HGEC Capital Ltd: Dad's final years 'blighted' by £155k loss

The returns offered by HGEC Capital Ltd were astronomical. Too good to be true, really. But Jane had been reassured by financial planner David Gibb.

He had been a friend of the family for decades, someone whose judgment they trusted.

Such was the promise of the investment, and the trust placed in the adviser, that her dad, Ronald Thomas, eventually ended up investing more than £155,000.

In 2020, HGEC went into administration, owing at least £4.3 million to more than 56 investors. There was, administrators say, little more than £7,000 in the firm’s bank accounts.

It is a complex tale involving Old Firm footballers, gangsters, a convicted Texan fraudster, and the former treasurer of the Scottish Conservatives.

But at its heart is a number of small investors who handed over their life savings, and substantial chunks of their pensions.

Ronald died last year, and the scale of the loss “blighted the last few years of his life”, the family say.

Jane told The Herald on Sunday that Mr Gibb went to great lengths to secure her investment.

She said: “He contacted me, said he had a few ideas and I said, well, should we Skype or FaceTime or something. And he doesn’t do business like that, he likes to do business in person, is what he said, and so he flew to my nearest airport, and I had to go meet him, and we sat and talked over several coffees. And then he got another plane home.

“And in the time that we talked, I mean it was a few hours sitting around, but in the time that we talked, he obviously quizzed me about my set-up, what I wanted to do, and gave me some ideas about how he could help me.

“And the first thing that he pressed on me was the HGEC pamphlet, saying Dad had invested, it was 10% that you got return for your investment, it’s a really good investment, he got lots of people doing it, and, you know, you’re kind of foolish not to do it.”

Jane says Mr Gibb seemed very canny and very personable. 

In the slick brochure she had been presented with, HGEC Capital claimed 2018’s downturn in the oil price presented an opportunity for investors.

It listed a number of oil and gas sites in Texas that, it said, were worth $89,360,000 at the time, but which it claimed could be sold for $666,000,000 in 12 months.

The director and 100% shareholder of HGEC Capital was Ayrshire businessman Kenneth Campbell.

He was sequestered on December 3, 2019. According to the public Register of Insolvencies, his debts total £1,073,747.63

Ayr Sheriff Court appointed Begbies Traynor as the administrator for HGEC Capital in February 2020 following a petition submitted on behalf of an offshore fund registered in the Cayman Islands.

The period of administration has just been extended to August next year.

According to reports filed with Companies House, they say that around £1 million was transferred “to and from” a bank account in the USA between April 2018 and June 2018. However, they have been unable to find “trace of any further transfers” to the states after this time.

According to HGEC Capital bank statements, all sums invested after June 2018 “were distributed shortly after receipt to various parties, including Mr Campbell”.

There are 30 parties who received payments totalling over £4m.

So far, Begbies Traynor has managed to retrieve just £13,061 from one of those people.

In emails seen by The Herald on Sunday, Mr Gibb says he received a commission for everyone he introduced to HGEC Capital who invested.

It is not known exactly how many clients Mr Gibb persuaded to back the company, but The Herald on Sunday has spoken to at least four, and Jane says she knows of many others.

Mr Gibb also invested in HGEC Capital. According to documents filed with Companies House, his loss is £72,468.

In a frank email exchange before he handed over his investment, Ronald asked Mr Gibb: “Could this be a form of Ponzi scheme?”

The adviser replied: “It is not in any shape or form a Ponzi scheme.”

He signed off his email to his old friend: “As you know, I only do my business on trust and reputation.”

A Ponzi scheme is a fraud where existing investors are paid with funds collected from new investors.

The administrators say no money from investors was sent to Texas after June 2018, but funds were taken by HGEC Capital up until December 2019.

Instead of being invested in Houston Gulf Energy Corporation, the administrators say this cash was “used in a variety of ways, usually immediately upon receipt”.

This includes “investor funds being used to pay returns due to other investors”, and over a £1m towards the “personal expenditure of Mr Campbell”.

Other money was used on “introductory commissions to unregulated financial business advisers, some as high as 25% of funds deposited”.

There were also “miscellaneous payments to or on behalf of third parties and associates”. The administrators say the sums involved “are significant and vary in size, with one party the apparent beneficial recipient of funds totalling upwards of £500,000”.

It has previously been reported that Glasgow-based businessman Richard Cook, a former Scottish Conservative candidate and treasurer of the party, signed a deed of trust between HGEC Capital and a Texas oil firm run by a man described by a judge almost a decade earlier as “a repeat offender with criminal convictions for securities fraud”.

On behalf of HGEC Capital, Mr Cook made a number of visits to the US on the company’s instruction and also registered the firm’s website.

Under the deed of trust signed by Cook, HGEC Capital – formed in Glasgow in 2018 – agreed to lend $14.3 million to Texas Gulf Coast Secured Lenders Joint Venture LLC in return for oil and land rights.

There is no suggestion of any wrongdoing on Mr Cook’s part, and his lawyers say he had “no involvement with any investor in, or in securing any investment in, HGEC”.

Mr Cook is now working with Begbies Traynor and creditors “to advise them with a view to securing recovery of funds”.

The real owner of the Texan properties, according to the deed signed by Mr Cook, was a company called Houston Gulf Energy Corporation.

This firm was run by John Ehrman, who at the time was being indicted by a grand jury over a $2.3m lease fraud involving a series of oil wells in Texas. He was sentenced to 42 months in prison for fraud in August 2018.

Houston Gulf Energy Corporation went into receivership in Texas in March 2019 and the administrators say that the receiver “had never heard of either Mr Campbell nor HGEC Capital Limited”.

It is understood HGEC approached a number of high-profile footballers, including players for Rangers and Celtic, though none appears on a list of unsecured creditors that Begbies Traynor lodged with Companies House earlier this year.

However, the document does name the wife of a Rangers star.

Meanwhile, a report last year claimed a former Scotland international footballer had hired “gangland enforcers” to retrieve missing money.

The Sunday Mail quoted an “insider” who said: “There are a lot of people who have lost huge sums of money and they’re not in the mood to discuss it – they just want their cash back and are tired of being fobbed off.”

Looking back on how everything unfolded, Jane says there were warning signs: “The first thing that was odd was that he asked me to send the £20,000 to transfer it across to Campbell’s personal accounts.

“And I didn’t get immediate recognition that I’d done that, and I’ve got an email trail of me saying to David, look, hang on, is somebody’s going to acknowledge this? Am I getting paperwork? It didn’t come through for nearly two weeks.

“That should probably have warned me.”

In one report, filed by the administrators, Mr Campbell is said to have used his “personal bank accounts for all company transactions, including the collection of investor funds, until company bank accounts were opened in December 2018, some nine months after the date of incorporation”.

They say that at a meeting with him, he confirmed that separate investment bank accounts were not set up to hold investor funds, as would have been expected.

“It was very lucrative. Obviously, now I know what I know, I know you never get that kind of money without it being really high risk,” Jane adds.

“I just feel stupid. I don’t know, even in retrospect, how I would know that this deal wasn’t what it said it was.

“That the front they’ve managed to put up about this business wasn’t what it was.”

Mr Gibb has never apologised for what happened, Jane says, nor does she think she could forgive him.

“What I find pretty impossible to forgive him for is the fact that he let dad invest.”

Mr Gibb did not respond to requests for a comment when approached by The Herald on Sunday.