Five people were today sentenced to a total of 17.5 years in prison for their part in a £2.8m investment scam which resulted in the City watchdog's second largest criminal prosecution ever.
The fraudsters conned their victims into investing the cash in a fantasy development on the Portuguese island of Madeira, supposedly guaranteeing massive returns when in fact the cash was used bankroll an extravagant lifestyle.
The five people were sentenced in Southwark Crown Court today, with the mastermind of the scheme, Michael Nascimento, to be sentenced on 14 September. The six defendants were charged by the Financial Conduct Authority (FCA) with offences of conspiracy to defraud, fraud, money laundering and perverting the course of justice, and either pleaded guilty or were convicted by the jury.
Investors were targeted from a nondescript business centre in the shadow of Canary Wharf, with a team of cold callers trying to persuade people to hand over their cash in a "boiler room" scheme. Fake prospectus documents copied from legitimate businesses referenced guaranteed returns of up to 228 per cent, but none were ever paid.
Victims were told the investment would buy a stake in a development overlooking a golf course to be built by former world number one golfer Sir Nick Faldo. The course was never built, and no project was ever connected to the scammers.
Nascimento, who had previously worked as a nightclub bouncer, was incriminated by witnesses after he showed one willing investor – a risk manager at a bank – around the site of the supposed development, using an alias and even having an associate call him so he could play the part of an in-demand businessman.
The proceeds of the scam were used to fund extravagant spending, including an Arsenal season ticket with hospitality package. Investigators found wads of £50 notes when they raided Nascimento's house, tucked above a stack of Arsenal football DVDs. Meanwhile, at least £4,000 in investor money was used to fund a day out to the Thorpe Park theme park for the fraudsters and their "salesmen".
The net closed on the gang in October 2013, with the FCA and the National Crime Agency carrying out a dawn raid in which they recovered 1.4m documents and other evidence. This included CCTV footage of the scammers at work in the office and, in one case, even attempting to hide evidence in the office's suspended ceiling while investigators were downstairs.
The victims may receive some cash back, with £1.6m in restrained assets currently subject to proceeds of crime procedures.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “These fraudsters callously targeted investors who were often elderly and vulnerable, lying to them to get them to part with significant sums of money. Despite efforts to conceal and destroy evidence, the FCA, in one of its largest ever investigations, was able to ensure that these criminals faced justice and ended up behind bars.
"Applications under proceeds of crime legislation remain on foot and the FCA is determined to recover as much money from these defendants as possible for the benefit of investors.”
|Michael Nascimento (DOB 28th June 1977) was the ringleader, controlling mind, and main beneficiary of the scam. He will be sentenced separately on 14 September. Investors’ money was used to maintain the fraud and particularly to fund the lifestyle of Nascimento. Over 170 members of the public invested over £2.8m in the shares. Many were elderly or vulnerable, and lost life-changing sums, in some cases all their life savings.|
|Charanjit Sandhu (DOB 3rd December 1989) was sentenced to 5.5 years’ imprisonment. He was a senior broker, often using bullying sales tactics and false names. The Judge commented that he was “dazzled by the rewards of crime” and had “lost his moral compass”. In terms of two of the investors he said that Mr Sandhu “had pestered them mercilessly by telephone” and that his conduct was “cruel and callous” and “chilling”.|
|Hugh Edwards (DOB 13th July 1982) was sentenced to 3 years and 9 months’ imprisonment. He recruited and trained brokers; drafted and sent misleading brochures to potential investors; and personally pitched the product as a senior broker using false names.|
|Stuart Rea (DOB 12th February 1968) was sentenced to 3 years and 9 months’ imprisonment. He fronted one of the companies, recruited and managed the sales brokers, and circulated the misleading promotional material.|
|Jeannine Lewis (DOB 15th September 1967) was sentenced to 2.5 years’ imprisonment. As PA to Nascimento she assisted him to launder the proceeds of the fraud through various bank accounts including her own. She hid and destroyed documents and computers to prevent them falling into the hands of FCA investigators. The Judge described Mrs Lewis as “Michael Nascimento’s devoted personal assistant” and that she was “in truth a thoroughly dishonest woman."|
|Ryan Parker (DOB 26th November 1992) was sentenced to 2 years’ imprisonment to be suspended for 18 months. He was also ordered to carry out 180 hours of unpaid work. He fronted two of the boiler rooms for Nascimento and his personal bank accounts were used as a conduit for some of the money. His sentence was suspended by the Judge due to his age and personal mitigation and lower level of involvement. The Judge said that Mr Parker had “been exploited in a significant way by Michael Nascimento”.|