A company boss accused of cheating thousands of property investors out of millions of pounds has been found guilty of fraud.
David Ames, 70, was accused of three counts of fraud by abuse of position while head of Harlequin Management Services South East Limited.
He allegedly encouraged investors to purchase overseas properties in the Caribbean before they were built and then failed to give them anything in return.
At Southwark Crown Court today (August 3), he was found guilty on two counts of fraud by abuse of position. He offered no evidence in his defence.
The Serious Fraud Office successfully convicted him for the £226mn fraud involving celebrity-endorsed luxury resorts in the Caribbean.
An SFO investigation uncovered how Ames deceived over 8,000 UK investors in the Harlequin Group, a hotel and resorts development venture.
Victims were led to believe they had a secure investment in property whereas, in reality, Harlequin Group was never operating as promised.
SFO director Lisa Osofsky, said: “David Ames committed fraud on a huge scale, knowingly exposing thousands of UK investors to losses totalling hundreds of millions of pounds.
“Diligent SFO investigators reviewed millions of documents, traced over 8,000 investor deposits and called on more than 25 witnesses, to expose the full extent of Ames’ deception.”
The business model relied upon investors paying a 30 per cent deposit to purchase an unbuilt villa or hotel room, half of which went toward fees for Harlequin and relevant salespeople, while Harlequin put the remaining 15 per cent toward construction.
Investors were fraudulently told that the building of the properties would be further funded by external financial backing.
With no additional source of funding, three properties needed to be purchased to finance just one of the luxury accommodation units.
This led to the expansion of the scheme, the diversion of investor money between resorts and ultimately a funding shortfall of over £1.2bn by 2012 – seven years after Ames launched the scheme.
By this point, an expert accountant told Southwark Crown Court that investors were exposed to a near 100 per cent risk of loss, which Ames did not contest.
The investigation revealed that by the time it went into administration in 2013, Harlequin had sold around 9,000 property units to investors, with less than 200 ever actually being constructed.
Throughout the entire eight year project, only 28 of over 8,000 investors ever completed on a purchase, leaving well over 99 per cent with no return on their investment.
Thousands of investors lost £398mn in savings and pension pots between 2006 and 2015.
The SFO said several thousand victims lost pensions and life savings to the fraud, while Ames enriched himself and his family by £6.2mn.
The Harlequin companies were family businesses, employing at certain times both David Ames’ wife and his son, who was paid £10,000 per month.
Chairman of Harlequin
Yesterday (August 2), the jury trying the company boss had been sent out to consider its verdicts.
Ames had been temporarily barred from serving as a company director due to a previous bankruptcy and therefore was the “chairman of Harlequin”.
The SFO uncovered how he repeatedly ignored warnings that the business was likely insolvent, while concealing this reality and continuing to sell more units to investors.
It is believed he sacked associates who raised the alarm, and on one occasion told colleagues that concerned investors needed “to be put in their place” to avoid attracting “bad press”.
SFO said Ames made publicity a key priority, promising celebrity-sponsored tennis, golf and football academies with marketing videos in which he personally explains his vision for the resorts.
Predicting major tourism development opportunities, he even secured the endorsement of politicians in the region, including the prime ministers of Barbados, St Lucia, and St Vincent and the Grenadines.
Ames will be sentenced in September 2022.
Source : FT Adviser