13 people sued by LCF administrators in £178m lawsuit

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According to the Financial Times, 13 people are to be sued by the administrators of London Capital & Finance in an attempt to recover £178 million of investors’ money.

The not-so-unlucky 13 include:

Clockwise from top right: Simon Hume-Kendall, Andy Thomson, Spencer Golding and Elten Barker.
  • The Four Horsemen Of LCF, the four directors of London Capital and Finance or connected companies to whom LCF on-lent money, who were arrested by the Serious Fraud Office and shortly thereafter released without any charge: Simon-Hume Kendall, CEO Andy Thomson, Elten Barker and Spencer Golding.
  • Hume-Kendall’s wife Helen.
  • Paul Careless, CEO of Surge Group which received a total of £60 million in commission for promoting London Capital & Finance.
  • Former Tory Energy Minister Charles Hendry, who is one of five defendants accused of not doing enough to identify the fraud while serving on the board of LCF-linked companies.
  • The other six defendants have not been named by the FT.

The lawsuit alleges that LCF’s purpose was to defaud bondholders. According to the lawsuit,

nearly 60 per cent of all of the investors’ cash — about £136m — was channelled to its executives either directly or via loans to companies they controlled or were connected to.

Add the £60m paid to Surge, and you only have at most £1 in every £5 invested by investors going into assets which might pay them a return, according to the administrators.

Although there is not a long history in the UK of the perpetrators of collapsed unregulated investment schemes having to give the money back, one wonders how many directors of unregulated investment schemes that have recently collapsed, or are in the process of collapsing, might be sleeping a little less easy in their beds.

It remains to be seen, probably over the next few years at a minimum, a) whether the administrators are successful in making the allegations stick against the defendants (who universally either vigorously denied wrongdoing or did not make any comment) and b) whether, if so, they can recover any assets.

5 thoughts on “13 people sued by LCF administrators in £178m lawsuit

  1. Yep these are guilty of selling fraudulently they promised isa’s but sent secured bonds to unsuspecting investors and that in itself is illegal investors were not getting what was advertised the product advertised were isa’s at 8% per annum even the hmrc were caught with their pants down

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  2. What do you expect? Did investors expect 8% guaranteed? With protection?

    I agree there were failings but come on, it’s still happening.

    Blackmore, basset and gold, Westway even high street group.

    I am a financial advisor, and if you are looking at bonds and these types of investments, at the least you need to look at listed bonds and not unlisted mini bonds.

    My opinion.

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  3. I half agree with you Cedric. 8% p.a. with a capital guarantee is simply not feasible. However, I would not criticise the investors so harshly. The salesmen and women are highly proficient at selling these awful investments and the sales tactics are designed to dupe investors. People with little knowledge of investments and the UK’s regulatory framework i.e. the vast majority of people – are easy prey.
    The FCA denies responsibility by simply stating the truth that the companies were not carrying out a regulated function.
    There is no protection for retail investors who are suckered in and it appears that there is nothing stopping the determined minibond issuer selling to retail clients.
    I wonder whether the FCA has been asked to turn a blind eye to the issuing of loan notes/minibonds to retail investors post 2007/8, since the banks cannot make enough capital available to support the demand for credit

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  4. It would be easy to lose sight of other big issues in cases like this – greedy liquidators, their greedy lawyers and the fee journey everybody gets taken on. It’s happening in numerous cases where investments have gone wonky and nobody ever really takes the liquidator to task as they believe themselves to be bomb-proof.

    They’ve already collected millions of pounds in fees between them and this whole action is a win:win for them. If they are awarded money they will have an even bigger estate to draw fees from and slap each other on the back for a job well done and if they lose they’ll still get paid for their time and effort and put it down to being in the best interests of the creditors. If the transactions are bogus then there are much quicker mechanisms to get the money back which wouldn’t cost anywhere near as much.

    Wake up people – the liquidators are spending your money. Noble cause corruption.

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