Ponzi Scheme

Ponzi SchemeFrenkels Forensics were instructed to prepare an expert accounting report in relation to a Defendant accused of obtaining criminal benefit amounting to a figure in excess of £2 million arising from a Ponzi scheme.

The Defendant, currently serving time for this fraud, maintained at his original Trial that the scheme was not a Ponzi scheme and was in fact a legitimate business.  Like many start up companies it had failed for commercial reasons and not because it was fraudulent from the outset.

The Judge in his summing up agreed that the scheme had not started out as a scheme set up to defraud investors.  However, the Prosecution, in the Confiscation Proceedings, were nevertheless seeking benefit based on all turnover generated from the outset.

We successfully argued that the benefits derived by the Defendant should exclude the period that the Judge suggested was legitimate.  Based upon the patchy financial records available, we calculated that turnover in this period amounted to half of the £2 million claimed by the Prosecution.  We identified further adjustments that were also needed, including several reductions for mistakes in calculations by the Prosecution.

Frenkels Forensics worked alongside their instructing Solicitors and learned Counsel and produced a robust report which showed that the Defendant’s maximum benefit should be around £350,000, after taking into account all these various adjustments.

We were also able to show that the ‘hidden assets’ the Prosecution had accused the Defendant of owning did not exist.  This reduced the Defendant’s realisable assets to a far more reasonable and realistic figure.

The case settled earlier this year at a figure far closer to the Frenkels’ figure and so we were instrumental in assisting the Defendant in avoiding the loss of his family home and saved him from financial ruin.

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