Financial Conduct Authority  

Ucis director jailed for hiding assets

Ucis director jailed for hiding assets

The director of an unauthorised collective investment scheme involved in losses of more than £15m has been sentenced to six months in prison for breaching freezing injunctions and attempting to hide information about his assets.

In March last year the Financial Conduct Authority won its case against Robert McKendrick who, among others, was ordered to pay losses associated with unauthorised investment schemes Africa Land and Reforestation Projects, also known as Capital Carbon Credits.

The High Court found the schemes had been unlawfully promoted to the public by "false, misleading and deceptive statements".

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Between 2009 and 2013 the schemes offered investments in rice farm harvests in Sierra Leone and investments in carbon credits intended to be generated from land in Sierra Leone, Brazil and Australia.

The FCA stated the losses across the schemes in which McKendrick was involved exceed £15m and the High Court’s judgement was intended to collect the losses to be paid back to investors - but McKendrick has since been declared bankrupt.  

On Friday March 1, 2019, the High Court found McKendrick had diverted funds and failed to disclose information about his assets in breach of freezing injunctions obtained by the FCA and the court.

The injunctions were intended to prevent Mr McKendrick from disposing of assets and ensure money could be recouped for investors in the unauthorised schemes.

In breach of the freezing orders, McKendrick appointed his wife to manage his portfolio of buy-to-let properties at a commission rate "significantly higher" than he had paid to his previous letting agents, the FCA alleged.

The FCA said McKendrick then diverted the rental income from these properties to his wife and did not disclose these arrangements.

Following a further application to the court brought by the regulator, McKendrick admitted his breaches of the freezing orders and revealed the whereabouts of his money.

In sentencing, Mr Justice Smith indicated McKendrick would have received a 12 month sentence but this was reduced in light of his admissions and "genuine attempt to remedy his failures to provide full and accurate information".

Despite McKendrick’s apologies Mr Justice Smith found there were "many, varied and deliberate [breaches] intended to thwart orders of the court". 

The FCA reported it is currently seeking to enforce its judgment obtained against McKendrick and others, prior to distributing the proceeds to investors.

Mark Steward, executive director of enforcement and market oversight at the FCA, said: "In this case, Mr McKendrick misled investors and then, in contempt of court, failed to comply with court orders requiring him to properly account for the losses. 

"The FCA will ensure that defendants who mislead investors are held to account to the fullest extent possible."