Judge says bankrupt tycoon Scot Young has 'a serious problem'

Property and telecoms magnate claims he lost a vast fortune just as his marriage collapsed

Scot Young and Michelle Young. Ms Young claims her ex-husband has committed a 'fraud' on the marital estate (PA)

The penniless tycoon embroiled in Britain’s most high-profile divorce has a “serious problem”, according to the judge who is set to determine whether is a billionaire or a bankrupt.

Mr Justice Moor said Scot Young, a property and telecoms magnate who claims he lost a vast fortune just as his marriage collapsed, had an “insurmountable difficulty” over whether or not he owned £6 million of shares in the telecoms giant o2.

The High Court has heard Mr Young’s previous lawyer, Stanley Beller, allege the tycoon stole the share certificates from his London office around the time he claims to have suffered a “financial meltdown”.

Mr Young claims he never owned the 3.1 million shares – despite the court hearing he signed a letter of authorisation for Mr Beller to sell them in order to obtain a bridging loan from the Bank of Scotland to buy a £6 million luxury beachfront property in Miami.

As he heard closing submissions at the High Court today, Mr Justice Moor said: “Mr Young has got an insurmountable difficulty because either Mr Beller is telling the truth and he (Mr Young) stole the share certificates. Or Mr Young is telling the truth and he used them to defraud the Bank of Scotland….He’s got a serious problem.”

The judge is set to hand down a final judgement on the bitter, seven-year divorce battle on Friday.

Mr Young, 51, a friend of many leading British businessmen including Topshop billionaire Sir Philip Green and restaurateur Richard Caring, claims he lost his vast wealth and is unable to provide for his wife Michelle and two daughters.

Ms Young, 49, claims he has squirrelled away “a few billion at least” in offshore tax havens. Earlier this year, the businessman was jailed for repeatedly failing to disclose how he lost his money.

At the High Court today, Mr Justice Moor gave an indication to his thinking.

He said property adjustment orders – where he could seize specific residences targeted by Ms Young and officially transfer their ownership to her – may be a step too far, based on the limited evidence.

But he indicated he was considering “a finding of fact that he (Mr Young) owns properties in other peoples’ names”.

The court heard Ms Young is pushing for a lump sum order of £400 million and 50 per cent of her husband’s worldwide assets, owned either directly by him or on his behalf by nominees and foundations.

During one exchange, Mr Justice Moor said: “I don’t see any difficulty with a lump sum order.”

Summing up the four-week hearing, Rex Howling QC, acting for Ms Young, said the tycoon had hid his assets in March 2006 through a “sham” property deal known as “Project Moscow”.

Mr Young claims it collapsed leaving him penniless, but Mr Howling said “the figures do not add up” and that the tycoon retained a “beneficial interest” in the Moscow site.

He added: “We are left with a suspicious restructuring that does not smell right. I know that doesn’t seem like a typical leading counsel opinion but the elephant is in the room and we all know what we are looking at.”

He said Project Moscow was a “set-up” orchestrated by Stephen Jones, an offshore lawyer from Jirehouse Capital in London. Mr Jones has previously rejected the allegations and denied ever acting for Mr Young.

Mr Howling said Project Moscow led to several “suspicious” debts, including one owing to Ekaterina Berezovskaya, a daughter of the deceased Russian oligarch Boris Berezovsky.

He said: “The point I am making, My Lord, is that we have not seen any primary evidence that these debts are actually owed.”

During exchanges, Mr Justice Moor said he had “got the point” that there were no debts to one of Mr Young’s creditors arising from Project Moscow, an entity called Legal and Equitable (L&E).

The court has heard previously that Harvey Lawrence, the man behind L & E, has been in South Africa during the entire four-week trial and unable to give evidence.

A key point of dispute in the case is a £400 million schedule of assets Mr Young is alleged to have lodged with commercial law firm Fox Williams, which was recovered from the tycoon’s wiped laptop in 2008.

Mr Howling also referred to an “I2” chart tracing Mr Young’s links to 30 banks, 30 law firms and eight management companies and said it “starts to show the scale of this man’s operations”.

“He had his fingers in lots of pies,” Mr Howling added.

The court has also heard previously that Mr Young currently enjoys a comfortable lifestyle, living in a £4,000-a-week central London flat and surviving on large cash gifts handed to him by friends and corporate lawyers.

Mr Howling said: “My clear and obvious request to the court is what Mr Young is telling the court is not based in reality.

“Funds are coming to him in such a contrived and convoluted way that he is trying to shield the money from his family.

“He is not living the life of a penniless bankrupt. The answer is obvious: the money is there, but it has been hidden.”

Mr Young has repeatedly accused his wife of orchestrating a “media circus” around their divorce case. However, Mr Howling said: “The reason my client went to the press was because of specific advice over concerns about her safety.”

In his closing submission, Mr Young said his wife’s case was “absolute and utter nonsense”.

He added: “I am trying to prove a negative in every way shape and form.”

Mr Justice Moor’s judgement will be handed down on Friday.