HBFS Financial Services  

Adviser jailed over £14.5m Ponzi scheme

Adviser jailed over £14.5m Ponzi scheme

A wealth manager has been sentenced to six years in prison after pleading guilty to running a Ponzi scheme, in which 55 victims were defrauded out of more than £14.5m.

Freddy David, of Hartfield Avenue, Elstree, Borehamwood, pleaded guilty to obtaining a money transfer by deception and fraud by abuse of position at Southwark Crown Court. David was also disqualified from being a director of a company for 10 years.

An investigation by the City of London Police's Fraud Squad found that between 2005 and 2017, 49-year-old David had been running a Ponzi scheme through wealth management company HBFS Financial Services Limited (HBFS), of which he was managing director. 

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The case was referred to the City of London Police, the national lead force for fraud, by the Financial Conduct Authority (FCA) which became suspicious of the HBFS bank accounts.

Following the referral, the City of London Police worked closely with the FCA to investigate the affairs of HBFS.

This fraud was running in parallel with legitimate HBFS business, with David using the company’s name as a means to defraud victims out of vast sums of money.

A total of 55 victims invested a total of £14.54m.

The investments made by victims varied between £20,000 and £750,000 per person.

David would convince victims, some of whom he knew personally as friends, that their funds were being held in a high interest bank account offering between 4 and 8 per cent interest annually.

David would tell victims they could obtain interest each month and they were advised that their money was locked in for varying amounts of time, between three months and five years. 

The investigation found victims were transferring large sums of money into the HBFS business accounts, under the impression they were investing in high interest accounts.

But it was found large sums of money were being transferred into David's personal bank accounts for his own use as well as being used to pay other investors their "monthly interest".

A review of David's personal bank accounts showed once he received transfers from HBFS related accounts, he used this money to fund his gambling habit, as well as for paying his children's school fees and holidays abroad.

The investigation found David was using client money for his own purposes, including the funding of his online gambling habit.

Between January 2005 and November 2017, David spent £15.6m on gambling websites and £240,000 in one day alone. 

Victims were provided with forged bank documents, which supposedly confirmed the investments had been made and that interest was being accrued each month.

Katie Watkins, police staff investigator, said: "David took advantage of individuals who placed significant trust in him.

"He abused his position and as a consequence this has had a devastating impact on the victims and their families, both financially and psychologically.