dalriada Trustees. Andrew Isles of Isles and Storer Accountants is still in practice. Stephen Ward still authors the Tolley’s Pensions Taxation Manual.
The definitive pensions taxation manual by leading pension liberator Ward
Interestingly, Stephen Ward, who used Ark to launch a whole series of further pension scams – including several currently under investigation by the SFO and in the hands of Dalriada – claimed in 2014 that “The Ark thing is history now and my involvement with that was administrative”. Of course, neither of those statements was true: Ark is far from being history as, in the wake of the Beddoe proceedings, a whole new chapter of wretched challenges for the Ark victims has only just begun. Ward was the leading promoter, evangelist and advisor to Ark. He had sold over a third of all the transfers – with a total transfer value of more than £10 million.
In fact, Ward and his herd of “introducers” he had recruited from up and down the country (including FCA-registered Gerard Associates which went on to collaborate with Ward in the London Quantum pension scam) – also now in the hands of Dalriada – often assured the victims they would never have to repay the loans.
Fenner Moeran QC, for Dalriada, opened with the lusty confidence of a dashing matador – and who could possibly have failed to be charmed by his persuasive, eloquent, star quality? He reminded me of an actor at the Oscars who knew he was the favourite to win. With his extravagant hand gestures and polished, word-perfect performance, he got into his stride and stayed there – holding court for the whole day with barely a feeble squeak out of our QC.
Moeran’s confidence, however, veered a little too close to cockiness, and he strayed occasionally into the realms of being callously offensive to the Ark victims when he talked about using a “sharp stick” to beat them into submission with threats of bankruptcy. At that moment, he stopped looking like a polished QC and started to look like a mere back-street bully. In fact, it was astonishing that the judge didn’t pull him up on that “foot and mouth” moment, but she appeared to be far too mesmerised by his charming performance to notice – or care.
While I was taking notes, it was really interesting to watch the players’ body language. One can tell an awful lot about what is really going on in people’s heads by what they do with their various body parts. When Moeran was on his feet, Justice Asplin was coquettish, smiley, full of chuckles and did this wiggly thing with her shoulders (like we women do when we are trying to get a bra straight). But when our QC Keith Bryant was on his feet, she sat as still as a statue and peered down at him with a combination of indifference and pity as if he was a dying bull in the afternoon sun.
Mrs Goldsmith sat quietly and showed not a shred of distress as Moeran referred to her and all the other Ark victims as though they were just names on a list, as opposed to human beings – or indeed anything with a pulse. Knowing her well, I am sure she will have felt profound pain and anguish during the whole three days, but not once did either her composure or her dignity slip.
So here is my transcript of the notes I took on what the various parties said during the proceedings – with my comments in bold.
The last thing I personally want to say on the matter, is that something good has to come out of this and my fervent hope is that all those involved in the promotion, sale, administration, introduction, advice, purchase of assets, execution of loans and various other functions will now face justice sooner rather than later. And here, I am actually grateful to my learned fiend’s suggestion of a sharp stick and would propose something more akin to what Vlad The Impaler would have done to these criminals.
TRANSCRIPT OF MY NOTES AT THE HEARING
DAY ONE
Never forget that legal proceedings are nothing to do with justice
Justice Asplin opened with the words “This was a tragedy and an abuse of vulnerable members of the public”. That got us off to a really good start, but curiously the following day she vehemently denied ever having said it. She also denied ever having mentioned Ark and didn’t even seem to know that collectively, the six schemes (Tallton, Grosvenor, Woodcroft, Cranbourne, Lancaster and Portman) were the Ark schemes. Bearing in mind she had had – and been paid for – a whole day’s reading, one would have thought she would have been a little better prepared.
Ark’s Craig Tweedley was quoted as having made a statement that Ark was “designed to unlock amounts of money from people’s pensions in a way which was not taxable”. This is perfectly true – but it went further: it was promoted to the public (both introducers and potential members alike) as an innovative structure which was lawful and tax free. And the principal promoter and recruiter was Stephen Ward. Ward is also a CII Level 6 qualified former pensions examiner and government consultant on pensions and QROPS – so who wouldn’t have believed him?
One of the Ark schemes’ assets – the South Horizon land option in Larnaca, Cyprus – was brought up and reported as having been purchased by Ark for £4 million. But what was not mentioned was that the option had originally been purchased by two football celebrities for £1.1 million and then sold on to Ark for £4 million. And that this pair had gone to accountant Andrew Isles of Isles and Storer to get advice on how to procure further investors in the Cyprus land project. Isles had introduced them to Craig Tweedley and Stephen Ward. In fact, Isles subsequently introduced at least eleven cases to Ark.
It was stated that Craig Tweedley’s associates Andrew Hields and Julian Hanson had purchased all the assets of the schemes and that the sales documentation claimed that some of the funds were “guaranteed “funds and protected by “re-insurance”. Hields and Hanson may well have purchased some of the assets but they will certainly have benefited from handsome investment introduction commissions along the way.
