£20 million Ponzi scheme closed down

A fraudster who ran a £20 million Ponzi scheme has been found guilty of fraud, false accounting and forgery after abusing millions of pounds of investors’ money to buy racehorses and fund other businesses. He was sentenced to seven years’ imprisonment and remains disqualified as a Director.

Liam Wainwright, a director of Rawdon Asset Finance Ltd, had falsified documents to mislead investors and spent their money on ventures, including a racehorse syndicate and his own failed private businesses.

Wainwright was investigated by the Insolvency Service, who said his investors were victims of a “classic Ponzi scheme”, whereby the returns paid to them were funded by the capital injections from later investors.

Initially investigated for falsifying around £12 million worth of entries in the company’s loan book in the two years before the company entered administration in 2019, Wainwright was the subject of a further investigation into false accounting, fraud, forgery and acting as a Director while bankrupt. He was disqualified for 11 years in November 2020.

Investigators found that at the time the business went into liquidation, Rawdon Asset Finance’s creditors were owed more than £20 million, including £100,000 defrauded from one investor only weeks before the business collapsed. However, liquidators have so far recovered just £750,630.

When the case went to court, Wainwright admitted he had begun to falsify accounts from around 2017, to hide the company’s true financial position from his co-directors and investors. He also admitted he had earlier forged a mortgagor’s signature on a legal charge to mislead investors and had breached the terms of a previous bankruptcy by acting as a Director of the company with the court’s permission.

Roger Isaacs, Forensic Partner at Milsted Langdon, said: “This conviction is a good result for the Insolvency Service, but it raises questions about how Wainwright was able to hoodwink colleagues, auditors, investors and regulators for as long as he did.

“It is notable that although he has now been disqualified from acting as a director for 11 years, his earlier disqualification seems in no way to have inhibited him from perpetrating the fraud of which he was found guilty.

“There is arguably a case for more active monitoring by the Financial Conduct Authority, by Companies House, by auditors or by some other regulatory body to ensure that anyone who acts as a director is not disqualified from doing so.

“The sooner a forensic accountancy investigation into frauds, such as this can be started, the greater are the chances of recovering funds for creditors and stemming the losses for investors.”


Source: Gov.UK

Posted in The Forensic Blog.