Businessman accused of £115m 'ponzi' scam

Click to follow
The Independent Online

A businessman was accused today of masterminding a sprawling £115 million scam that claimed a series of high-profile victims.

Kautilya Nandan Pruthi, 39, was charged with 30 fraud offences including running a bogus business, money laundering and obtaining money by deception.

He was questioned by City of London Police detectives investigating a gang suspected of cheating at least 600 people around the world.

People were allegedly persuaded to invest in an apparently high-yield fund, but the money was siphoned off to fuel the lavish lifestyles of those behind it.

Victims are believed to include a 1960s pop star, a household name from television and the cricketer and Strictly Come Dancing champion Darren Gough.

The swindle is said to be one of the biggest "Ponzi" frauds, a crime made famous by disgraced Wall Street broker Bernard Madoff, yet detected in Britain.

The Crown Prosecution Service said Pruthi will appear on bail at City of London Magistrates' Court on September 3.

He is accused of participating in a fraudulent business, fraud, obtaining money by deception, unauthorised regulated activity and concealing criminal property.

The charges relate to Pruthi's activities from his base in Knightsbridge, central London, between August 2005 and June 2009.

The criminal investigation focuses on finance firm Business Consulting International (BCI) and several companies linked to it.

Police believe a gang of men ran a fraudulent and unregulated investment scheme offering returns of between 6% and 13% a month for up to four years.

Clients were told the money was loaned to "distressed" companies which needed short-term cash and were willing to pay for it.

But it began to unravel when some payments were missed and people alerted the financial authorities to their suspicions.

Detectives found the fraud was similar to many Ponzi schemes where a small amount of investor money is used to pay returns.

This leads clients to believe their money is safely invested, encouraging them to put more money in and encouraging others to follow them.

However, the vast bulk of the money disappears overseas or is used to fund the lavish lifestyles of a small number of people behind the conspiracy.

The Financial Services Authority (FSA) has obtained a judgment in the High Court requiring Pruthi and others to pay £115 million to investors.

Police launched an unprecedented charm offensive to persuade victims to help them through a series of public meetings because many refused to face their losses.

Several victims have already lost their homes, others have been declared bankrupt and some have attempted suicide.

Officers remain in a desperate race to track down the missing money, some of which may be held in accounts in Dubai, the Cayman Islands and Thailand.

They have seized assets worth about £1 million, including jewellery and watches, as well as £250,000 cash.

An £800,000 stable of eight prestige cars including a Lamborghini, two Ferraris and several Bentleys was seized from a West Sussex dealership that was storing them.

Last year Madoff was jailed for 150 years for orchestrating a £39.5bn Ponzi scheme, the largest in the United States.