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Four individuals behind an occupational ‘pension scam’ have been told by the High Court to pay back £13.7 million to their victims following a prosecution led by The Pensions Regulator (TPR).
Around 245 individuals were convinced to invest in one of 11 pension schemes operated by Friendly Pensions Limited via cold-calls, TPR said.
The four people behind the scheme, David Austin, Susan Dalton, Alan Barratt and Julian Hanson, have been ordered by the High Court to pay back £13.7 million to their victims. According to TPR this is the first time an order like this has been made by the courts.
Many of the victims of the scheme were lured by the prospect of receiving tax-free ‘commission rebates’, however now they face the prospect of ‘significant tax penalties because the sums received by them were at least arguably "unauthorised payments"’, judge Mark Pelling said in his ruling.
David Austin, described by TPR’s prosecuting barrister as the 'ring leader’, ‘laundered funds from the schemes into his bank account and the accounts of family members in the UK, Switzerland and Andorra through a number of businesses’, TPR said.
The High Court was then shown evidence of how Austin and his family ‘had lived a life of luxury using the money – including showing off their spending on expensive goods, ski holidays and trips to Dubai and the Mediterranean on social media sites’.
The independent trustee Dalriada, which was appointed by TPR in 2015 to take over the schemes, has now been issued with a confiscation order meaning it can claims back assets for the victims.
According to TPR 245 members were the subject of cold calls between 2012 and 2014 which encouraged them to move their pensions into one of the 11 schemes run by the individuals involved.
These members were attracted by ‘rebate’ payments.
In the High Court judgement the judge noted how instructions were given via email that client commissions should not be mentioned to any IFAs ‘otherwise case will be dead’.
A Spain-based introducer called Select Pension Investments was used to generate leads. Around £1 million was paid to introducers or agents who used cold calls, TPR said.
‘More than £10.3 million was transferred to businesses owned or controlled by Mr Austin, including the current accounts of Friendly Pensions Limited and Friendly Investments Company,’ TPR said.
Around £3.2 million of funds was invested, and out of this £2 million went to a St Lucia property development called Freedom Bay.
Nicola Parish, TPR’s executive director of front line regulation, said: ‘The defendants siphoned off millions of pounds from the schemes on what they falsely claimed were fees and commissions.
‘While Austin was the mastermind, they all took part in stripping the schemes almost bare. This left hardly anything behind from the savings their victims had set aside over decades of work to pay for their retirements. The High Court’s ruling means that Dalriada can now go after the assets and investments of those involved to try to recover at least some of the money that these corrupt people took. This case sends a clear message that we will take tough action against pension scammers.’