Three men convicted of defrauding investors out of almost £80m ($116.4m, €104m) in a London-based Ponzi scheme to fund their lavish lifestyles have been sentenced to nearly 20 years in prison.

Forty-year-old Jolan Marc Saunders, Michael Dean Strubel, 54 and Spencer Mitchell Steinberg, 46, were all convicted in February of conspiracy to defraud following an investigation by the Serious Fraud Office (SFO).

Ponzi scheme

The fraud involved a form of purchase order financing for the electrical supply business Saunders Electrical Wholesale Ltd. (SEWL).

The firm claimed to a successful supplier of electrical goods such as light bulbs, air conditioning units and televisions to major hotel chains such as the Marriott and Hilton, while also falsely advertising that it was the preferred supplier of the Olympic village, ahead of the 2012 Games. In reality, the trade was fairly minor, and not to the high levels claimed to potential investors.

From early 2006, the fraudsters persuaded people to invest hundreds of thousands of pounds, in some cases millions, in SEWL by convincing investors that because of the credit crisis it was difficult to obtain finance from the banks to purchase goods for which the company already had orders.

Investors were also told that obtaining finance from banks took time and they could make a bigger profit if the orders, referred to as deals, could be completed quickly and thus with higher returns.

Instead, the three used the money to fund their lavish lifestyles, buying yachts, expensive property and cars.

Sentencing

According to the SFO, Saunders was sentenced on Tuesday to seven years in prison for conspiracy to defraud and one year for acting as a director whilst disqualified, to run concurrently. He has also been disqualified from acting as a company director for 12 years.

Meanwhile, Strubel and Steinberg were sentenced to seven years and six years and nine months respectively.

Jane de Lozey, joint head of fraud at the SFO, said: “This was a particularly pernicious crime where vulnerable investors from within the fraudsters’ own communities were targeted for huge sums, including, in some instances, their life savings.”