City traders claiming to have exclusive rights to an Ecuadorian gold mine have been sentenced after duping hundreds of people out of nearly £5.5million.
Mastermind Stephen Todd, 40, claimed to work for a company called IPR Capital Ltd, which employed broker companies as sales agents to sell shares in relation to a gold mine in Ecuador.
The now disqualified director acted as the brainchild of the scam by employing sales agents and providing them with training in selling bogus investments in the Chichi gold mine.
Todd and financial analyst Steven Mayne, 42, admitted conspiracy to defraud while David Williams, 41, and John Andrews, 54, admitted laundering the proceeds.
Financial investigators began to probe IPR Capital after employees at Kendrick Zale Limited were convicted for conspiracy to defraud and money laundering in relation to the sale of worthless carbon credits.
Following the warrant and subsequent arrests at Kendrick Zale, IPR went on to sell shares in a partnership which purported to own the rights to the Chichi gold mine in Ecuador for five years.
The shares were being sold on behalf of IPR at the initial price of £3,000 per 0.03 per cent and prospective investors were told that their investment would go towards modernising exploitation methods.
Investors were told to expect an overall return of 250 per cent.
Some early investors did receive a revenue payment in March 2014, equal to 2.3 per cent of their original investment, but a review of the bank accounts held both by IPR and five separate escrow agents showed that the money had actually come from new investor funds.
Investigators found that only seven per cent of investor funds were ever sent to the mining partner in Ecuador.
In May 2014, IPR received independent Ecuadorian legal advice which confirmed that the rights were not properly owned by the mining company, making the partnership null and void.
Despite this, IPR continued to promote and sell shares at an increased share price of £6,000 per 0.02 per cent until the company was put into provisional liquidation in February 2015.
The company was wound up in April 2015, with director disqualifications ordered against Mayne and others.
In total there were 343 victims, who lost a combined total of £5.4 million.
Financial Investigator Hayley Wade, from the City of London Police, said: “This was a long and complex investigation, fraught with challenges, but ultimately the weight of the evidence against the defendants led to late guilty pleas.
“We hope that the sentences will come as some comfort to the hundreds of people who fell victim to this scheme. Officers will now be continuing with the work in this case to try and recoup some of the money lost.”
Stephen Todd, 40, from Liverpool, was sentenced to two years imprisonment, suspended for two years, along with a 12 month curfew for conspiracy to defraud.
Steven Mayne, 41, from London, was sentenced to two years imprisonment, suspended for two years, along with a 12 month curfew for conspiracy to defraud. He worked as the director and was the signatory to company accounts, as well as conducting compliance calls.
David Williams, 40, from Minster, was sentenced to 12 months imprisonment, suspended for two years, along with a 12 month curfew order for money laundering. He worked in IT at the company, alongside being a director of one of the sales agents and a signatory on the account.
John Andrews, 53, from Orpington was sentenced to 12 months in prison for money laundering. He worked as the office manager and authorised payments.