A COMPANY director who conned investors out of millions in a Ponzi-style scheme run from an Edinburgh office contributed to a 300 per cent rise in fraud across the UK costing £70 million last year.
Stephen Farley, 47, who duped clients out of £18.4m, was among a number of individuals highlighted in a new report who cost victims and the tax man £69.6m – a 300 per cent rise in 12 months.
The total value of UK fraud is now at a five-year high, according to the new figures.
The unscrupulous Barbados-born businessman from Newtongrange, Midlothian, was jailed for seven years in November by Judge Lady Scott, who said his had been a complex, detailed and elaborate deception.
He ran the scam at his firm Cameron Farley’s offices at St Andrew Square in Edinburgh from April 2004 to October 2008.
He admitted the fraud at the High Court in Edinburgh. Potential investors would be contacted by him saying he would invest their money and trade it on the foreign exchange market. Losses would be limited and underwritten by insurance.
By April 2008, he launched a purportedly new investment opportunity, “guaranteeing” a 100 per cent return on any capital deposited, along with interest at 9.25 per cent. But his scam was akin to a Ponzi scheme fraud, and there were no investments.
Farley’s case was among 36 across Scotland – with tax fraud the most common – compared to 28 in 2015 The total for the UK as a whole was 504 cases, which in contrast to the Scottish figures represented a small reduction from the 519 the year before.
But global accountancy and business advisory firm BDO LLP’s annual research into reported fraud shows that the total UK value of fraud in 2016 rose to £2.0bn, a five-year high, an increase of 31.5 per cent from the previous year, and the highest value since 2011.
Public administration reported fraud rose sharply in 2016 with the value rising by 204.7 per cent to £1.4bn (2015: £450.9m). But this was largely due to a single £1bn VAT “carousel fraud” case involving a woman from York. Sarah Panitzke was named in October as one of ten British fugitives police believe to be hiding in Spain’s expat communities.
She was a senior member of gang behind a VAT fraud conducted by controlling many company accounts remotely via different IP addresses.
She travelled to Dubai, Spain and Andorra and was responsible for laundering approximately £1bn. Panitzke was sentenced to eight years in prison.
However, financial services, mortgage fraud and third-party frauds overall showed a significant year on year decline.
The report’s author, Kaley Crossthwaite, Partner and Head of Fraud, BDO LLP said: “It is extremely encouraging to see that the public and regulatory scrutiny within financial services is starting to gain some traction in reducing the volume and value of reported fraud.”
Insurance fraud dropped due to better anti-corruption systems.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article