Who's suing who

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The Independent Online
THE Serious Fraud Office (SFO) is seeking confiscation and compensation orders to recover over pounds 1.5m from two husband and wife teams, one Russian and one British, who were sentenced to jail yesterday for a sophisticated international fraud.

The defendants pleaded guilty earlier this year to inducing some 700 businesses in the former Soviet Union to pay travelling and hotel costs for senior executives to attend non-existent management seminars in California in the summer of 1996.

Together, the police from Thames Valley and Russia believe they have traced all the losers, and are embarking on the legal trail to return the money to the victims.

At Isleworth Crown Court yesterday Svetlana Kouznetsova, 34, was sentenced to 2 years for conspiracy to defraud. She was the prime mover behind the fraud and acknowledged all the facts of the Crown's case. Her husband, Igor Falkovsky, 35, was sentenced to jail for money laundering - the first time the SFO has ever brought a money laundering charge.

Michael Newman, 39, received 3 years for furnishing false information for accounting purposes, while his wife Maria, 31, got 18 months for conspiracy to go equipped to cheat.

Many thousands of glossy brochures for the "Investco Corporation", a company registered in Bermuda, were printed in Reading with the sole aim of enticing businesses in the Ukraine and Russia to part with their money.

Kouznetsova produced the brochure in Russian with the help of the Newmans and sent it out via a mail distribution service at Heathrow Airport in 1996.

The brochure claimed Investco was "a founder member of the Roosevelt Foundation", a charity said to be sponsoring the courses. There is no evidence the Roosevelt Foundation exists.

The brochure also claimed that Investco had "a turnover of US$850 million in 1995". In fact it was bought by Newman and Kouznetsova from an English company formation agent called "OCRA" in early 1996.

In response to the brochure, which invented a series of non-existent lecturers from institutions like Yale University, Russian businesses sent money to Investco accounts in London and Geneva.

Correspondence from the victims was directed to mail drop addresses in California, Luxembourg and Belgium, from where it was forwarded to further mail drop addresses in Reading and London.

The SFO said yesterday: "Kouznetsova and Falkovsky operated only from these addresses and used only mobile telephones. This made finding them difficult."

"They were eventually caught when they were stopped in the City of London driving a car which was circulated as being of interest to Thames Valley Police," the SFO said.

The defendants benefited from the money by filtering it through a series of accounts under false names in countries as varied as Andorra and Guernsey.

In the early part of the SFO investigation, the Newmans went to live in Spain. Michael Newman was arrested in August 1997 while visiting Switzerland. He was extradited from Switzerland in September last year. After that his wife returned voluntarily from Spain to face trial.

THE Financial Services Authority (FSA) won a series of court orders this week against Steven Rhodes, an unauthorised share dealer who the FSA claims tried to sell shares in an American company to investors in South Africa, Ireland and Jersey.

Mr Rhodes carried on his business from offices in Jermyn Street in London under the name "Stirling Montague & Speke." The High Court granted the FSA a world-wide freeze over Mr Rhodes's assets and ordered him to repatriate all funds he might hold overseas. It is understood that the FSA is seeking to recover about pounds 250,000 which investors handed over in the belief that they were buying shares in International Resorts and Entertainment Group, a Florida-based hotels company. The company has said any such share purchases were "null and void."

MARCELLA Levy-Aston, better known as "Marcella Detroit" out of Shakespeare's Sister, the formerly popular young persons' beat combo, has issued a writ against her record company.

The statuesque chanteuse, who lives in Camarillo, California, is seeking to clarify what royalties she is owed by FFRR Records, trading as London Records, of Chancellors House, Chancellors Road, London.

Ms Levy-Aston is seeking between pounds 10,000 and pounds 50,000. Her writ seeks "damages for breach of contract" and "equitable compensation for breach of fiduciary duty" in respect of six separate contracts agreed with the record company, stretching from 19 July 1988 to December 1993.