It was also reported that one of the other Ark assets, Freedom Bay, the St. Lucia timeshare development, is now in administration and that none of the investments made met the statements and claims made in the sales documentation. In fact, it did not come out that few – if any – of the victims were ever shown the sales documentation. Most of Stephen Ward’s victims were told the assets would be “high-end residential London property”.
The matter turned to the recovery effort. It was reported that Tweedley had been pursued for the 5% fees taken from scheme members and that although Dalriada had won their claim, of the approx. £1.5 million taken in fees, they only ever actually managed to recover about £20k. This does beg the question as to just how successful Dalriada will actually be in recovering the £9 million in MPVA loans.
In taking steps to recover the loans, it was reported that Dalriada intends to consider the cost vs benefit situation and decide on the approach on a case by case basis, taking each individual case on its merits. It was acknowledged that the chances of recovery were slim and that the costs could be disproportionate to the likely return. The judge asked how many members had received MPVAs and it was disclosed that 348 had and 138 had not. However, nobody raised the question of why such a large number of members had not received an MPVA loan – had they done so it ought to have been disclosed that a significant proportion of transfers were not rejected after Dalriada were appointed.
It was at this point, while examining the possible avenues to recovery, that Moeran’s confidence bubbled over into bald cockiness and he started bragging about using the threat of bankruptcy as a “sharp stick with which to beat the victims into paying back their MPVA loans”. In fact, by now the judge seemed to be very firmly on his side and stated that the members had already agreed to repay the loans and that their only loss was having to repay early. It seemed clear that neither Moeran nor the judge understood – nor had made any attempt to understand – how the loans were sold to the victims. They were told, by Ward and all the others involved in promoting the scheme, that the loans would be repaid out of their pension pots and not out of their own funds. In fact, some people were told they would never have to repay the loans and that each person on either end of the loan transaction would simply agree to tear up their “IOUs”.
Moeran then went on to claim that by repaying the loans, members could avoid the tax charge. Perhaps the HMRC fairy had whispered this in his ear? Or perhaps he was deliberately ignoring the fact that it is HMRC’s position that the loans will remain taxable even if they are repaid.
Towards the end of day one, it was clear that Moeran was confident they were going to win and that the judge would clearly find in favour of Dalriada and against the members. It was also clear that he had the full support of the judge. In fact, Moeran even went so far as to pretty much read out what our QC, Keith Bryant, would be arguing and told the judge what she ought to find against the case he would be putting forward. At some point, I wondered whether Moeran and the judge would be swapping places.
Moeran talked about the methods and costs of taking recovery action against the Ark members. He itemised three issues to take into consideration:
Merits of taking recovery action
Cost vs benefit of taking recovery action
Consequences of not taking recovery action
He then went on to report that Dalriada had 144 signed Standstill agreements and said that Dalriada was intending spending £2,925 per member on court recovery action. The judge declared that that was on the low side as that cost could only happen if the claim was uncomplicated and resulted in a quick and easy repayment. She also said she was not confident that bankruptcy proceedings were necessarily appropriate.
She did, however, firmly declare that the Ark members had all shared the “mistaken belief” that the MPVA loans were valid, non-taxable and only repayable by the end of the originally-agreed loan term. She broke this “mistaken belief” down into four points:
The members’ “mistaken beliefs”:
The trustees had the power to make the loans
The loans were capable of being made valid
The trustee could transfer beneficial ownership of these monies
The loans were not unauthorised payments and would not trigger a tax charge
The judge appeared to consider that somehow the members had come to these conclusions all on their own. The reality was, of course, that this was exactly what they were told by Stephen Ward and the herd of introducers and advisers – including a couple of FCA-registered ones. But reality did not seem to concern either the judge or Moeran overly.
The last thing that Moeran said on Day One was to make reference to the revised Standstill agreement – the focus of which was to ensure that criminal proceedings are now taken against all those who were involved in defrauding the Ark victims. The judge read the document herself, giving us a welcome rest from listening to Moeran.
As the first day came to a close, I was beginning to wonder whether I had dreamed the fact that a High Court judge had clearly stated in the High Court that Ark had involved an abuse of members of the public. Her statement had been made in front of a dozen or more witnesses and she had then gone on to deny that she had ever said it in front of the same witnesses who all clearly heard her words. Moeran and the judge had both agreed the Ark sales documentation was false and yet I heard neither of them conclude spontaneously that criminal complaints were now essential.
DAY TWO
Moeran opened with: “We are in the process of agreeing six test cases at the First Tier Tribunal” in relation to the personal tax appeals resulting from HMRC’s treatment of the loans (whether repaid or not) as unauthorised payments. The judge questioned whether members put forward for this role might not be happy. Moeran confidently assured her that there had already been five volunteers. I am not aware that any of these purported volunteers have come from the Class Action. Also, at the last meeting that Mrs Goldsmith, Mr Walters (Salmon Enterprises) and I had with HMRC, we agreed two Ark test cases – one with a loan and one without. Moeran did not appear to be aware of this.
