UK: £115 million fraudster jailed
A three-year CoLP investigation has concluded with a 14 1/2 year prison sentence for the mastermind of a £115 million fraud that trapped 800 investors living across the UK and around the world.
Kautilya Pruthi, 41, from Wandsworth, admitted to running one of the UK’s biggest investment frauds from 2005 to 2008, trading as Business Consulting International (BCI) to lure clients in with the promise of massive monthly returns made from lending to companies in crisis.
Victims on the Ponzi scheme, including people from the world of sport and entertainment, were given personal guarantees and told they were buying into a niche area that needed to be kept confidential to avoid alerting competition.
The reality was Pruthi, described by counsel as a ‘svengali’ like character, was investing next to nothing and instead spending millions on a luxury life-style, owning a fleet of fast cars, a private jet and renting £20,000 per month properties.
At Southwark Crown Court Kenneth John Anderson and Kenneth Peacock were found guilty of lesser charges and both received 18 month prison sentences.
National TV and newspapers told how the three men had operated out of Knightsbridge offices, adding to the façade of wealth and success by travelling to client meetings in a helicopter.
But by 2008 the scheme was under pressure and close to failing, needing considerable new investment each month just to make interest payments to other clients.
In August of the same year many investors were getting late payments, with Pruthi, Anderson and Peacock blaming banking problems and liquidity issues resulting from the credit crunch.
The Financial Services Authority were informed and shortly afterwards intervened to freeze the assets of the three men, but by this point their bank accounts were almost empty.
In March 2009 the City of London Police launched a criminal investigation, arresting the fraudsters a couple of months later. Even then some victims refused to believe they had fallen victim to a fraud, and with encouragement from Pruthi and the support of local MPs tried to get detectives to unfreeze assets so the investment scheme could start running again.
To counter this misinformation and provide additional support to victims, some of whom had suffered losses running into millions of pounds, the investigation team held a series of special forums in summer 2009. These were the first of their kind held by the City of London Police, with 300 investors attending and providing new witness statements.
Det Supt Bob Wishart, of the City of London Police, said:
"Pruthi used fast cars, helicopters and luxury houses to create an illusion of success and legitimacy. In reality he was a cold-hearted criminal driven by greed, with an unquenchable desire to steal and spend leading to the construction and collapse of the UK's biggest Ponzi scheme.
"It took a complex and painstaking investigation over several years to blow away the smoke screens and ensure all the men faced justice. The record sentence handed to Pruthi is reflective of the damage he caused."
DS Ben Flannaghan, who led the three-year investigation, added:
"This case highlights the dangers of investing in unregulated schemes; there will be no compensation available for the 800 victims who have lost millions. The public need to be aware that these ‘magic bean’ returns just do not exist."
No trees were killed in the creation of this message. However, many scammers may be terribly inconvenienced.