A trio of directors who cheated more than 200 investors out of almost £12m of their pension savings have been disqualified for a combined 34 years.
The High Court heard Kevin Kirkwood, 39, and Gary Quillan, 48, both of Liverpool, and Gregory Gerard Garrett, 49, of Leamington Spa, had operated a so-called ‘pension liberation’ scheme by scamming consumers who were after a loan.
Pension liberation, unlike other pension transfer-related scams, happens when a saver is persuaded to access their pension funds before the age of 55 when permission has not been provided by HM Revenue and Customs.
This is subject to high tax charges by HMRC of at least 55 per cent of the pension withdrawn.
Kirkwood and Quillan ran Liverpool-based KJK Investments while Quillan’s brother-in-law, Garrett, was director of G Loans, based in Windermere.
The court heard clients seeking a loan were offered the required amount from G Loans on the condition they simultaneously invested their existing pension in KJK Investment shares — the value of which was typically twice the value of the loan they received.
The investment, which was advertised with a potential 6 per cent annual return, would be used to repay the loan on retirement.
Over a 30-month period 209 investors ploughed £11.9m of their pensions into KJK Investments.
About half of this money was then loaned out to the very same clients through G Loans — investors were in effect being loaned their own money.
The remaining invested funds were used by KJK Investments on £900,000 worth of sales commissions while £500,000 funded director salaries. Some was also used to make further loans to other companies on uncommercial terms.
Both KJK and G Loans were wound up in the public interest in 2015 after the Insolvency Service undertook a confidential investigation that resulted in a petition to the court.
Passing judgement at the Manchester High Court on September 18, District Judge Obodai found the directors had misled investors and deliberately caused the companies to obscure the relationship they had with each other, calling the scheme a “house of cards”.
Kirkwood was handed a 10-year ban, while Quillan and Garrett both received 12-year disqualification orders.
Alex Deane, chief investigator for the Insolvency Service, said: "None of the directors expressed any real regret for deliberately misleading people who were mainly small pension investors, and who were targeted because they were unable to get credit and required cash.
"Pension liberation is being widely promoted as an easy way of gaining early access to pension savings. Any schemes offering such benefits should be viewed with caution and independent financial advice should always be sought before entering into such a scheme."