'British Madoff' took £14m from his investors – and lost the lot

To his clients, Terry Freeman had all the trappings of a multi-millionaire City trader with a reputation for risk-free currency investments. Along with holiday homes in Cyprus and France, his wealth had bought him a top-of-the-range Land Rover, an executive box at Tottenham Hotspur and a £120,000 ring for his third wife.

The true source of the 62-year-old's profligate lifestyle was revealed in a south London court room yesterday when Freeman pleaded guilty to running a "Ponzi" scheme which defrauded about £14m from some 350 victims who were taken in by the bankrupt businessman's plush City offices and promises of unbeatable returns on their money.

Victims, who ranged from a roofing company owner who invested his £600,000 life savings to footballers and the ex-wife of golfer Colin Montgomerie, were shown paperwork from Freeman's company, GFX Capital, which showed their investments doubling or tripling in value – when in reality he was frittering away millions of pounds on botched trades and the toys of a tycoon.

The single biggest losers from Freeman's fraud were a couple who handed over £1.4m, including their family home. Investment updates suggested that their capital had risen in value to about £2.7m, but by the time the authorities caught up with the conman they had just £15,000 left in their account.

The extent of the deceit of the financier – dubbed the "British Madoff" after the American fraudster Bernie Madoff, who stole $18bn from clients – was only revealed in 2008 when Freeman gambled on a bailout for the US investment bank Lehman Brothers and bought large numbers of dollars.

When the bank collapsed, the dollar plummeted and GFX Capital, which operated from offices in Broadgate costing £14,000 a month in rent, was no longer able to conceal its empty coffers. In a cynical attempt to buy time, Freeman sought to quell his investors' concerns by announcing a 12 per cent profit in the same month and laughed off suggestions that he was "another Madoff".

As clients began to withdraw their funds, Freeman, who lived in a £500,000 house in Buckhurst Hill, Essex, with his 30-year-old Russian bride, approached police claiming he was being threatened by investors and admitted to losses of about £20m.

It was only when officers from the City of London Police began to examine the trader's trail of false money transfers around accounts he held in a Swiss bank that it became clear he was operating a Ponzi scheme – a fraud whereby funds from new investors are used to pay the "profits" of existing stakeholders, until funds abruptly run out when members withdraw or people stop joining.

Freeman, who was jailed in 1997 for four-and-a-half years for fraud offences, yesterday pleaded guilty to six charges, including fraud and trading while bankrupt, during a hearing at Southwark Crown Court. His victims claim the losses from GFX Capital could be as high as £44m.

Detective Superintendent Bob Wishart, who led the investigation, said: "Rub away the sheen and you find Freeman is the archetypal fraudster, happy to steal money and ruin lives. People invested their futures with GFX only to find they had been horribly conned by this criminal."

Such had been the success of Freeman at spreading word around the City by smooth-talking bankers at breakfast meetings that investors were queuing to buy into his schemes, the court heard.

Freeman will be sentenced next month. Judge Geoffrey Rivlin QC told the court there was not even a "remote possibility" he would be spared jail.

Voices
The Sumatran tiger, endemic to the Indonesian island of Sumatra, is an endangered species
voicesJonathon Porritt: The wild tiger population is thought to have dropped by 97 per cent since 1900
News
news
Arts and Entertainment
Story line: Susanoo slays the Yamata no Orochi serpent in the Japanese version of a myth dating back 40,000 years
arts + entsApplying the theory of evolution to the world's many mythologies
Life and Style
Popular plonk: Lambrusco is selling strong
Food + drinkNaff Seventies corner-shop staple is this year's Aperol Spritz
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
Gardai wait for the naked man, who had gone for a skinny dip in Belfast Lough
newsTwo skinny dippers threatened with inclusion on sex offenders’ register as naturists criminalised
News
Shake down: Michelle and Barack Obama bump knuckles before an election night rally in Minnesota in 2008, the 'Washington Post' called it 'the fist bump heard round the world'
newsThe pound, a.k.a. the dap, greatly improves hygiene
Arts and Entertainment
La Roux
music
Arts and Entertainment
Graham Fellows as John Shuttleworth
comedySean O'Grady joins Graham Fellows down his local Spar
News
people
News
Ross Burden pictured in 2002
people
News
Elisabeth Murdoch: The 44-year-old said she felt a responsibility to 'stand up and be counted’'
media... says Rupert Murdoch
Arts and Entertainment
tv
Extras
indybest
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

QA Manager - North Manchester - Nuclear & MOD - £40k+

£35000 - £41000 per annum + competitive: Progressive Recruitment: QA Manager -...

Property Finance Partner

Very Competitive Salary: Austen Lloyd: LONDON - BANKING / PROPERTY FINANCE - ...

Agile Tester

£28000 - £30000 per annum + competitive: Progressive Recruitment: An ambitious...

Senior SAP MM Consultant, £50,000 - £60,000, Birmingham

£50000 - £60000 per annum + Benefits: Progressive Recruitment: Senior SAP MM C...

Day In a Page

A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on
It's the best of British art... but not all is on display

It's the best of British art... but not all is on display

Voted for by the British public, the artworks on Art Everywhere posters may be the only place where they can be seen
Critic claims 'I was the inspiration for Blanche DuBois'

Critic claims 'I was the inspiration for Blanche DuBois'

Blanche Marvin reveals how Tennessee Williams used her name and an off-the-cuff remark to create an iconic character
Sometimes it's hard to be a literary novelist

Sometimes it's hard to be a literary novelist

Websites offering your ebooks for nothing is only the latest disrespect the modern writer is subjected to, says DJ Taylor
Edinburgh Fringe 2014: The comedy highlights, from Bridget Christie to Jack Dee

Edinburgh Fringe 2014

The comedy highlights, from Bridget Christie to Jack Dee
Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

The woman stepping down as chair of the Heritage Lottery Fund is worried