Absent Liberal democrat donor convicted of fraud

The Liberal Democrats' biggest donor became one of Britain's most wanted men today after being convicted of stealing millions from a former football boss.

Michael Brown, 42, who was tried in his absence after skipping bail, posed as an international bond dealer, pretended his father was a Lord, claimed connections with royalty, and promised investors staggering returns of up to 50 per cent.

His numerous lies, including claims he had clients "vetted" by US embassy officials and Special Branch before accepting their money, helped him pocket nearly £8m from ex-Manchester United chairman Martin Edwards.

The former football chief, one of an international array of victims who lost fortunes, little realised he was entrusting his money to someone who had not even passed his maths O-level.

Altogether he and the others gave the Glasgow-born businessman 57.7 million US dollars (£36m), of which a record £2.4m was donated to the Lib Dems' 2005 General Election war chest.

While the Electoral Commission decided it was "reasonable" for the party to regard his seeming generosity as "permissible", Brown's conviction for theft and other offences will almost certainly heap further embarrassment on them.

There may even be renewed calls to give it all back.

An American lawyer has already launched a High Court bid for the return of hundreds of thousands of pounds he claims the crook handed to the Lib Dems.

London's Southwark Crown Court heard the picture of political largesse presented to party grandees was simply part of a carefully crafted "illusion of wealth and influence" designed to give him the social acceptability he craved.

Following the donation he flew in a private plane with then leader Charles Kennedy and dined with other senior Lib Dem figures.

The crooked businessman - who will not be sentenced until he is caught - channelled the gift through a company called 5th Avenue Partners.

He used the millions left over to fund an "extravagant lifestyle," pay business expenses and keep other investors happy with "pretend" returns.

Counsel told the court Brown first rented a £49,000-a-year Mayfair apartment where he "conducted negotiations" with Mr Edwards.

His breathtaking multi-million pound "spending spree" included an impressive office in the same area, and a garage of upmarket cars, including a Range Rover with the number plate 5 AVE, a Bentley and a Porsche.

Brown, who was last known to live in Templewood Avenue, Hampstead, north-west London, also splashed out £2.5m on a private jet, £400,000 on an ocean-going yacht and £327,000 on an entertainment system for his home in Majorca.

Another £100,000 disappeared on improving the library at the Caledonian, the exclusive Belgravia club he had joined.

"Then there are the holidays, luxury travel and the like. What you will see is money going out on a grand scale, providing the costs of the business, accommodation and staff, providing a luxury lifestyle, and all of it funded by investors' money," said the barrister.

He "simply used their money as his own".

"After all he had a front to maintain. It is the old story, if you tell a big enough lie, people swallow it."

His "front" knew no limits. During a confrontation with a suspicious bank official he trotted out his "I'm a successful bond trader" mantra, claimed he met the Duke of York at Buckingham Palace and spoke of connections with the US embassy.

Then, when his "lies" finally began unravelling, he resorted to "entirely inappropriate and criminal pressure" to persuade investors "not to pursue complaints to police".

After his arrest he continued to protest his innocence.

His barrister, Julian Bevan, QC, also argued his client had done nothing wrong.

But the three man, nine woman jury - not allowed to hear about the defendant's previous convictions for dishonesty - decided Brown was lying.

They took nine and a half hours over three days to unanimously convict him on four counts - two thefts, one of furnishing false information and one of perverting the course of justice between February 9, 2005 and April 17, 2006.

Liberal Democrat leader Nick Clegg told BBC News 24: "We took that money in good faith, everyone recognises.

"It has been recognised that we did all the due diligence checks we could have done, totally unaware of the crimes of which Michael Brown has now been indicted.

"Beyond that, I can't comment."

The latest case heard that the crook carefully sculpted a reputation of "experience and expertise", insisting he had a 10-year pedigree "trading in high-value bonds on the international markets".

It first attracted a 10 million dollar (£6.25m) investment from two US lawyers representing a group of Californian clients calling themselves Univest.

Mr Edwards' 12.7 million dollars (£7.94m) followed, along with 30 million dollars (£18.75m) from Hong Kong-based business figures Kevin So and Lucy Lu.

Another investor, Los Angeles lawyer Robert Mann, handed over 5 million dollars (£3.125m). He is now suing the Lib Dems for the return of £632,000 Brown gave to the party. The rest of his money was siphoned off for Brown's plane.

The bogus trader promised all his clients exceptionally healthy returns on their cash.

But not a single investment was made and, apart from Univest, which was repaid with other investors' money, no-one got their money back.

"Mr Brown never had any intention of trading in bonds," said Mr Edmunds.

"His representations to Mr Edwards were all just lies to get hold of his money."

Instead of being invested, it was used to help "create the illusion he was trading" and then provide the trappings of success.

The former football boss said Brown insisted he "only dealt in triple A- rated bonds which had practically no risk at all".

"I think I came away with the impression of 36 per cent to 50 per cent profits a year, which was quite high.

"He also said his father was a lord and referred to certain political connections as well."

When his edifice of deceit began to "unravel", Brown used a sheaf of false documents in a bid to avert suspicions.

An investors' representative was warned that, if they complained to police, "the drawbridge to any compensation would be well and truly shut forever".

Investigators quickly unravelled his modus operandi - ostentatious displays of wealth, a carefully nurtured but bogus investment reputation, and the squandering of tens of millions of pounds.

The Electoral Commission, the donations watchdog, later began an inquiry into Brown's £2.4m Lib Dem donation.

It ruled that, "based on the information available to them at the time", the party had "reasonably" regarded the sum as "permissible" and "acted in good faith".

But it then warned: "Nevertheless, we have always said that, if any additional information that has a bearing on the permissibility of the donations comes to light, for example as a result of the ongoing police investigation or legal proceedings relating to the affairs of 5th Avenue, we would consider the matter further."

A spokesman for the Lib Dems said the party would be making no comment on Mr Brown's conviction.

The Electoral Commission later said it was resuming its probe into Brown's donations to the Liberal Democrats.

"We are now able to resume our investigation which had been suspended at the request of the prosecuting authorities," a spokesman said.

"Our investigation concerns the permissibility of donations accepted by the Liberal Democrats in 2005.

"We have asked the Police and Crown Prosecution Service for access to relevant evidence from the trial to inform our investigation."