By Caroline Davies- An Essex businessman behind a £226m luxury Caribbean holiday homes fraud in which thousands of people lost their life savings and pensions has been sentenced to a 12-year term after a judge described him as running a “gigantic Ponzi scheme”.
David Ames, 70, was convicted last month at Southwark crown court on two counts of fraud by abuse of position, after a Serious Fraud Office investigation found he had deceived more than 8,000 UK investors in the Harlequin Group, a hotel and resorts development venture, using celebrity endorsements to lure people in.
Several thousand victims lost pensions and life savings to the fraud, while Ames enriched himself and his family by £6.2m, the court had heard.
Sentencing him, the judge, Christopher Hehir, described Ames as a “slick salesman and thoroughly dishonest with it”. He told him he was “a menace to anybody unfortunate enough to do business with you”. The harm he had inflicted “was immense” and his offending was “protracted and sophisticated and claimed a large number of victims”. He had “lied to and misled” both his employees and investors.
While he recognised that it was genuine scheme at the outset, only becoming criminal when Ames should have recognised investors were exposed to risk, the judge said the business model was “fundamentally flawed” and run under Ames’s “disastrous and dishonest stewardship”.
He sentenced Ames to nine years on the first count and three years on the second to run consecutively, with the first half to be served in custody, and the second on licence.
By the time it went into administration in 2013, Harlequin had sold about 9,000 property units to investors, with fewer than 200 actually being built. Only 28 of the investors ever completed on a purchase, leaving more than 99% of them with no return on their investment. The Harlequin Group ultimately lost a total of £398m of investor funds.
Investors paid a 30% deposit to purchase an unbuilt villa or hotel room, half of which went toward fees for Harlequin and relevant salespeople, with the remaining 15% toward construction. There was no external financial backing, and with no additional source of funding, three properties needed to be purchased to finance just one, leaving Harlequin with a funding shortfall of more than £1.2bn by 2012 – seven years after Ames launched the scheme.
The Harlequin companies were family businesses, employing at certain times both David Ames’s wife and his son, who was paid £10,000 a month, the SFO had told the court.
In victim impact statements before the court, investors described having to work past retirement, and sleepless nights, as many lost pensions to the fraud. One man, 61, who lost £403,500 from his three pension schemes, described himself as feeling “deflated, upset, and angry, as well as entirely shocked” at the potential loss of his retirement fund. Another, aged 52, was left in a “desperate financial situation” after investing all his life savings, £241,500, which was not refunded. He was left unemployed and having to sell his home.
A 57-year-old man, who lost £270,000, said he and his wife had been left with no pension to look forward to, and could not pay for their daughter’s wedding. Another, aged 78, who lost £138,000, said he and his wife had had to take out equity release on their home, and had nothing left to leave their children and grandchildren.
Ames had been temporarily barred from serving as a company director due to previous bankruptcy and therefore styled himself as the “chairman of Harlequin”. He repeatedly ignored warnings that the business was probably insolvent, while concealing this reality and continuing to sell more units to investors.
Ames had promised celebrity-sponsored tennis, golf and football academies. The former Wimbledon champion Pat Cash, the golfer Gary Player and Liverpool football club were included in marketing material supporting his venture. He also secured the endorsement of politicians in the region, including the prime ministers of Barbados, St Lucia, and St Vincent and the Grenadines, the SFO said.
Neil Hawes KC, defending, said in mitigation that the scheme was “not a dodgy product, it is a product that went wrong”. Those who had invested through IFAs – independent financial advisers – who accounted for around half of investors – had been compensated a total of £125m through the financial services compensation scheme.
Hawes added there was a “dearth” of evidence that Ames led an “extravagant” lifestyle, though he did have a driver, and he was of previous good character.
Lisa Osofsky, director of the Serious Fraud Office, said: “Those who are trusted with investors’ money have a fundamental duty to safeguard the interests of those investors.
“As today’s sentencing shows, we will not tolerate those who abuse that trust, show contempt for their victims and the law, and squander other people’s money for their own gain.” (The Guardian)
