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The former chief executive of collapsed minibond company London Capital & Finance has received a 10-month jail sentence for contempt of court after failing to declare £95,000 to UK Serious Fraud Office investigators.
Michael Thomson, known as Andy, was sentenced to 10 months in prison, suspended for two years, at a hearing at London’s Southwark Crown Court on Wednesday for breaching a restraining order on his assets obtained as part of the SFO’s ongoing probe into LCF.
Thomson’s is the first conviction stemming from the SFO’s investigation into LCF, whose £236mn collapse in 2019 meant more than 11,000 retail customers, including pensioners and first-time investors, faced losing their savings. The firm promised returns of as much as 8 per cent through so-called mini bonds.
Thomson’s conviction does not relate to events leading up to LCF’s collapse but rather to his behaviour during the SFO’s subsequent probe.
Handing down Thomson’s sentence on Wednesday, Judge Alexander Milne said it was “fundamental to our system that orders of the court be respected and observed”, adding there were “many instances . . . in which the court’s attitude would be to commit a person immediately to prison”.
However, he said, delays meant “this has been hanging over Mr Thomson and his family . . . for three years or more”. Thomson’s admissions to the court, state of health and recent compliance also justified a suspended sentence, Milne said.
At a hearing in July last year, the SFO said Thomson had hidden £95,000 from investigators, in breach of an asset freeze put in place in 2019. During that hearing, Thomson admitted to failing to declare the money while his assets were restrained, but said the two breaches were unintentional.
The sum included a £55,000 stamp-duty refund from HM Revenue & Customs and a £40,000 insurance payout for damage at a barn which was covered by his insurance, but which he did not own. Both payments went into the bank account of his wife, Debbie, which was not frozen.
Thomson spent the money on a £5,000 holiday in Italy, £3,000 at the retailer Next, £4,000 on a hot tub, as well as other expenses to fund the couple’s lifestyle, according to the SFO.
On Wednesday the agency’s barrister, Catherine Collins, said: “The money was spent, and spent rapidly.”
Collins said a visit to the barn last August revealed a “roofless, three-sided wooden frame propped up in places by pieces of timber”. She added: “The reality is he spent the money obtained through these two sources on himself.”
Thomson’s barrister, Genevieve Reed, said on Wednesday that Thomson had already admitted to having used the stamp-duty refund to pay his living costs, adding he had been “upfront, and accepts what those sums of money were [used] for”.
She said repair work had been undertaken on the barn too, adding that the insurance claim was not “a bid to extract money and conceal that from the SFO”. Thomson had admitted the breach, she said, “and should have declared [the payout] as an asset under the terms of his restraint order, of course he accepts that”.
LCF promised returns as high as 8 per cent through its minibonds, which in some cases erroneously claimed to have individual savings account status and were described as “fixed-rate Isas”.
While LCF held authorisation from the UK financial regulator, its products were unregulated, high-risk minibonds, which funded small businesses such as London Oil & Gas, which itself fell into administration in 2019.
The SFO is still investigating the scandal. Since March 2019 the agency has arrested five individuals, who were all later released pending further investigation. Two other individuals have also been questioned in connection with money laundering offences in relation to the probe.
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