SFO Chases Fraudster for $99 Million a Decade After Conviction
(Bloomberg) -- The Serious Fraud Office is trying to untangle a legal web that’s blocked the agency from collecting 72 million pounds ($99 million) owed by a London real-estate investor, more than a decade after his conviction for theft.
Gerald Smith built up a portfolio that included a yacht, 37 U.K. hotels and properties in expensive areas of London before pleading guilty in 2006 to a number of offenses relating to Izodia Plc, an unsuccessful U.K. software company.
Smith, who trained as a doctor, was sentenced to 8 years in jail for stealing about 35 million pounds from the firm. In November 2007, the SFO obtained a confiscation order for 41 million pounds, a figure that has nearly doubled because of unpaid interest. The agency has yet to collect a penny.
U.K. Man Sentenced to 8 Years in Jail for Stealing From Izodia
Smith, who was born in 1955, says that all his former assets now belong to friends, family or business partners. The SFO is in a London court trying to convince judges otherwise in a case that involves more than 40 different entities.
“These proceedings are, on any view, complicated,” the SFO lawyers said in a legal filing.
Smith is expected to testify next week.
Part of the complexity in the case comes from the involvement of Andrew Ruhan, another real-estate investor who isn’t one of the named parties in the case, but plays a prominent role. The SFO says he is behind several companies that were involved in transactions with Smith, and has used another man as a front for several companies in the hearing.
The agency says the case lays out “a story which encompasses: the zenith of entrepreneurial success and excess; the most hostile of litigation; dishonesty, forgery and duplicity; rapprochement; and finally back-stabbing.”
Smith’s lawyers at Doughty Street Chambers and Berkeley Solicitors declined to comment on the case. Lawyers at 1 Hare Court who’d worked for Ruhan didn’t return calls for comment.
Smith’s conviction came after he took 35 million pounds from Izodia in 2002, according to the legal filings. While he says that he used the funds to support Orb, a holding company for his real-estate assets, some money was also spent on a 1.8 million-pound down payment on a yacht, a 20,000-pound water clock for his property in Jersey and 100,000 pounds of work on his homes.
In 2003, Orb sold assets including its hotel portfolio to Ruhan’s Atlantic (U.K.) Ltd., for 2 million pounds in “key money” and an interest-bearing loan of 35 million pounds.
Faced with the order to repay restitution in 2007, Smith said he wasn’t able to because Ruhan held his “realizable property” of 41 million pounds -- the same amount he owed the SFO.
Two former Orb properties, since turned into a luxury apartment complex, were sold by Ruhan for a profit of 217 million pounds, according to filings from Smith’s lawyer, Richard Thomas. Smith brought the transaction to the attention of the SFO but it didn’t stop the transaction, according to his representative’s court documents.
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