THE Scottish lawyer whose multi-million pound property hedge fund went bust amid claims that £90 million was misappropriated has popped up again in Gibraltar – and made another fortune from a similar scheme.

Gregory King founded Heather Capital – a failed fund which lured investors into providing huge loans on what turned out to be massively overvalued properties. Over its short life he paid himself around £34m in salary and benefits.

The Sunday Herald can also reveal that a Gibraltar company owned by him in the offshore tax haven was paid £6m, including a non-returnable deposit of £2.1m, for proposed housing development land in Kirkintilloch which had no planning permission, is in the green belt and cannot be built on because it is on a flood plain.

King, cousin of Glasgow nightclub magnate Stefan King, had paid £305,000 for the land – which he brought from was sold to him by housebuilders Stewart Milne after they were unable to obtain planning permission and concluded that they would not be able to get planning permission in the future.

King set up Heather in 2005, prior to the 2007-08 financial meltdown, attracting high-profile investors like City super-slicker Nicola Horlick as well as institutional investors and pension funds. It was registered in the Isle of Man and administered by King from Gibraltar. where, In both places, financial regulations are less than rigorous.

At one point, the fund was reckoned to be worth in excess of £300m.

Heather collapsed in 2010. An Isle of Man court judgement likened it to a “Ponzi” scheme.

Heather liquidator Paul Duffy of Ernst and Young has been pursuing King and the financial mess he left behind since then, alleging that tens of millions of pounds were unaccounted for. In 2012, he was able to confirm that up to £90m was missing in circumstances suggestive of a “deliberate fraud”.

Last week, Duffy won an appeal heard by three Scottish judges which now allows him to pursue damages claims against two legal firms, Burness Paul for £7.3m, and Levy & McRae for £28.412m.

The two firms had argued that the case was time-barred, that under the five-year prescription law the liquidator’s case should be struck out. However, it will now go to proof in front of a Court of Session judge for a full hearing of evidence, unless an out-of-court settlement is struck.

Two payments from Levy & McRae were made to companies owned or controlled in Gibraltar by King and his associate, Nicholas Levene. Burness Paul partner Scott Wilson also sent a payment for £3.3m into Levene’s personal account.

Levene later admitted ripping-off, among others, Stagecoach founders Ann Gloag and Brian Souter for £10m in an unconnected fraud. He was sentenced to 13 years and is still in jail.

In January 2007, according to court papers, Heather paid £19m into a Levy & McRae client account. Five days later, it was paid out to a Panamanian company owned by Levene.

Later that month, a further £9.412m from Heather was paid through Gibraltar solicitors to a company owned by King. Both these payments were undocumented and without security.

The Glasgow-based solicitors maintain that they never acted for Heather.

In December 2008, the Gibraltar solicitor, Hassans, made an “unexplained payment” of £200,000 to Peter Watson, one of Levy & McRae’s senior partners. Watson left the company in 2014 and has been suspended from his part-time role as a sheriff.

King lives in the gated La Zagaleta millionaire complex in Marbella, with its own golf courses, riding stables and swimming pools, where houses sell for up to £20m. He paid himself around £34m from Heather between 2005 and 2008.

Duffy, the fund liquidator, claims in court papers that many of loans made to companies to develop land were “a fabrication and a sham”. They were usually paid through a subsidiary company called Mathon, in which Peter Watson was, for a time, a director.

The properties purchased, several of them in Scotland, were valued by Heather at £161m but were eventually sold for just £8m.

Several of the Scottish loans went to companies owned by highly controversial businessmen. The twins Mario and Carlo Rea were recipients. They are associates of the Glasgow crime family the Daniels. The two were convicted of attacking members of the rival Lyons clan. Mario, a boxing promoter, was also stabbed in the head, arm and back in Coatbridge, in 2012.

Other loans went to companies owned by Stephen McKenna and Allan Stewart, who once claimed to be interested in buying Rangers. However, their company went bust owing the tax authorities £78,000. McKenna has also had another of his companies compulsorily wound up.

In 2012, a Gibraltar couple, Mark and Minette Compson, set up Advalorem Asset Fund Limited, a similar scheme to Heather, to buy and develop properties. Four UK pension funds backed them with £7,760,500 of investment. Like Heather, Advalorem (AAFL) also went bust. The principal cause was the purchase of a piece of land in Kirkintilloch owned by King.

The 36 acres had been owned by the housebuilders Stewart Milne. In 2000, Milne applied to East Dunbartonshire council for planning permission to build, which was refused. They then took the view that no-one could get permission to build on what was a flood plain.

According to legal submissions in the Gibraltar Court of Appeal, the land was sold in 2008 by Milne for £305,000 to a company incorporated in the British Virgin Islands, owned by King, and then shuffled through two other companies to one in Gibraltar, Thistle, again owned by King.

Despite the Milne planning refusal, a report commissioned by AAFL from a Glasgow firm of surveyors indicated that planning permission was likely, as the council was “skint”, valuing the land up to £10.3m – although valuations since the collapse have put the worth as less than £200,000.

AAFL, according to court papers, paid King’s company “a non-refundable deposit of over £2.1m with no reason or justification being provided”, with the balance of the £6m completed by June 2013.

But according to the AAFL liquidator, Adrian Hyde, who visited the Kirkintilloch site: “Valuing the land on the basis of an assumption that it is not a flood plain makes the valuation completely worthless.” He addedAdding that it “was based on what I describe as fantasy assumptions”.

In 2015 King, as well as his lawyer Andrew Sobolewski, accountant Andrew Millar and property expert Scott Carmichael were named in police report to the Crown Office. A spokesperson said only that a report had been received “in relation to four men aged 41, 44, 54 and 62. The report remains under consideration.”