Langbar boss gets twelve months in jail
THE one-time boss of an Aim-listed cash shell has been jailed for 12 months for making misleading statements that ended up losing investors millions of pounds.
Stuart Pearson of Langbar International (formerly Crown Corporation Limited) falsely claimed that the firm had assets worth £365m, both in stock market statements and in talks with investors ahead of a £4.4m share placing, the court found.
As well as a year in jail, Pearson is also disqualified from acting as a company director for five years and faces losing his own assets under the Proceeds of Crime Act.
His sentence is the latest in a string of criminal and civil cases linked to Langbar, which collapsed in 2005 after the company could not independently verify its ownership of its assets and said it had likely “been subject to a serious fraud”.
One of Langbar’s biggest investors, Delaware-registered Lambert Financial Investments, paid for its €207m (£183m) worth of shares during Langbar’s float in 2003 with a promissory note ostensibly issued by Banco do Brazil. This note, along with others used by Lambert to buy contracts from Langbar, turned out to be nonexistent.
But when Langbar discovered the worthless notes, the firm continued to make statements to the market about its value based on the nonexistent assets until October 2005, when its shares were suspended and advisers could not sign off its accounts.
Former Baker Tilly partner Pearson, who became chief executive when founder Mariusz Rybak stepped down in June 2005, told the markets in September 2005 that the false assets had been transferred successfully to a Langbar bank account, helping to prop up its share price.
Rybak himself paid £30m in 2008 to settle a civil recovery lawsuit linked to the firm’s collapse, while Langbar’s nominated adviser Nabarro Wells was fined £250,000 in 2007 for failing to make proper checks ahead of the company’s float on Aim.
The Serious Fraud Office said the “fraud on a grand scale” took in victims ranging from institutional investors to individuals, who have lost millions of pounds.