Former cab driver convicted of £34m fraud
Former taxi driver Kevin Foster was found guilty of theft and deception
March 10, 2010
A company director who tricked thousands of people out of their savings by promising them a fivefold return on their investment was convicted yesterday of a £34 million Ponzi fraud.
Kevin Foster was remanded in custody to await sentence next month after being found guilty of 14 counts of theft and deception. Harrow Crown Court in London had been told that he had attracted investments in his KF Concept firm through roadshows at hotels and conference centres, where he promised high returns on gambling and network marketing schemes.
The Serious Fraud Office said he had used the money to finance his own lavish lifestyle, buying properties including a £600,000 farm in Kent complete with swimming pool, exotic animals and Koi carp breeding pools. He also spent more than £700,000 on cars and withdrew almost £3 million in cash.
Foster, 51, of Sittingbourne, Kent, started with a football betting scheme among work colleagues in 2001. As it grew he used new investors’ money to pay out those already taking part. Over the next three years, he expanded into new schemes so that by 2004, more than 8,500 people had put £34 million into his scams.
The court was told that most of the cash was put into an illegal overseas pyramid selling scheme set up by Foster called Planline, purportedly run by a Cayman Islands-registered company called Infocus International, which had bank accounts in Switzerland. Infocus International claimed to be an internet-based art dealership, but the dealership was a front and the “artwork” turned out to be worthless copies. Of the £12 million paid into Planline, only £1,703 was ever returned.
Richard Alderman, the SFO director, said yesterday: “I am very pleased with this verdict. This was a very complex investigation and the SFO was determined to bring justice for the many victims who lost their hard-earned savings.”
Foster’s conviction came after the SFO’s decision to take no action against the Mayfair-based British division of Bernard Madoff’s notorious investment scheme despite a year-long investigation into the operation.
The SFO said there was insufficient evidence for a conviction at Madoff Securities International Ltd.
Madoff, 71, admitted in a US court to defrauding thousands of clients through the scheme last year. His Ponzi scheme was revealed when investors tried to redeem $7 billion (£4.5 billion), sparked by the financial crisis.
However, the SFO has had success with a number of smaller such schemes that have bubbled up in the UK since the credit crunch hit.
Five individuals behind a scheme that conned British property investors out of an estimated £80 million pleaded guilty to their roles in the fraud last month. The five, former directors of three property investment businesses, fraudulently sold about 4,000 properties in the North East of England. The directors used the investors’ original capital to pay the expected rental incomes and fund extravagant lifestyles.
Source; TimesOnLine
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Former taxi driver who conned millions in Ponzi scheme convicted
10 Mar 2010
A former taxi driver who reinvented himself as an investment guru was yesterday found guilty of conning investors out of millions of pounds in a Madoff-style “Ponzi” scheme.
Kevin Foster, 51, was convicted on 14 counts of theft and deception following a seven-week trial at Harrow Crown Court, and now faces a maximum of seven years in jail.
The court heard how he lured investors into his “pyramid scheme” at flamboyant roadshows held in hotels and conference centres across the country.
Foster would appear on stage to cheering and loud music - often Abba's Money, money, money - and award prizes of cash or cars.
He presented himself as a successful gambler who could deliver clients riches simply by betting on the football and the horses.
He claimed that for every £1 invested in his firm by the 50,000 participants he claimed to have attracted, he made £28.50. He also said that his scheme had £203 million in the bank.
Sceptics were won over when they saw large returns paid to other investors - although in reality those "returns" were paid for with their money. Those who received pay-outs were also encouraged to reinvest their money to make more.
However, Foster's proposal was never as sophisticated as the £30 billion ($50 billion) scheme dreamed up by the US fraudster Bernard Madoff.
When the Financial Services Authority shut Foster down in February 2004, he was found to have £34 million outstanding from 8,500 investors. He was later declared bankrupt with clients losing everything.
Little of the funds people had invested were used for gambling - millions were instead poured into an offshore fund.
Meanwhile, Foster had paid himself and his close associates substantial incomes and used KF Concept money to fund an extravagant lifestyle.
He bought a £600,000 farm near Sittingbourne in Kent and stocked it with exotic animals including wallabies, prairie dogs, llamas, rheas and peacocks.
He fitted it with a swimming pool and built Koi carp breeding pools. Another £700,000 was spent on cars including a string of Mercedes and a £135,000 Ferrari, according to the Serious Fraud Office, which brought the case.
Speaking after the Foster was remanded in custody, the SFO's director Richard Alderman said he was "very pleased" with the verdict.
"This was a very complex investigation and the SFO was determined to bring justice for the many victims who lost their hard earned savings to this Ponzi scheme," he said.
"I would like to thank colleagues from Kent Police and the Financial Services Authority who helped us with our investigation".
Source; Telegraph.co.uk
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