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Investor granted freezing orders in suspected Ponzi scheme case

Posted: 10th February 2021   In: Dispute Resolution

An investor has been granted freezing orders against a father and son who ran a company that was allegedly operating a Ponzi scheme. 

The investor said that he had provided £700,000 to the company after being promised returns of 3% and guaranteed access to his capital on 28 days' notice. He maintained that he had received back only £438,256 despite requests for the full amount.

He alleged that the investment scheme was in fact a Ponzi scheme and that he had been induced to invest by the father and son’s fraudulent misrepresentations.

Following information that the son was selling his home, an interim freezing order was granted against him and the company.

The father denied any involvement with the investment.

The investor applied for a continuation of the freezing order and sought to add a claim relating to a cheque provided by the son's wife which had not been honoured. The wife had received a large sum from the proceeds of sale of the home, yet the son submitted that he had no funds.

The investor sought disclosure of what had happened to the proceeds of sale.

The court held that the investor's evidence led to a good arguable case of deceit. His allegations of reliance and inducement were adequately pleaded.

There was evidence that it was a Ponzi scheme and evidence that the transactions were of a dishonest nature. There was a good arguable case that the father was involved in the transaction. 

There was evidence of an ongoing risk of wrongful dissipation of assets and concealment by both father and son. A freezing order was granted against them and their company.

The dispute regarding the cheque from the son's wife was added to the claim.

The son had not complied with the previous order and the investor was justified in his application for an affidavit from him disclosing what had happened to the proceeds of sale.

Please contact Holly Baker if you would like more information about the issues raised in this article or any aspect of dispute resolution.

Investor granted freezing orders in suspected Ponzi scheme case
Ch D (Clare Ambrose) 14/01/2021
Posted by: Holly Baker
Dispute Resolution
Luton Office