Skating quickly over the tax issue for the members – and studiously ignoring the fact that according to HMRC the tax will remain payable even if the MPVA loans are repaid – Moeran and the judge got back to pondering recovery measures. The judge expressed reservations about bankruptcy proceedings because she said that that would merely release members from liability to the scheme rather than help recovery.
Moeran and the judge then started to discuss which members might not be worth pursuing at all for a variety of reasons. Between them, they concluded that those with very small MPVA loans should be ignored and that they might also have to ignore those outside the jurisdiction of the UK. Moeran reported that there were four members in Northern Ireland; 22 in Scotland, 24 in the EU and four outside the EU – USA, Jersey, Bulgaria and Australia.
Neither Moeran nor the judge were sure whether Bulgaria was in the EU (in fact, of course, it is an EU member). The members and I having complained in the strongest possible terms about Moeran’s use of the term “beating the victims with a sharp stick” the previous day, Moeran then went on to publicly apologise for that statement. To be fair to him, he made a good job of the apology and I am sure that Mrs Goldsmith and other members present appreciated it.
I really don’t remember whether our QC said much or anything at all that day – if he did it was not very memorable, or perhaps I couldn’t hear him terribly well because he muttered apologetically and miserably rather than speaking in Moeran’s strident voice.
The MPVA loans were summarised thus:
50 members with loans between £5k and £9,999
124 members with loans between £10k and £19,999
132 members with loans between £20k and £44,999 (totalling £4m+)
40 members with loans of £50k upwards (totalling £3m+)
The judge opined that the bigger the loan, the bigger the original pension must have been, and therefore the wealthier the member was likely to be. She concluded that these would be the easiest targets for recovery.
Then the judge handed down her judgement. She summarised the claim by Dalriada for Beddoe relief (money to be taken from the members’ funds) for the recovery of the MPVA loans and also to challenge the scheme sanction charge in the Tax Tribunals. She approved both of these, but did not agree that Dalriada should use funds to help the members with their individual tax appeals.
She reported that 152 claims had been written to date and that 12 consent orders had been received. She declared that she believed the claims were strong but expressed reservation as to whether the members were in reality good for the money. She reminded the court that there were 138 members without loans and that Dalriada had a duty to protect their position by recovering loans from as many of the other 348 members as possible.
She determined that it was appropriate that the trustees should be granted the relief they sought – albeit not the entire amount sought. She advised Dalriada to take stock of each individual situation and use their discretion as to whether it was appropriate to continue with the action. She also urged them to take into account relevant factors including the aggressive stance being taken by HMRC and to act as a reasonable trustee.
Finally, she said Dalriada should bear in mind that the individual cost of recovery per member would rise from £2.9k to £3.6k (plus VAT) if bankruptcy proceedings were issued and that those with the very smallest loans ought not to be pursued because of the disproportionate cost of doing do. She said it was difficult to decide where exactly the “watermark” might be and reiterated that bankruptcy might not be appropriate and should not be the first refuge sought and could be used as a “second string to their bow”. She suggested that further directions might need to be sought by Dalriada.
Regarding the scheme sanction tax charge appeal matter, she said it was appropriate to give the relief sought and for Dalriada to take steps to challenge the assessments. She recommended a “ceiling” on the amount to be spent and said that to challenge the £4m in tax sought by HMRC, the amount of £350k + VAT was appropriate.
On the question of paying a further £50k to fund legal representations for members against personal tax assessments, she recommended that the scheme sanction charge and the personal tax appeals should be coordinated. But she expressed a reservation about granting this relief to Dalriada as she felt it was excessive “because of the vagueness of what might take place”. She did not consider that for them to pay a barrister was necessarily a reasonable step to take. Therefore, she did not grant the relief sought.
In summary, therefore, the judge’s determination was as follows:
Yes to recovering the MPVA loans from as many of the members as possible/practicable
Yes to paying for the recovery costs out of the members’ funds – at the ideal rate of £2.9k + VAT per member (possibly rising to £3.6k + VAT per member if bankruptcy proceedings were issued)
Yes to taking £350k + VAT out of the members’ funds to pay for the appeal against the scheme sanction charge
No to paying £50k + VAT towards the members’ personal tax liability appeals
At the start of the proceedings, Moeran had reminded the court that Dalriada, as the trustee, already had the legal right to recover the loans if they chose to. But they were seeking the necessary relief and directions to do so from the court to protect their position.
DAY THREE
The final day was all about the nitty gritty of how the recovery costs should be apportioned between the six schemes. Moeran and Bryant put forward different suggestions as to whether this should be done on the basis of the value of the assets or the value of the MPVA loans within each scheme, and whether this should be done equally or on a pro rata basis.
The members at the back of the court were by now numb and none of them really paid much attention to what was basically “housekeeping” in terms of internal accounting procedures by Dalriada. One of the judge’s last points seemed to be that Dalriada should take all and any reasonable steps to recover the MPVA loans – but that the only question was what was reasonable. She cautioned that some options should not be taken, but stopped short of saying what they were.
