Jim Armitage at the Evening Standard reports that administrators are investigating the role played in the collapse of London Capital & Finance by John Russell-Murphy, who pitched LCF bonds in person to wealthier investors.
The Evening Standard has spoken to 10 clients of LCF who invested between £100,000 and £580,000 and allege Russell-Murphy gave them financial advice that experts have suggested he was not allowed to give under Financial Conduct Authority rules because he is not a regulated adviser.
One, a severely disabled woman in her late seventies, claimed he had visited her at her home, looked at the paperwork for her existing savings and recommended she put £100,000 of her entire £150,000 into LCF. The former charity worker said: “I told him I had to keep back £20,000 for my grandchild’s university bills but he said if I invested £100,000 with LCF the interest would pay for them and I wouldn’t lose the capital. Now it looks like it’s all gone.”
One investor claimed that Russell-Murphy claimed inaccurately that LCF bonds were protected by the FSCS.
Michael Grice, 84, claimed Russell-Murphy came to his house last September and reassured him that if anything went wrong with the bonds, LCF investments were backed by the Financial Services Compensation Scheme.
In a case of crimes against cliché as well as the Financial Services and Markets Act 2000, another investor said that John Russell-Murphy said that he would recommend LCF bonds to his own mother.
Another said, when he came to her house, she asked if he would recommend LCF to his own mother. “He smiled and said, ‘yes’,” she claimed.
For the record, we are not in any way suggesting that John Russell-Murphy was being dishonest. We sincerely believe that John Russell-Murphy would indeed recommend LCF bonds to his own mother.
Russell-Murphy reportedly described himself as an “LCF senior account manager” but was actually employed by LCF’s marketing agent, Surge. Investors say that Russell-Murphy recommended other investments linked to Surge as well as London Capital & Finance. A spokesman for Surge said that Russell-Murphy was not authorised to cross-sell non-LCF investments.
According to the Evening Standard, Russell-Murphy was unavailable for comment on the above claims.
Not mentioned by the Evening Standard is John Russell-Murphy’s previous role in the unregulated bond world. Russell-Murphy was one of the three founding directors of MJS Capital – he was the “J” in “MJS”, along with Martin Westney and Shaun Prince. His directorship lasted from its incorporation in March 2015 to his resignation in February 2016.
Russell-Murphy left MJS two years before it collapsed in 2018 and there is no suggestion that he had anything to do with its failure.
In the dim and distant past Russell-Murphy and London Capital and Finance CEO Michael Andrew “Andy” Thomson were at upmarket salesforce St James’s Place together. The FCA register shows they were both at SJP on 1 December 2001 when the FCA’s register began*. Thomson left in December 2001, shortly before joining NatWest as a Trainee Adviser. Russell-Murphy remained at SJP until April 2003. Since when, according to the FCA register, he has never held FCA authorisation.
Not that this stopped him advising elderly investors to invest in his old mucker’s company 12-15 years later.
[Hat tip to Mark Taber for unearthing the St James’s Place connection.]
A lawyer for Mischon de Reya, who are working with LCF administrators Smith & Williamson, stated
“We are investigating all parties connected to LCF including those involved internally and externally in the sales and marketing function. We understand John Russell-Murphy was a key figure in the sales operation run by Surge on behalf of LCF including making home visits to certain bondholders. He also appears to have significant links to the former directors and shareholders of LCF.”
*Thanks to reader Adam Smith for explaining why the FCA shows Russell-Murphy and Thomson as joining on the same date of 1.12.01.
“According to the FCA register, they both joined SJP on the exact same date, 1 December 2001.”
Strictly true but somewhat misleading; 01/12/2001 was when the FSA took on financial services regulation so, if you were in post on that date, that’s what the register will say – no-one would have an earlier date than that. What’s not visible to register users is the date of first approval by the predecessor SRO; equally opaque is what locations the two may have worked in.
I’m not saying they weren’t pals back in the day, but I don’t think you can reliably draw that inference from such limited data.
Ah, I did think it was an odd coincidence. Thanks Adam. I’ll amend the article.
“For the record, we are not in any way suggesting that John Russell-Murphy was being dishonest. ”
Not sure why “for the record” you cannot suggest “John R-M was being dishonest. i.e a deliberate deception. There is a legal test for fraudulent misrepresentation which I feel can be applied.
The test is:-
1. There must have been a representation made which can be clearly identified, which must be a representation of fact.
2. The representation must be false.
3. It must have been made dishonestly.
4. It must be proved that the representation must have been intended to be relied upon and was, in fact, relied upon.
Take the examples stated above that a) the investment was backed by the FSCS and b) John R-M was a senior account manager at LCF.
I hold 1,2 & 4 are easily shown. The question is does it meet 3? I hold it does. Above, he apparently worked at Nat West – albeit as a “trainee adviser”. It is unclear whether he gained any qualifications in that role as it isn’t stated, but it can be reasonably concluded that knowing if an investment is covered by the FSCS or not, is so basic, even a “trainee” would be able to know this. Even if John R-M didn’t know it wasn’t covered by the FSCS I surely can’t believe he didn’t know he was not a senior account manager for LCF. So the question is whether he really did say these things.
By “dishonestly”, the law means the “fraudster” either knew it wasn’t true or they didn’t really care that it might not be true (the law uses the term reckless as to its truth).
In Derry v Peek, Lord Herschell established “… fraud is proved when it is shown that a false misrepresentation has been made (1) knowingly, (2) without belief in its truth, or (3) recklessly, careless whether it be true or false”.
Don’t suppose any victim has it in writing?
In the scam I got caught up in, the [mis-]adviser actually made fraudulent misrepresentations to me in writing – yeah, I know stupid as well as deceitful. Did any authority in any jurisdiction care or do anything about it – not a jot! Not: the FCA; Action Fraud; the Maltese regulator or the Czech National Bank, regulator for Czech republic – all the jurisdictions the scammers were operating in, in one capacity or another.
