Versailles fraudster gets three more years

One of the masterminds behind the £600m Versailles fraud, Frederick Clough, has been sentenced to an additional three years in prison after failing to comply with a £15m confiscation order.

The case was one of the first to be referred under the Proceeds of Crime Act 2002, which is designed to deprive criminals of ill-gotten gains.

A Serious Fraud Office spokesman said: "Fraud cases can often have a long tail and the offender knew what to expect for non-compliance with the order."

Clough had been the finance chief at Versailles, a company founded by Carl Cushnie. A Labour Party donor, Cushnie was described as a "financial genius" by Tony Blair before the fraud was exposed.

The company was a commission-based operation that provided bridging loans to small companies. Turnover reached £84m but the two men fraudulently inflated the figure to £600m. Clough used an estimated £20m to fund a playboy lifestyle, indulging in exotic holidays with girlfriends and lavishing expensive gifts upon them. He also liked luxury cars.

It was only when Versailles was put into liquidation that the deception was revealed and Clough and Cushnie were arrested. Clough pleaded guilty; Cushnie was found guilty after a four-month trial. Clough was sentenced to six years in prison in 2004 in what was described by Judge Justice Jackson as one of the "worst examples of conspiracy to defraud".

In one of the first cases of its kind, Clough and Cushnie's prosecution was then referred to the London Regional Asset Recovery Team.

Investigator DC Nigel Birch discovered that Clough still had access to nearly £15m of the proceeds of the fraud. A judge ordered Clough to repay within two years or face a longer sentence.

At a hearing last week at Horseferry Road Magistrates Court, it was revealed that Clough, now 66, had paid back less than £1m. The judge ordered almost three additional years on top of his sentence. The confiscation order still stands and is increasing with daily interest amounting to more than £3,000.