This story was first published by International Investment journalist Helen Burgraff on 22.5.17 and heralds a welcome start to the much-needed initiative to bring pension scammers to justice.
Unfortunately, the pension landscape – both in the UK and offshore – is no better now than in the days of the Wild West. Back then, first the Sheriff’s Fraud Officer had to catch his horse; check the horse wasn’t lame; saddle up; then whistle for his tame injun to help him track the thief. Finally, once his water bottle was filled, the brave sheriff set off with his companion, Raging Bull, by around lunch time. Usually, they had tracked the thief down drinking whisky in a saloon by tea time, and after a dusty skirmish, he was thrown in jail by supper time.
Almost exactly two years ago, on 27.5.2015, the Insolvency Service published a witness statement on the £120 million Store First fraud which saw more than 1,000 victims lose their pensions and gain tax liabilities. The statement clearly named 18 scammers involved in these cases – many of whom had been visited at their offices. And yet, not a single one of these criminals was prosecuted or jailed.
Of course the blooming obvious happened – all the scammers went on to operate further scams and ruin thousands more victims’ lives. The cold calling firm, Nunn McCreesh, went on to operate the toxic UCIS fund, Blackmore Global; many of the cold callers upgraded their operations to “introducers” and the Ginger Scammer promoted himself to fund investment manager in the Trafalgar Multi Asset Fund (£21 million now suspended).
Whatever all the rest of the scammers are doing, it won’t be making good the damage they caused back in 2012/13. And Group First is now launching a new Park First car park at Luton Airport. Doubtless there will be healthy investment introduction commissions for the scammers to con hundreds of investors and pension savers into losing their life savings. Perhaps Toby will name this new venture “Lootin’ Airport”.
Meanwhile, I have discovered one of the advantages of having police officers among the members of the Pension Life Groups. You get the benefit of a wee bit of inside information and I hear that a bunch of the scammers have been arrested. About time!
Meanwhile, the Ginger Scammer’s lawyer is complaining about an image on the Pension Life website. Trouble is, I can’t work out which one it is – I’ve searched and searched and I can’t find a single offensive photo. But then what is offensive to one person is inoffensive to another. I called the Ginger Scammer’s lawyer a “dick” once – maybe it should have been “tick”.
Shedding a tear or two at the departure of tPR’s Head of Willy Waggling
Bye bye Tinky Winky. Good luck and have fun at LGPS!
His next challenge will be to lead by example and ensure negligent ceding providers compensate their victims whose pensions were transferred into scams. And he can start with LGPS as a shining example so the rest can follow.
As Tinky Winky sails off into the sunset and leaves his regulatory willy waggling duties behind, his first mission is to understand the other side of the coin: the transfer of £millions from secure pensions into the trousers of the scammers. He will now see with a fresh pair of eyes how ineffective tPR has been – and how negligent the ceding providers were.
Winky is going to have quite a mess to clean up when he gets to LGPS – so he had better make sure he takes Noo Noo with him.
Will probably need more than 1 Noo Noo – in different sizes for all the mess at LGPS
And I am sure he is going to be cheerfully looking forward to working even more closely with me from now on.
On June 19th, the Secretary of the Ark Class Action – Mrs. G – will be in the High Court as the Representative Beneficiary for the Ark victims challenging Dalriada Trustees’ Beddoe application. Dalriada, appointed by tPR in May 2011, have already spent around 15% of the £30 million Ark fund. They are now seeking the court’s permission and directions to use even more of the victims’ funds to take legal action against them to recover £11 million worth of liberation loans. This will result in financial ruin for most of the victims – many of whom will lose their homes. HMRC say the loans will remain taxable even if they are repaid so there is the real possibility that members will face two sets of crippling proceedings.
Mrs. G and the other Ark victims – originally 487 of them but now significantly fewer as some have died (some as a result of taking their own lives) – became victims because HMRC and tPR took way too long to take action to suspend the schemes. Also, the schemes were registered negligently in the first place – tPR allowed fourteen occupational Ark schemes to be registered by the same person without there being evidence of any intention or chance of the sponsoring employer being a bona fide employer.
Between August 2010 and August 2011, dozens of personal and occupational pension providers cheerfully handed over £30 million to the scammers with utter incompetence, no due diligence and complete disregard for all the dozens of warnings which had been put out by HMRC and tPR for many years.
In particular, these negligent ceding providers ignored this one issued by tPR Chair David Norgrove on 13.7.2010 just before Ark was launched: “Any administrator who simply ticks a box and allows the transfer, post July 2010, is failing in their duty as a trustee and as such are liable to compensate the beneficiary.”
I shall be looking forward to my next meeting with Tinky Winky because he will be able to bring a wealth of first-hand knowledge and experience to the table. I will probably be bringing Mrs. G to the meeting with me. Because guess who her negligent ceding provider was? Yep, you guessed – LGPS.
