The conviction of two fraudsters, following an investigation by the Serious Fraud Office, has highlighted how wary investors need to be. The fraud, which netted the crooks over £10 million, was, a classic Ponzi scheme. According to Paul Taylor, Senior Partner of Kidd Rapinet, “To maintain the illusion of good returns, later investors’ funds were used to pay returns to the earlier investors. So, on paper it looked good”.
The crooks, (John and Linda Hurst, and Richard Pollet) have been jailed for up to 9 years. They promised investors returns of up to 40% per annum by investing in the New York Stock Exchange, and even categorised the “investments” as low risk. In reality they invested no money and simply spent some of the money and recycled a small proportion in pay-outs to early investors.
Paul Taylor comments: “The usual caveat would seem to apply: If something sounds too good to be true, that’s probably because it is too good to be true. In the case in question, promising returns of up to 40% per annum on so-called low risk investments should have set alarm bells ringing”.
If you feel you may need advice, Kidd Rapinet can advise you. Call Paul Taylor on 020 7265 5461 for further information.