The administrators of collapsed mini-bond provider London Capital & Finance said they found "a number of highly suspicious transactions" among a small group of people at the firm.
Smith & Williamson said in its report, released on Monday (March 25), that it would be pursuing a "small group of connected people" to recover funds and return them to investors.
The report stated: "There are a number of highly suspicious transactions involving a small group of connected people which have led to large sums of the bondholders’ money ending up in their personal possession or control.
"We are pressing these people to return those funds to us for the benefit of the bondholders and failing this we will pursue those individuals, as appropriate, for recovery of those sums."
London Capital & Finance entered into administration at the end of January, putting the funds of more than 14,000 bondholders at risk.
At present the administrators estimated bondholders would see as little as 20 per cent of their investments returned to them.
They said the company did not hold any immediately realisable assets, other than cash at bank of about £3.6m, while the outstanding loans to investors amounted to £237m.
But they found several million pounds of bondholder money flowed through Cornish and Dominican property companies and ultimately into the hands of Andy Thomson, chief executive of LCF, Simon Hume-Kendall and Elten Barker at London Oil & Gas, and Spencer Golding who ran an equestrian business.
Mr Hume-Kendall and Mr Thomson have so far agreed to pay the money into an escrow account to be returned if the bondholders receive their money back from the assets of LCF.
Advisers to Mr Thomson and Mr Hume-Kendall declined to comment to FTAdviser's sister publication, the Financial Times, saying they were still studying the report. Meanwhile Mr Barker and a lawyer for Mr Golding did not respond to requests seeking comment.
Shortly before LCF's collapse the Financial Conduct Authority ordered London Capital & Finance to stop marketing its fixed-rate investment bonds and Isa products and the provider had its assets frozen by the regulator.
The FCA alleged the Tunbridge Wells-based firm had signed clients up to fixed-rate Isas promising 8 per cent interest, with investors' capital then invested into mini-bonds used to issue loans to small businesses.
There were concerns the 14,000 clients of the firm may not have fully understood the nature of the investment they were making due to unclear marketing material.
As unregulated investments, London Capital & Finance did not need to be authorised by the FCA to issue the mini-bonds but it did need to be authorised to issue the promotion of the mini-bonds
Earlier this month the Financial Services Compensation Scheme confirmed it would not be accepting claims against the insolvent company because mini-bonds were unregulated investments and therefore not protected by the compensation scheme.
An investigation was opened following a referral from the Financial Conduct Authority to the National Economic Crime Centre, and the Serious Fraud Office said it had been working in conjunction with the regulator.