BACKGROUND TO THE NEGLIGENCE OF CEDING PROVIDERS SUCH AS LGPS:
The Ark schemes were launched in 2010 by – among others – Stephen Ward of Premier Pension Solutions S.L. and Premier Pension Transfers Ltd. The six Ark schemes had been registered by HMRC and the Pensions Regulator with no due diligence by either to establish whether the schemes had been set up with the specific purpose of operating pension liberation; whether they were bona fide occupational pension schemes set up by a sponsoring employer which intended to trade and provide employment; whether there was a competent trustee and board of trustees in place; whether there was a clear Statement of Investment Principles or whether there was ever any realistic prospect of the schemes providing member benefits.
At around the same time, a multi-million pound occupational pension scam was being vigorously promoted by James Lau of Wightman Fletcher McCabe while the administrators/trustees of the scheme, Andrew Meeson and Peter Bradley, were under criminal investigation for cheating the Public Revenue (and were subsequently jailed). Also, former barrister, solicitor and porn star Paul Baxendale-Walker was promoting a whole series of liberation scams unhindered by the authorities – despite having been firmly in the spotlight since 2007 as a passionate advocate of liberation. And KJK Investments/G Loans was a further liberation scheme flourishing at around the same time, having been started in 2009.
By the time Ark was getting well underway, tPR (formerly OPRA) was fully aware that liberation scams were proliferating and that the feeble warnings they had made back in 2002 about scams which had been operating as far back as 1997 had reached neither the public nor the industry effectively. In 1999, tPR had been investigating two scammers – Stephen Russell and William Ferguson – for a £6m pension fraud. The pair were jailed for five years in 2003.
In fact, tPR were fully aware that since 1999 pension scams were on the increase, and yet did not make it clear to ceding pension trustees what their statutory obligations were in respect of transferring victims into scams. On 13.7.2010, tPR Chair David Norgrove stated that: “Any administrator who simply ticks a box and allows the transfer, post July 2010, is failing in their duty as a trustee and as such are liable to compensate the beneficiary.” But pension trustees claim they never read that message (let alone heeded it) and that it was neither publicised nor distributed. Further, in the same year Tony King, the Pensions Ombudsman, reported that he had “found that pension trustees failed in carrying out serious fiduciary responsibilities to others in circumstances in which the law specifically states that they should not be protected from liability.” And still tPR did nothing. And the Pension Schemes Act 1993 was not amended to reflect the urgent need to protect the public.
The Scorpion Campaign was launched by tPR in 2013 after fifteen years of failing to warn the public sufficiently, and omitting to make it clear to trustees what their statutory obligations were to pension scheme members. During this period, the pension scam industry matured into a deadly serious and well organised large-scale operation in the UK, with many new “players” coming into the arena having been trained by Stephen Ward and other founders and pioneers of early scams.
It was – by the time Scorpion dribbled weakly and ineffectually into the arena – well known to tPR what the typical characteristics of pension scams were and what phrases and claims were habitually being made by the scammers to dupe their victims into signing over their gold-plated pensions into worthless, toxic schemes and being financial ruined. Among the many key phrases (such as “your pension is frozen”; “tax-free loan”; “guaranteed 8% returns” etc.), was the most powerful of all: “the scheme is HMRC approved”. There was, of course, no such thing as HMRC were as guilty of lazy, box-ticking negligence as the culpable ceding provider trustees. But to this day, tPR has done nothing to dispel this myth, and in fact even continues to help the scammers by using the same incorrect phrase on its own website: “If you are required to register a scheme with TPR that does not require HMRC approval, please contact us.”
Even by the time tPR had published the feeble Scorpion campaign in February 2013, the scammers acknowledged this was having a negligible effect on their various scams, and merely moved the goalposts a little to avoid detection. Capita Oak, Henley and Westminster continued to operate successfully beyond February 2013, but only a few ceding pension trustees either noticed Scorpion at all or took any steps to put into practice the minimal due diligence suggested by Scorpion.
In the full knowledge that Stephen Ward was one of the most prolific pension liberation scammers, tPR took no action to suspend any schemes in which he was involved. As a consequence, in August 2014, a Police officer was scammed out of his Police Pension by Ward’s Dorrixo Alliance and into the toxic London Quantum scheme. In fact, far from having any widespread effect, the multitude of scams continue to this day unaffected by tPR’s dismal attempts to protect and inform the public.
PENSIONS REGULATOR’S OBLIGATIONS AND OBJECTIVES:
According to their own website, tPR’s statutory objectives are set out in legislation and include promoting and improving understanding of the good administration of work-based pensions to protect member benefits. These objectives are detailed below with notes in bold.
