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Accountants jailed for celebrity Ponzi scheme

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15th Apr 2008
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Shinder Gangar (46, ICAEW) and Alan White (49, ACCA) of Midands-based Dobb White & Co, have been jailed for running a fraudulent high-yield investment scheme. Gangar and White were sentenced to seven years imprisonment each, and disqualified from being company directors for 12 years.

The case was a long time in the making. The Serious Fraud Office began its investigation in 2003, and charged the two men in October 2005, releasing them on bail with a surety of £10,000 a head. The Financial Services Authority, however, first became involved with the two-partner firm as early as 1998, when the two men were ordered not to accept deposits from the public. It started proceedings in the High Court to wind up Dobb White & Co in 2003, the first time it had ever used its insolvency powers since they were granted in the Financial Services and Markets Act 2000.

The administrators originally estimated that deposits were in the region of £11 million. The appointed liquidator, Baker Tilly, soon found out the figure was closer to £125 million. Numerous professionals had invested with the firm, together with a strong of high profile clients such as Norris McWhirter of Guinness Book of Records fame, who reportedly invested half a million, and Terry Brady, the father of Birmingham City chief executive Karren Brady.

Gangar and White also told potential investors that Andrew Lloyd Webber and David Frost had also invested, but this was simply a lure to give the scheme credibility, the court heard.

Dobb White’s investment plan was a classic Ponzi scheme. The monies deposited weren’t used to make any actual investment, but simply held off-shore and used to make interest payments to investors, each of whom had been promised a yield of up to 160%. While clients were told the scheme was insured against failure, in reality it depended entirely on Gangar and White securing a steady stream of new clients.

The deposits were also used by the pair to provide unsecured loans to acquaintances, purchase property, and invest in other schemes of interest.

The scope of the case widened considerably with the Stateside arrest of US fraudster Terry Dowdell. When Dowdell pleaded guilty to 20 separate counts of fraud and money-laundering, the SEC heard that he had been schooled in raising investor funds by Gangar & White. When US authorities froze his accounts, Gangar & White attempted to bribe a US official to release the funds.

Two weeks before the trial began, the pair sacked their legal counsel and decided they would represent themselves.

The court also found the two men guilty of conspiring to corrupt a US official.

Mr Justice Langstaff described the fraud as “deeply corrosive.”

“The defendants obtained money from victims that many of the victims could ill afford to part with,” he added.

The Ponzi scheme is named after Charles Ponzi, who perfected the technique after emigrating to the US from Italy in 1903. Arriving penniless, by 1920 he was a well-known Boston millionaire.

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