A group of businessmen allegedly lured pensioners into investing £558,000 in a worthless company and siphoned off the money to spend on flash cars and private mortgage payments.
Mark Chapman and his brother Lee claimed to have marketing deals with the MCC to use the name of their home ground at Lords on a range of exclusive whiskies and gins.
They and their friend Marc Payne persuaded eight investors aged between 70 and 92 to put money into companies called Specialist Packaging Solutions LTD (SPS) and CMS Drinks International in the hope of good returns.
They sunk more than half a million pounds into the ventures and lost everything apart from £5,000 which one investor succeeded in having repaid.
Lee Chapman and Payne, who were former financial advisers with Prudential but were no longer employed by the insurer when they recommended the two companies, persuaded former clients to plough their savings into the venture.
Mark Chapman bought a £46,000 Range Rover Sport, a £30,000 Porsche Boxster and a Mini Cooper and allegedly used company money to pay his mortgage and household bills.
Mark Chapman founded SPS in 2006 and persuaded business contact Graham Knight to inject £250,000 by telling him it had marketing rights to use the name of Lords Cricket Ground.
His brother Lee is a former Prudential agent who allegedly abused the trust of three elderly fomer clients from Devon to persuade them to invest £97,000 in the businesses.
Marc Payne is a friend of Lee Chapman, who was working as an independent financial adviser.
He allegedly funneled £180,000 from four more clients into the scheme.
Mark Chapman, aged 51, from Twyford, Reading and Merton, North Devon, denies five counts of fraud and two of using fraudulent documents.
His brother Lee Chapman, aged 49, from Merton, near Okehampton, denies four charges of fraud and three of acting as an unauthorised financial adviser.
Marc Payne, aged 43, of Higher Hearson, Swimbridge, North Devon, denied two frauds and four of carrying on a regulated activity as a financial adviser without authorisation.
The allegations against all three men relate to a period between January 2007 and August 2012.
The alleged victims and the amounts invested are Graham Knight, £291,000; Gwendoline Small, aged 85, £17,000; Gertrude Hill, aged 92, £40,000; her daughter Victoria Ford, aged 70, £40,000; Richard Biss, aged 91, £30,000; Valerie Addicott, aged 83, £50,000; Elizabeth Gage, aged 84, £50,000; and William Maynard, aged 83, £50,000.
Oliver Wellings, prosecuting, said the investors were encouraged to put their money into the companies by claims that it held the marketing rights to use the Lords name.
In reality, they never paid anything to the MCC and as a result an agreement with Lords was cancelled in March 2009 and Mark Chapman was warned he would be sued if he carried on using the name.
Mr Wellings said: “An important fact in this case is all the eight complainants share one characteristic. They are all elderly individuals.
“They all believed they were investing in a viable and properly run company which was a going concern with credible links to a prestigious brands.
“They believed they were making a business investment. What happened to all that money, it did not bear fruit. Besides £5,000 which was returned to one investor it was a total loss and the company was dissolved in April 2012.
“That in itself does not indicate criminality. However, the vast proportion of all this investment is that Mark Chapman took 17.23 per cent and Lee Chapman 10.79 per cent.
“One of the most extraordinary features is that company expenditure went directly to making personal mortgage payments for Mark Chapman and a lot of money was squandered on fast cars.
“A Range Rover Sport was purchased for £46,000, a Porsche for £30,000 and there was also a BMW for Mark Chapman’s son and a Mini Cooper for another family member.
“A large tranche of the income simply disappeared and there were cash withdrawals without any serious account. There was systematic mismanagement.
“Not only was there money taken for personal benefit but there was lying to investors about the company’s activities. A newsletter made false representations about the relationship with the MCC and another gave the impression the company was due £1.5 million revenues due from a major retailer called Neto.
“Put together, the loss to the investors, the misuse of company funds and the misallocation of shares, this was a systematic fraud perpetrated against those who invested in good faith.”
The three men all denied dishonesty when interviewed by police. Mark and Lee Chapman said they believed it to be a viable business which failed. Payne said he was a victim and lost £50,000 he invested. He said he advised others in good faith.
The trial continues and is due to run for four weeks.
