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Operators of London Capital & Finance’s “Ponzi scheme” have been told they are liable to pay £180mn to cover losses sustained by investors in one of the UK’s biggest financial scandals.
Spencer Golding, a businessman found to have had “ultimate control” of the now-defunct investment company, alongside other defendants including former LCF chief executive Michael “Andy” Thomson, were told on Friday they were liable for a total of £180mn.
Another group of defendants, including former police officer Paul Careless, whose marketing efforts had attracted individual savers to LCF, were found to be liable for a total of £211mn for “dishonest assistance”.
At a High Court hearing in London on Friday, the judge in the case said he recognised it was “highly unlikely” that the defendants would in practice be “able to pay anything like the amounts” he ordered, given the “economic circumstances of the parties”.
But administrators to LCF, which raised about £237mn from almost 12,000 investors before its collapse in 2019, said they would push to recover as much as they could.
The hearing came after Mr Justice Miles ruled last month that the failed provider of so-called mini bonds was a Ponzi scheme that misrepresented itself in a “widespread, fundamental and systematic” way.
LCF had promised high returns to investors, many of them elderly, by providing financing for small and medium-sized UK companies.
In fact, said Mr Justice Miles, a “substantial part” of the money raised was misappropriated and used to make payments to people connected with the company.
Some of the proceeds were spent on items including diamond earrings, horses and shotguns, the court previously heard.
Administrators had brought the civil case in an attempt to recover money on behalf of creditors, which include the Financial Services Compensation Scheme as well as individuals who invested particularly large sums and were not covered in full by the scheme.
Barry Coffey, partner at Mishcon de Reya, representing the administrators, said on Friday: “We will now be taking steps to enforce the terms of the order and collect assets to realise in satisfaction of the judgment.”
He said administrators were “pleased to have now obtained this order, after four and a half years of litigation.”
Lawyers acting for Thomson told the court on Friday that he was “clearly not the mastermind” of LCF, and that he had did not derive nearly as much financial benefit as some of the other defendants.
Lawyers for Careless said he “did not know the full details of the misappropriation of assets” and “was not himself involved in or fully aware of the dealings with the monies raised by LCF once the money had been raised”.
Lawyers acting for Golding told the court it was “vital that sufficient time is given” to him “to enable him to comply with [his] obligations”.
