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In recent news, City solicitor Jonathan Denton, along with a dozen other defendants, have been jailed for 15 years for being involved in an investment fraud scheme which amounted to £30m in total. In 2015 police first received reports that Denton was involved with Simon Oakley and were working together in a likely fraudulent investment scheme. Named Operation Circus Two, the Yorkshire Police described the fraudulent investment scheme as one of their biggest ever and took evidence from multiple bank accounts, companies, and witnesses from all around the world to uncover.

This scheme was perpetuated through a network of Ponzi schemes which promised investors huge returns. North Yorkshire Police said that around £30m in total was lost by victims, some of whom were elderly people who had invested their pensions and life savings into the scheme.

What is a Ponzi Scheme and what are the penalties?

A Ponzi scheme is a fraudulent investment scheme offering very high returns to investors over a short period. However, these returns are not from profits earned from the supposed investment scheme, but money invested by new investors. Old investors are paid by new investors. Eventually, the unsustainability of the scheme will cause it to implode, and the scheme operator disappears, along with all the investments.

In the UK, convicted fraudsters can be subject to a variety of penalties including:

  • A maximum of10 years imprisonment per offence
  • Substantial fines
  • Deprivation orders
  • Financial reporting order
  • A serious crime prevention order
  • Confiscation order i.e. proceeds made from the crime will be confiscated and may be used to compensate victims.

Professional Negligence Claims

If you are a victim of financial loss from a fraudulent investment scheme, you could pursue a professional negligence claim.

For example, if you instruct a solicitor who failed to advise on obvious or high risks of property development schemes. The Solicitors Regulations Authority (SRA),regards property schemes as inherently risky. If a scheme offers “risk-free” investments urging investors to acquire and quickly sell the property at a profit, it is a clear red flag. In a Ponzi Scheme, these transactions will not occur, and investors may, for example, retain a portion and utilise the remainder to repay previous investors. Funds will eventually run out, leaving investors with nothing.

Although they’re not obliged, if you instruct a solicitor, there are certain risks of the schemes which are precisely the types of risks solicitors should advise their client. If a scheme is offering “risk-free” investments and/or offering highly favorable returns to the investor, it should raise alarm bells, as it is very rare that any investment is risk-free.

All Solicitors owe their clients a statutory duty of care to act in their best interests; if this duty of care is breached, a claim can be made. Specters solicitors specialise in making these claims, so if you’re interested in seeking legal representation then don’t hesitate to contact us on 020 7251 9900. Once we’ve confirmed you have a valid claim, we’d be happy to help during any stage of your professional negligence claim.