Reporting restrictions lifted on ponzi investment scheme.
A fraudster who masterminded a wine investment fraud that offered returns of £100m has been jailed for five years.Reporting restrictions have been lifted to reveal the details of a case that led to the jail term for Richard Gunter, 50, who pleaded guilty to fraudulently obtaining money through Vintage Hallmark, a wine investment company.
Vintage Hallmark took £30m from 300 investors, and had it been a genuine business, the £30m was project to become £100m, but prosecutors said it was a sham. Gunter alone withdrew more than £1m from the company to fund a lavish lifestyle of luxury cars.
The Serious Fraud Office (SFO) has now published all the details of its investigation into Gunter and his conviction after the final case in a series of linked scams.
Richard Alderman, the director of the SFO, said: “Over the past few years the SFO has successfully prosecuted a number of individuals connected with these frauds. This brings a close to past wrong-doing. But the SFO is keen to prevent the public from further criminal acts and this is why we apply for serious crime prevention orders wherever appropriate.”
The linked fraud cases, which included wine investments running into millions of pounds, concluded at Harrow Crown Court last week.
Gunter had already been sentenced to five years for his part in the Vintage Hallmark case, but in the most recent trial, the jury was unable to reach agreement on another defendant, 52-year-old Robin Grove. Grove will not face a re-trial.
Gunter, who is now subject to a serious crime prevention order, lured customers from the USA and Canada into investing in alcoholic drinks.
This investment scheme, run via the Vintage Hallmark company, was similar to a ponzi scheme whereby investors are promised high returns, only for their money to be mismanaged by the scheme’s operators.
The scheme was structured in three stages. In the first phase, a boiler room was set up and manned with sales staff to solicit money from Americans and Canadians, for their investments in whisky, cognac and other alcoholic drinks.
Before the investments could be paid, staff were directed to “roll over” the value of the initial investment and the promised profit on the deal into other investments.
Staff described this mechanism as “product financing” and it led investors to believe their investments were successful.
In the second phase of the alleged fraud, staff told investors to convert the money they were owed into simple interest-bearing promissory notes. Promissory notes are financial instruments in which one party makes a promise to pay funds to another at a later date.
Finally, Vintage Hallmark was re-registered as a UK plc and investors were persuaded by sales staff under instruction to swap their promissory notes or product financing deals for shares in Vintage Hallmark Plc. Within a short period of time the shares turned out to be virtually worthless and Vintage Hallmark Plc was placed into liquidation.
In addition to the Vintage Hallmark case, Gunter was also convicted for fraud in a trial in September 2008.
In this trial four defendants including Gunter were convicted at Southwark Crown Court for their involvement in a similar fraudulent wine investment business, Vintage Wines of St Albans.
Now that reporting restrictions have been lifted, insolvencynews can reveal that Gunter was sentenced to four and a half years in this case.