Fake trading desks, accounts audited with signatures lifted from Google and offices decked out with £10,000 statues are just some of the means Benjamin Wilson employed to carry off one of the most elaborate scams the FCA says it has ever seen.
Wilson, who was today sentenced to seven years in prison, persuaded 300 investors – many of whom were his personal friends – to invest £21.8m in what an FCA lawyer describes as “the emperor’s new clothes form of investment”.
He set up the front for the scam, a firm called SureInvestment, in 2003.
Potential investors were shown round the firm’s offices, which were lavishly kitted out with bull and bear statues worth £10,000, a bar, a games room and even an office massage room. Prospective investors could also watch traders at work on trading desks.
Wilson was regarded as a “trading maestro”, according to FCA criminal prosecution lawyer Alan May, who investors and staff believed had a natural gift for generating huge profits.
Accounts and trading statements for the firm showed he had grown the fund from $3.6m in 2005 to $160m in 2010, generating monthly returns of 4, 5 or even 9 per cent.
But in fact, almost nothing about the firm was as it appeared.
May says: “Wilson would simply make up each month what the monthly return and the fund value had been.
“The truth was, in 2005 he only had £100k invested. And in 2010 when he was telling everybody he had $160m, the figure was more like £20m.
“And Wilson wasn’t even a good trader – he didn’t do much trading, and when he did trade he invariably lost money.
“Even the staff were not what they appeared to be – the traders were actually trainee traders who were being taught by Wilson and who spent all day using computer simulated trading programmes.”
The trainee traders were unaware of the scam and many invested in the scheme, losing substantial amounts of money.
Wilson himself spent most of his time watching films in his office, or on the golf course.
May says: “He would come out of his office to say he had conducted an amazing trade that had made the fund masses of money, but in fact it was completely fictitious.
“It seems he actually spent most of his time downloading films and TV series on the internet. One of the witnesses said occasionally he would have to go into Ben’s office to ask him to stop downloading material because it was slowing the office’s internet connection down.
“By the end, he was hardly doing any trading at all and spending most of his time on the golf course.”
In order to deceive investors, which included a long-term friend of his parents who described him as ‘a member of our extended family’, Wilson forged a large number of documents.
When a potential investor asked to see a copy of the firm’s audited accounts, Wilson simply amended the accounts of another firm, changing the name and figures.
And to produce the auditor’s signature on the accounts, he typed the word ‘signature’ into Google images and downloaded the first result, which was actually the signature of the author Terry Pratchett.
Only about £4m of the total amount invested in the scheme was actually traded, of which Wilson lost about half.
The rest was spent on the firm’s offices and staff and funding Wilson’s lavish lifestyle.
Business expenditure included £814,000 on office renovation, £34,500 on a life coach who trained Wilson and other staff, including taking them on a horse whispering seminar, a £25,000 team building event and £10,000 on statues.
Investors’ cash was also spent on lifestyle expenses including a £4.7m house in Sandbanks complete with a swimming pool, £216,000 on fast cars including a Lotus Elise and a Ferrari, £74,000 on golf and £51,000 on numerous trips to Las Vegas. On one such trip, a bar bill paid by Wilson came to $37,000.
Wilson was eventually caught thanks to a tip off to the regulator from an IFA.
The FCA first got involved shortly after the company was set up in 2003, to inform Wilson that he needed authorisation.
After entering into negotiations with the regulator, in July 2005 Wilson told the FCA the company had been wound up and all client money returned.
The FCA contacted investors to check whether this was the case, and were told they had had their money returned.
But Wilson had persuaded the investors to keep the full truth from the FCA, telling them he would transfer their funds to a new offshore version of the scheme in the British Virgin Islands and to keep this from the regulator.
Although in fact, there was no offshore account and Wilson carried on as he was before, with the money sitting in his personal account.
By 2009 the amounts invested in the fund had picked up substantially, and in March 2010 a concerned IFA passed a SureInvestment brochure to the FCA, sparking a civil and later a criminal investigation.