Stephen Todd, 41, masterminded the swindle through IPR Capital Ltd, offering shares in the mining company in Ecuador.
Todd has previous convictions for fraud and was disqualified from being a company boss for 10 years in 2017 for unfit conduct while running a series of disreputable firms in the City.
He and financial analyst Steven Mayne, 42, both admitted conspiracy to defraud while David Williams, 41, and John Andrews, 54, admitted money laundering offences.
[This is] a story of dreams crushed, relationships torn apart. Judge Gregory PerrinsTodd and Mayne were both sentenced to two years' imprisonment, suspended for two years.
Williams received a 12-month sentence suspended for two years.
Andrews, a former Army NCO currently serving a lengthy jail sentence for dealing MDMA, was jailed for 12 months.
Todd was also disqualified from being a company director for six years.
'I'm finding it difficult to re-live this time'
Retired nurse Geraldine Fitzgerald, who lost £13,000 in the scam, had told Southwark Crown Court: "I felt excited about the gold mining project. I had recently inherited a few thousand pounds from the death of my mother.
"I was very impressed by their friendliness on the phone. They invited me to visit the office.
"They gave the impression of being honest and open. I was impressed by the emphasis on eco-friendly mining. I was very impressed by their alleged care for miners. There was talk of a school being built, a health clinic being set up.
"It really touched all my buttons, all the things I care about. I trusted them."
Fitzgerald said when she realised she had been conned "I felt sick and wobbly. I didn’t want to believe that such nice, friendly people could be involved in scamming people like me.
"The feeling of blankness lasted some time. I’m finding it difficult to relive this time. I feel sick that I allowed them to get emotionally inside me. I feel very sad that I allowed money from my mother to be used in this way."
She added: "I worked as a nurse in developing countries. I am now reliant on housing benefits and a state pension. I put a lot into life. No one will pull me down or make me feel like a victim forever."
Another investor that did not want to be named lost £71,000 and told the court: "It seems that the people behind the fraud were trying to line their own pockets. They had little or no thought for the investors putting their money into the scheme."
Judge's comments
Judge Gregory Perrins said: "The entire investment was doomed to fail so that many people who had put their trust and so much of their lives in the project would suffer loss.
"The greed involved meant it was doomed to fail. There is no doubt that this is a significant, sophisticated and prolonged fraud.
"It is important to not lose sight of what this fraud is actually about. A large number of innocent people have had to endure the loss of their financial security, with all the loss and heart-break that that brings.
"[This is] a story of dreams crushed, relationships torn apart. Bringing so much misery to the lives of so many."
The court was told heard 344 people were persuaded to invest £5.4mn in the project between May 2013 and January 2015.
Over time it was quite clear that this was not a viable investment. Judge PerrinsWalton Hornsby, prosecuting, said: "The reason the conspiracy came to an end was that in February 2015, the Insolvency Service shut it down, as it was seen to be against the public interest.
"Investors lost all their money. This has been categorised at various points as a boiler room fraud.
"That is not in fact a correct description. It is quite clear that there was a genuine intention to set up a profitable and functioning gold mine in Ecuador, and it was hoped that it would result in investors receiving a substantial increase in the amounts they had invested.
"Over time it was quite clear that this was not a viable investment. Mr Todd was capable of behaving in a domineering if not dictatorial manner in relation to others involved with IPR.
"Mr Todd at this time was capable of being a bully, particularly in relation to Stephen Mayne. He was capable of domineering him, bullying him, and persuading him to do things that were against his better judgement."
The court heard that workers in the gold mine had to be laid off before Christmas 2014. "Having to lay off workers before Christmas, due to lack of funds from England, is a very striking feature in this case.
"Starvation of funds was one of the main reasons it was not profitable.
"So much of the funds from investors were going nowhere near [the mine] but into the pockets of various individuals", the prosecutor continued.
History
Mr Hornsby explained that Todd would never have been authorised to run the scheme by the Financial Conduct Authority because of his past conduct.
"Both (Todd and Mayne) must have been aware that this investment scheme would always have been categorised as a collective investment scheme, and that Mr Todd would never be authorised to run it.
Todd was jailed for seven years for 'carrying on a business with intent to defraud creditors' at Croydon Crown Court in 2018.
A year later he received a consecutive sentence of 12 months imprisonment for a scam involving The Commodities Link Limited, which offered investments in rare earth metals.
Mayne had no previous convictions, and had published articles in the financial press as well making TV appearances.
The effect of being in custody during the pandemic cannot be overstated.Anhu Mohindru, defenceHe worked in the City as a regulated broker and had his own firm called 'EGR Broking Ltd' which had ceased trading.
Anu Mohindru, KC, defending Todd, said: "Since the offence, Mr Todd embarked on a journey of self-reflection. He obtained a higher education certificate in law."
Todd was jailed again in 2019 for another scam where he marketed plots of land that had no planning permission.
"The effect of being in custody during the pandemic cannot be overstated", said Mr Mohindru. But he also argued that Todd had learned from his time in jail.
Todd co-founded ‘Inside People’, an organisation aimed at securing employment for ex-offenders.
The defence said: "He is a true advocate for rehabilitation. It would have a profound negative impact if Stephen were sent to prison."
Andrews was jailed for five and a half years in September 2020 for dealing in MDMA, a Class A drug.
He was "a close friend and business acquaintance to Stephen Todd for more than eight years", said Jason Sugarman, for Andrews.
"Mr Todd could be extremely persuasive and dictatorial as an employer."
Mr Sugarman said Andrews "has served extra time because he has not been eligible for early release, and he has suffered from the delays of Covid and this case hanging around.
"He has a child he hasn’t seen since his third birthday, who is six in early March.’
Todd, of Limehouse, east London, and Mayne, of Earl’s Court, admitted conspiracy to defraud.
Williams, of Minster-on-Sea, Kent, admitted converting criminal property between 19 May 2014 and 3 February 2015, namely £60,553, knowing or suspecting it to constitute or represent in whole or in part a person’s benefit from criminal conduct.
Andrews, of Greenhithe, Kent, admitted converting criminal property between June 14 and 30 2014, namely £60,000, knowing it to constitute and hold at least in part proceeds from criminal conduct.
Confiscation proceedings will now begin to recoup some of the money lost by victims of the fraud.
Eddie Beaver is a court reporter at Southwark Crown Court