to protect the benefits of members of occupational pension schemes tPR has failed to do this and as a result of repeated failures over a period of more than fifteen years has facilitated the scamming of thousands of victims out of millions of pounds’ worth of occupational pensions and into millions of pounds’ worth of tax liabilities
to promote, and to improve understanding of the good administration of work-based pension schemes tPR made no effort to work with administrators and trustees of schemes such as Royal Mail; local authorities; the NHS, the Police etc., to help them improve their understanding of how to avoid transferring victims into scams
to reduce the risk of situations arising which may lead to compensation being payable from the Pension Protection Fund (PPF) Through multiple failings over a period of more than fifteen years, tPR has exposed the PPF to huge amounts of compensation claims. This is paid for by the ethical, compliant sector of the financial services industry who are understandably deeply unhappy that they have to bear the cost of tPR’s negligence and omissions
to maximise employer compliance with employer duties and the employment safeguards introduced by the Pensions Act 2008 tPR has done nothing to ensure that occupational pension schemes have a bona fide employer that either trades or employs anybody – or even exists at all
One thing which tPR omits to state as being one of its obligations or objectives, is to take action to prevent pension scams in the first place by carrying out due diligence on the trustees, administrators or sponsors of a scam before registering it. In fact, it is clear from evidenced facts, that what should have been simple common sense in terms of basic, obvious vigilance and diligence, was not done. No questions were asked; no checks were made; no basic suspicions were raised. There is no evidence that anybody at tPR ever had the intelligence to ask questions such as whether schemes repeatedly administered by Stephen Ward or his accomplice Anthony Salih and registered to 31 Memorial Road posed any risks to the public.
Over the past couple of years, numerous “whistle blowing” reports have been made to tPR by members of the Class Action but they have been studiously ignored. At a meeting in April 2015, tPR were invited to work with (rather than against) the Class Action, but this too was ignored. Also at this meeting, the Capita Oak case was discussed. The Insolvency Service subsequently wound up the trustee of Capita Oak, Imperial, but tPR has taken no action to protect the members’ interests and has left 300 victims facing the loss of £10.8 million worth of pension transfers which were 100% invested in Store First store pods (now arguably worthless). The Henley and Westminster victims are facing a similar fate with zero intervention by tPR.
In 2014, evidence of Stephen Ward’s pension scam portfolio was handed to HMRC – including numerous occupational schemes and a pension trustee company: Dorrixo Alliance (registered at 31 Memorial Road, Worsley). However, neither HMRC nor tPR carried out any due diligence to see how many scams were under the trusteeship of Dorrixo and the toxic London Quantum scheme slipped through yet another gaping hole in the net, leading to dozens of victims losing £ millions of pension funds (including final salary ones).
Reverting back to 2010 when the most damning of tPR’s multiple failings started, hundreds of people were left to be scammed into the Salmon Enterprises scheme with no warnings by tPR that the administrators were under investigation for fraud, and thousands of people were left to be scammed into the various Baxendale-Walker and KJK Investments schemes. Along with Ark, 2010/11 alone accounted for well over a quarter of a billion pounds’ worth of pension fund losses and crippling tax liabilities. And this excludes the dozens of scams still being run by Stephen Ward to this day and which tPR continues to ignore. In fact, it has recently been reported that pension scams are by now accounting for over £10 billion worth of losses so the 2010/11 figure may well be substantially higher in reality.
Just goes to show that there is no let up in pension scamming
The Tonight programme “How Safe is My Pension” aired on Thursday 4th May. An undercover “sting” exposed the operation of a pension cold calling scam.
IFA Darren Cooke of Red Circle Financial Planning featured in the programme and spoke passionately about the dangers of cold calling. He ran a successful petition to campaign for a ban on cold calling. This attracted thousands of signatures in a short space of time and earned him widespread praise and respect from the financial services industry. Hopefully, after the election, whatever government we end up with will get back to the serious business of cleaning up the pension scamming industry and putting the scammers where they belong – behind bars.
WHAT MORE COULD THE PROGRAMME HAVE TOLD VIEWERS ABOUT PENSION SCAMS?
However, while one victim’s tragic circumstances were highlighted, I think the programme could have done more to feature the extent of pension scams; how many there have been during the past seven years; how much has been lost (many £ billions); how many people’s lives have been ruined; how many scammers there are in the UK and offshore and how many £ millions they have earned out of ruining victims’ lives.
The programme also missed two important regulation failings – cold calls are facilitated by the illegal sale of personal data – almost no victims understand this. Also, the promotion of unregulated investments to ordinary savers is an offence. A country that can’t enforce its own laws is a failing state. And enforcement takes far too long: it took the Pensions Regulator four years to take action to disqualify the shysters behind the 5G Futures pension scam – and there is still no news about them being prosecuted for scamming hundreds of victims out of £16 million worth of pensions which were invested in a plantation in Fiji. This despite the Pensions Regulator’s Lesley Titcomb clearly stating that scammers are criminals.
IFA Darren Cooke from Red Circle Financial Planning
The whole purpose of Darren Cooke’s cold calling ban petition was to draw attention to the enormity of the pension scamming industry and get the government to finally take some action. The regulators and the police have failed dismally to tackle the problem and address the point that the scammers are left free to operate scams over and over again. The public need to know just how prolific the scams and scammers are.
But this is the most tragic issue of all. Serial scammers train and coach the next generation. They teach the new boys the tricks of this filthy trade and then more scams spring up like rabbits on viagra. The regulators and the police stand by and let the scammers just get on with their next lucrative operation. And this is what must change – once and for all. The victims need protection for the damage already done to them. And new victims have to be warned of the dangers posed by the pension cold calling scammers as well as the introducers, administrators, promoters, distributors and trustees of various scams operating in the UK and offshore.