For the general good, it’s worth noting that fraud legislation has moved on. Fraud by false representation is now covered by section 2 of the Fraud Act 2006. To save my fingers, I’d signpost readers to https://www.legislation.gov.uk/ukpga/2006/35/section/2 for the text of that.
The dishonesty test is now clearly understood to be an objective one; that is, that it is not the defendant’s belief in his honesty which needs to be disproved, but rather what the proverbial man on the Clapham omnibus would view as dishonest. This was held in the 1986 Barlow Clowes litigation and most recently confirmed in teh Ivey v Genting Casinos case (card sharping at Crockfords Casino).
I am sure that test would almost definitely show J. R-M was being dishonest. And does anyone think the authorities – any of them – will do anything about it? There’s a better chance of Nigel Farage being Prime Minister!
Trust me, J.R-M will be working for Blackmore Bonds next, maybe as Senior Account Manager 😉 – you watch …. the risk of any serious punishment in unregulated “financial advice” is so small and the rewards so very great, being an unregulated adviser in the UK is a no brainer so long as we continue to have an impotent FCA and a less than useless Action Fraud!
John Patrick Russell-Murphy has been doing this for years selling high risk investment and passing them off as low risk!!
Harliquinn Properties, Grovenor Park International
Repossed homes in Detroit
https://redd-monitor.org/2016/03/31/irish-tax-office-moves-to-shut-down-celestial-green-ventures/
Also on this website is how he was selling carbon from the rainforest as an asset however it is a depreating asset.
2010 Johns company gets in trouble for mis use of credit cards this is money
And none other than Lord Timbo Razzall turns up at Colarb Capital with John R-M as well as MJS Capital and he was credible NED at catalyst Investment Group. It might be unfair as I think hes just an old school schmuck who likes the fees and doesn’t ask too many questions, but the good Lord is always a walking Red Flag to me.
For Peter Bridge – Russell-Murphy was lending his credit card machine to Spencer Golding to no less.
Its all networks and they have a habit of finding one another.
THE INVESTMENT MY HUSBAND AND I MADE WITH J.R.M. WE WERE TOLD ALL WERE COVERED BY LLOYDS OF LONDON SO IF THEY SHOULD COLLAPSE (very unlikely though ) all are covered so we would NOT lose out.. I notice he is still living the high life on our monies. UNFORTUNATLY MY HUSBAND HAS PASSED AWAY SO OF COURSE KNOWS NOTHING ABOUT THIS.THIS WAS FOR MY SECURITY AND J.R.M. KNew this
Him & the other 4 scammers took our savings which we invested with LCF . Now we don’t know if we will ever get anything back. They should be in prison serving long sentences……
Where is John Russell-Murphy now?
JRM. should be locked up in jail for a long time he has ruined my life. :My poor husband passed away before the outcome of all this and i am now having to watch every penny i spend instead of having a lovely money worry free end to my life. How can he (JRM)sleep at nightafter all the lies he told us all. Even the so called insurance companies we were supposed to have been with do NOT exist,
Thanks guys this is a very informative historic summary of JRM. I met JRM at the Eastbourne office “the Old Printworks” Suite 29, 1 Commercial Road, Eastbourne, East Sussex, BN21 3XQ on 10 March 2017. (JRM was the leaseholder of this property and I think he still is to this day
The office had about 20 staff and walls were covered with LCF advertising all geared up to selling bonds and JRM gave me his LCF business card all giving a clear impression it was LCF. I asked JRM several Q
Q1). The office looks all geared up to selling so where is the section for the SME loans as concerned if incoming bondholders money is sitting idle not loaned out how can you pay 8% interest. A1). Its all done by private brokers and the demand for SME loans is greater than the money coming in.
Q2). If you are paying 8% to bondholders and say loaning out at 15% why would you they not go direct to the bank at a much lower rate as LCF claim all the loans are asset backed similar to a bank. A).Speed as banks take a long time.
Q3). PWC audit shows LCF having only about £6 million and if your loan rate to interest rate is say 7% it will not cover staff salaries overheads and profit. A). New Investors money is rapidly coming in and currently stands at about £30 adequately covering overheads.
Q4). Can I see a small SME sample loan . A). Thats confidential and its all approved by PWC and the FCA giving you assurance.
I have asked the FCA several Q on their approval of LCF and escalated it to Andrew Bailey due to no response and he dodged to answer. I also forwarded the same Q to Dame Gloster. I put these questions again to the FCA on 8 July 2021 and no response . I am considering now resending it with a Freedom Of Information request.
If the FCA were required under their approval process in June 2016 to visit LCF premises, these questions need addressing and this was also sent to Dame Gloster. The FCA have repeatidly failed to respond to these queries.
a). Which LCF premises did the FCA visit with times and logs
b). Which LCF directors/staff did the FCA deal with giving them ADVICE and the ADVICE given.
c) Were the FCA under the impression it was staffed by LCF or aware or made aware that the office was staffed by Surge fronting up as LCF with LCF Business Cards.
d).What LCF documents did the FCA inspect as part of the approval process and what ADVICE was given on them .
e). The fact that LCF advertising literature made so many erroneous false claims and made no mention they were making loans to themselves rather than the claimed SME. What questions did the FCA put to LCF and the ADVICE given back. Their MOM and tel conversation between LCF and FCA require vetting which I trust you can gain access to.
f). LCF marketing makes No mention of Surge and their 25% Commission and were the FCA aware of this when approving their marketing material as the FCA replies on this have been evasive. I have asked the FCA on 3 separate occasions to clarify this as in my e mail to Andrew Bailey below and this still was never responded to.