Levitt trial ends as second man admits fraud: Unexpected events in court and the man behind a pounds 34m collapse

THE TRIAL of the financial adviser Roger Levitt and three of his 'underlings' ended months ahead of schedule yesterday after one of his co-defendants joined his former boss in admitting fraudulent trading, and another was acquitted.

Levitt and his former managing director, Mark Reed, who each face up to seven years' jail, will be sentenced on Friday. Both were allowed bail until then.

Mr Justice Laws ordered a new trial against Alan McNamara, former director of the debt-ridden Roger Levitt Group, an empty shell of a company which crashed in 1990 with debts of pounds 34m.

Yesterday's developments followed Monday's unexpected change of plea by 44-year-old Levitt, once one of Britain's richest men, who specialised in advising the rich and famous.

The now bankrupt father of five, who ploughed nearly pounds 900,000 belonging to the thriller writer Frederick Forsyth into his ailing business instead of buying bonds, admitted fraudulently misleading Fimbra, the City watchdog.

However, Levitt still denied two other aspects of the fraudulent trading charge. All four defendants had pleaded not guilty when the Southwark Crown Court trial began 13 days ago in a Chancery Lane annexe at the Old Bailey.

The parts of the charge denied by Levitt allege the fraudulent production and distribution of false accounts and the fraudulent injection of funds into his company, which sold mortgages and life assurance.

Reed, 40, adopted a similar position, telling the court he now admitted aiding and abetting Levitt to deceive the financial regulators dishonestly.

David Cocks QC, prosecuting, on behalf of the Serious Fraud Office, said that in view of the two men's plea changes the Crown would no longer be pursuing the outstanding parts of the charge and that Levitt's former finance director, Robert Price, could now be discharged.

Mr Price, 42, was granted defence costs, which are to be paid from public funds. He had suffered a 'mental collapse' in spring 1990 - months before Fimbra was deceived - and never returned to work. The Crown, therefore, would be offering no evidence against him on the fraudulent trading charge, Mr Cocks said.

But Mr McNamara, 29, would have to face a new trial before a different jury.

Formal verdicts of guilty against Reed and not guilty against Mr Price were then returned by the jury foreman.

Mr Cocks told the court that another 21 counts, which the men variously faced and which were due to be the subject of a second trial, were ordered to be left on the file and not proceeded with. He said many of them were encompassed by the fraudulent trading offence. Others involved investors' money being improperly ploughed into the cash- strapped company's office account.

The biggest loser, he said, was Levitt's close friend, Mr Forsyth, author of the bestsellers The Day of the Jackal and The Dogs of War.

False invoices relating to the misuse of his cash were covered by the Fimbra deception that Levitt and Reed had admitted.

When he first opened the case, Mr Cocks claimed Levitt had been the architect behind an extensive fraud to trick bankers and financial watchdogs into believing his company was a thriving concern. But it was kept going only by drip-feeding more than pounds 22m into the business.

When the liquidators moved in in December 1990 they found an 'empty shell' which had been kept going by 'cooking the books' and telling 'whoppers', Mr Cocks told the court.

The jury heard that losses of pounds 13m had been disguised to look like profits of up to pounds 16m. He said Levitt had borrowed money from wherever he could get it to stop the business from going under.

When Fimbra officers began investigating the company's affairs, they were shown an array of bogus documentation including a forged board minute.

But despite Levitt's efforts, Fimbra eventually uncovered the true state of the company.

Outside court Mr Price's solicitor, Steven Barker, said his client's case had always been that the Crown had never had any evidence against him of dishonest activity.

He added that Mr Price had suffered from damaging publicity incurred by the case and had been under considerable stress as a result.

'He today feels totally and fully vindicated by his acquittal and hopes to get back to normal life as soon as possible,' he said.