Remarkably similar logos with both Marazion and Perpetual
Every time I think this book about pension scams is done and I can put it away, a new scam or scammer pops up and I have to rethink it. And every time I add in a new sentence or paragraph, the formatting and pagination need to be adjusted. But, however imperfect and unfinished it may be, it is available on Amazon:
It has been much harder to write than I ever thought it would be. But nowhere near as hard as it is for the victims who have to live with the consequences of losing their pensions and investments – and gaining tax liabilities.
The purpose of this book is to warn the public against current scams and scammers (the same ones who have been doing it since 2010) and encourage the police and regulators to criminalise all forms of scams. The Pensions Regulator’s Lesley Titcombe has clearly stated that scammers are “criminals” and it is hoped they will all be prosecuted. The victims and the ethical members of the financial services industry want to see a zero-tolerance policy and a military-style campaign to stamp out this horrendous crime wave.
Evidence suggests that in the past seven years, there have been many £ billions lost to pension and investment scams – there are no precise “official” figures. But the dreadful fact is that the scammers who were targeting victims back in 2010, continued doing it in 2011; and 2012; and 2013; and 2014; and 2015, and 2016. And they are still doing it today. Happily and profitably. And nobody has stopped them or brought them to account for the horrific financial damage and distress they have caused.
It is hard to decide which is worse: the vicious, greedy, cold-hearted scammers or three sets of inept government or the feeble authorities who let them get away with it. Repeatedly. But it has to stop. A military-style, zero tolerance campaign has to be waged against all the guilty parties until every last one of them is brought to justice.
The tragic thing about these scams and the misery and financial ruin caused to so many thousands of victims is that this disaster was preventable. HMRC were warned by the industry about the potential for scams if the role of compulsory professional trustee was removed pre 2006. In a letter of March 2004 a specialist pension solicitor warned:
“It is essential that schemes offering self-administration and wide investment choice should have in place an independent person who has sufficient control of scheme assets to prevent abuse and sufficient knowledge and experience to know abuse when he sees it.
That does not necessarily mean that the system of pensioneer trustees should be retained in its current form but, if it is abolished without an effective replacement, we envisage that within the next 5 years the degree of abuse of such schemes by both incompetent and dishonest individuals will:
further stain the reputation of pensions generally; and
severely embarrass the government responsible for letting it happen.
Reputable professionals in the industry and the Government share a common aim of building a system of tax rules that is simple but is robust enough to last for a working lifetime without major overhaul. Such a system needs to contain adequate protections against abuse.”
The warning was ignored. And precisely what was predicted would happen, happened. And it will go on happening until and unless government, HMRC, regulators and police take responsibility for their failings and put in place robust measures to clean up the mess of the past/present and prevent future disasters.
This clear warning was brought to my attention by Martin Tilley who is director of technical services at Dentons Pension Management. Martin has written some excellent blogs and articles on the subject of pension scams and my favourite has to be this one:
I know the government is jolly busy at the moment with Brexit. But earlier this year there was a government consultation on pension scams – and still no word about what the battle plan is. In fact, neither Damian Green (Secretary of the DWP) nor Richard Harrington (Pensions Minister) will engage at the moment as they claim there is no point until after the consultation.
But they didn’t say how long after: three months? three years? With every day that they dither about, more victims will lose their life savings; more damage will be done to the reputation of the industry; more expensive will it become for the State to support those who have no retirement income; louder will be the ticking of the pension scam time bomb.
Richard Harrington recently stated that Britain can’t afford to implement transitional arrangements for 1950s-born women who weren’t notified their State pension age was going to be increased from 60 to 67. He reckons this would cost the country around £30 billion. With scams reportedly costing the British public £11 billion a year, the cost of supporting these thousands of victims throughout their retirement will be staggering. Plus the cost to the NHS (because of the amount of mental and physical health damaged caused by the stress of being scammed) will add to this enormous cost.
If you have read this blog from start to finish, it will have taken you seven minutes. During that time at least one person will have been scammed out of their life savings. If you read the Anatomy of a Pension Scam ebook from beginning to end, it could take you up to five hours if you read slowly and carefully. Think how many people could be scammed in that time. Avoidably.
Philip Hammond’s surprise 25% tax on QROPS transfers will leave many advisers and trustees floundering as the industry tries to make some sense of the long-term consequences for expatriates and their pensions. The uncertainty of the “five-year” change of circumstances rule will leave a huge question mark over the offshore landscape.
But while the industry ponders the fall-out of the Hammond organ, the “elephant in the room” is far more sinister: offshore trustees who have accepted business from scammers. This has been a serious problem since at least 2011, and the fall-out is £ millions of pounds’ worth of pension losses and sometimes tax liabilities for the thousands of victims.
Regulators, ombudsmen and financial crime units are now being sent detailed reports on thousands of cases where trustees have either been in league with the scammers or simply turned a blind eye to obvious scams – putting profit before due diligence (either accidentally or deliberately). The distinction between the varying shades of grey is sometimes somewhat subtle, but it always has the same outcome: pension losses for the victims.
