600 People Defrauded of Around £9 Million after Investing in Ponzi Scheme

A ‘Ponzi scheme’ is a type of fraudulent investment where members of the public are encouraged to invest money in a seemingly legitimate scheme. In Nowell’s case, he promised lucrative returns by trading in foreign currencies on his clients’ behalf (known as FOREX trading). Common with other Ponzi schemes:

• Only a very small proportion of the £9 million collected from investors was ever invested
• Money from new investors was passed on to earlier investors, to give the illusion of trading success
• Around £1 million was diverted to Mr Nowell’s extravagant lifestyle including a Mclaren car, new house and designer clothes

A Ponzi scheme starts to unravel when there is a lack of new investors and therefore no more money to pay the ‘returns’ due to earlier investors in the scheme. Such schemes collapse when too many investors try to withdraw their money at the same time.

Ponzi schemes appeal to criminals because they can generate large sums of money while creating the false impression of a legitimate investment opportunity. By the time the scheme is exposed, significant losses have already been suffered and the people behind it may have taken millions.

Signs that an investment ‘opportunity’ may be a Ponzi scheme include:

• Being contacted out of the blue by a company you have never heard of. It is vital that you do your own research on both the company and the investment they are offering.
• A promise of a “risk-free investment opportunity” or “guaranteed returns.” Investing always carries a capital risk, and higher returns often mean higher risks.
• The person you are talking to uses a lot of finance-related jargon and you feel confused.
• You feel pressurised to invest quickly, leaving no time to review the details or to do your own research. A legitimate company would never act in this way.
• The company has negative online reviews, or none at all.
• The company is not registered with Companies House or has a warning against it on the City watchdog, the Financial Conduct Authority (FCA), website.

If you, a friend, or a loved one has been a victim of a Ponzi scheme, it’s important to contact your bank as soon as possible if you have authorised money to leave your account.

Next, contact Report Fraud, the UK’s dedicated cybercrime and fraud policing service on 0300 123 2040. They also offer a Report Fraud Victim service which provides specialist help to victims of cybercrime and fraud.

If you transferred money from your bank account to the so-called investment, you may be a victim of Authorised Push Payment (APP) fraud. Your bank has a responsibility to protect you and your money by putting the right procedures in place to stop scams in real time. If you believe your bank has not done enough to protect you from falling victim to APP fraud and is refusing to refund what you have lost, you can pursue a private prosecution in the Criminal Courts, where a compensation order can be made, depending on evidence and the offender’s ability to pay. A claim can also be made to the Financial Ombudsman Service (FOS). FOS is a government-backed body responsible for resolving disputes between financial services providers and their customers. However, they can only get involved if the company concerned was FCA registered.

Sarah Spruce, Legal Director at TLW Solicitors, said of the case:

“It is saddening to hear that so much was lost by the victims of this large-scale Ponzi scheme. Ponzi schemes can be hard to spot for those who are unaware of what to look out for, and with a lot of investors receiving so-called ‘returns’ in the beginning, it can be a while before victims realise what is really going on.

Once a Ponzi scheme has imploded, it can be a devastating realisation for victims, like those in this case who lost millions of pounds.

If you or a loved one has been a victim to a Ponzi scheme, please get in touch with our specialist team to discuss your case in confidence, explore your options and how we might be able to help you.”