Ponzi Scheme Operators Bankrupted in Bid to Recover Lost Funds

The individuals behind the suspected £200 million Ponzi scheme, known as the 79th Group, have been declared bankrupt as part of ongoing efforts to recover lost investor funds. The bankruptcy was ordered by Liverpool County Court last week due to significant debts arising from an alleged investment scam affecting thousands of individuals in both the UK and abroad.

The operators of the 79th Group, whose identities remain confidential for legal reasons, were pursued by numerous investors who contributed to the scheme. This legal action aims to allow insolvency practitioners to trace the personal assets of these individuals, potentially facilitating the recovery of some funds.

The group solicited investments through “loan notes,” claiming that these loans were secured against lucrative property developments, including a £250 million holiday park in North Wales. Experts from Kroll and Quantuma have noted that this scheme exhibits the characteristics typical of the largest Ponzi schemes in the UK, where returns for early investors are paid using the capital from newer investors rather than through legitimate business activities.

In a previous ruling last November, the individuals associated with the group faced a £38 million global freezing order, requiring them to provide clarity on the use of investor funds. Initial investigations suggested that investor money was misappropriated for lavish expenditures, including payments for a private jet and luxury rental properties.

The investigation by City of London police commenced last February, resulting in the arrest of four individuals. Authorities uncovered a substantial amount of cash and high-value items, which were subsequently seized. Those arrested have since been released on bail, as inquiries continue without formal charges filed as of yet.

Amidst these developments, the Financial Conduct Authority is examining the involvement of financial institutions, including NatWest, in relation to compliance with anti-money-laundering regulations. Several banks, such as The Co-operative Bank, are reportedly beginning to reimburse certain UK investors under the “authorised push payment” regime; this policy mandates that banks refund up to £85,000 if customers are tricked into transferring money.

The Co-operative Bank confirmed its conclusion that the 79th Group was a fraudulent entity. Widespread concerns have been raised regarding the treatment of overseas investors who are not eligible for the same refund protections under the APP scheme. Many affected individuals living abroad are now considering potential legal actions against banks involved in managing 79th Group accounts.

Administrators have identified a Learjet 55, valued at approximately £3 million, alongside substantial expenses tied to a Caribbean villa and various transactions lacking justification related to any investment activities. With many victims identified as unsophisticated retired first-time investors, the situation continues to unfold, highlighting imperative issues in investor protection and regulatory oversight.