The jurisdictions affected include New Zealand, Guernsey, Malta and Gibraltar principally (although not exclusively). Whatever problems there may be with Hammond’s 25% blow job, the culpability of rogue trustees will hopefully now become a hot issue – and victims will stand a better chance of obtaining redress for their losses.
In Guernsey, from 2010 onwards, Concept Trustees was routinely accepting business from Stephen Ward of Premier Pension Solutions. Although Concept was warning some victims that Ward had provided no evidence of regulation or professional indemnity insurance – and refusing to communicate with him – this did not stop Concept from accepting transfers and dealing instructions from Ward. Concept should never have been offering members investments in toxic, high-risk funds such as EEA Life Settlements and Connaught Property Loans. In fact, the FSA had issued warnings about EEA in February 2010, but Concept continued to offer this to low-risk, cautious investors in the full knowledge that it was an entirely unsuitable investment for a pension fund.
At around the same time, Gower Pensions in Guernsey was accepting business from Dubai-based Holborn Assets. The firm was not licensed for pension or investment advice in Spain – or for any activity beyond wearing an expensive suit, regurgitating convincing, high-pressure sales patter and having an impressive leather-bound portfolio. Despite several years of communication with both Gower and Holborn, a derisory amount of compensation for heavy pension fund losses has been offered (and refused).
In 2012, New Zealand’s Evergreen Retirement Trust launched a pension liberation scam with Stephen Ward of Premier Pension Solutions. Three hundred victims – mostly Spanish residents – transferred their UK pensions (aggregate value of around £10 million) to Evergreen and obtained 50% “loans” from Ward’s Cyprus-based Marazion loan company. The loans were financed by the assets of the scheme and the victims were tied in to both the loan and the pension scheme for identical five-year periods. This particular chicken is coming home to roost later in 2017 and it will be interesting to see how the various parties in New Zealand and Spain who were behind this scam will try to escape liability and culpability.
In the last couple of years, pension scammers have moved away from the bogus occupational scheme approach and into QROPS – which they find even easier to use, abuse and lose. In 2015, Malta-based Integrated Capabilities started accepting transfers into their Optimus scheme from unlicensed scammers in the Czech Republic. These same scammers were also the distributors/promoters of one of the toxic, high-risk UCIS funds being used as the assets of the scheme. Despite Optimus having Lombard Bank (purportedly) as Investment Manager, there seems to have been an absolute lack of due diligence or transparency. In fact, had Integrated Capabilities bothered to look a little closer at the scammers they were getting into bed with, they would have seen that one party had been a cold-calling operation behind the Capita Oak £10 million scam.
But Gibraltar’s STM Fidecs probably takes the biscuit – or even the whole shopping trolley. In 2014, STM started accepting transfers from UK residents by an unlicensed firm which had also been involved in Capita Oak and other scams. This firm was not only the adviser but also the investment manager to the toxic UCIS fund that the victims’ pensions were invested in. This fund – the Trafalgar Multi Asset Fund – was invested entirely in German property development loans (which pay handsome introduction commissions to the introducers) and is now suspended and being wound up.
While it is clear that Hammond hasn’t a clue about pensions in general or QROPS in particular, his 25% surprise may have had unintended consequences in that it will shine the spotlight firmly on negligent offshore trustees who facilitate financial crime – either through omission or commission. Whether the regulators, ombudsmen and financial crime units in New Zealand, Guernsey, Malta and Gibralta will order these trustees to compensate their victims remains to be seen. The survival of these offshore jurisdictions as “safe havens” for financial business depends on them cleaning up their act and outlawing unlicensed operators profiting from trustees’ lax approach to due diligence.
The future of the QROPS may be uncertain, but the future of pension trustees such as Concept, Integrated Capabilities and STM Fidecs should be very clear: no dealings with scammers; no toxic UCIS investments; no failing to compensate victims who suffer pension losses through negligence and/or fraud.
Mrs. A: “I was first cold called by CWM in 2011. I first met Phil Kelman of CWM in January 2012. I was told only positive things about transferring my pensions and to be able to take 100% of my pension funds.
So, in other words, a load of old rubbish. But then what would you expect from Stephen Ward who has destroyed thousands of victims’ life savings since 2010. He may be a highly qualified “pensions expert”, and the author of the Tolley’s
Scammers are loathed by victims, regulators, police, ombudsmen and financial services professionals whose professional reputations are compromised by the nefarious practices of the scam merchants. But however damning the hard evidence is about the scams and the various promoters, introducers, advisers, administrators behind them, the scammers still protest their innocence.
Meanwhile, the Ginger Scammer’s lawyer is complaining about an image on the Pension Life website. Trouble is, I can’t work out which one it is – I’ve searched and searched and I can’t find a single offensive photo. But then what is offensive to one person is inoffensive to another. I called the Ginger Scammer’s lawyer a “dick” once – maybe it should have been “tick”.
