Two firm directors who lost investors £50m in a scheme the Serious Fraud Office (SFO) branded “an elaborate scam” have been sentenced to a total of 12 years in prison.
Richard Aston Clay was sentenced to ten years and ten months.
Kathryn Clark was given a two year suspended sentence.
Michael Cotter of law firm Regulatory Legal, which was acting on behalf of Arck investors, said the sentencing today is “of some small comfort to the hundreds of investors who have had their finances damaged by the actions of Clay and Clark”.
“I give credit to the Serious Fraud Office and the relevant authorities in securing the sentences and we continue to work with those affected to restore their finances as best as we are able,” he said.
The sentencing of Clay and business partner Kathryn Clark brings an end to a three year long battle between the pair and the SFO.
They had pleaded guilty to fraud in 2014 and it had been expected that the case would be concluded in February.
But at the eleventh hour Clay’s defence team served the court with a document disputing elements of the case against him.
They alleged witnesses for the prosecution – the SFO – committed illegal acts in relation to the case.
What is known as a ‘Newton hearing’ to judge Clay’s evidence of wrongdoing by the SFO was due to be held on 5 October.
But it did not take place as Clay agreed to be sentenced according to the prosecution’s case.
Clay was due to give evidence in mitigation ahead of his sentencing on Thursday morning, and was remanded in custody. Clark was on bail.
Where Did The Millions Go?
The fraud case brought by the SFO against Clay and Clark concerned the creation and marketing of Arck unregulated financial products made available to investors through financial advisers between 2006 and 2012.
It is estimated £60m was invested in the Arck property scheme by individual investors and, in some cases, advisers themselves.
The scheme collapsed in 2012, but not before Clay and Clark received in excess of £4m from it without explanation, according to a liquidator’s report.
This included a payment of £77,500 in respect of a Range Rover Vogue that Clay registered in his name, and payments from Arck in excess of £580,000 to Clark for which she has not been able to provide an explanation.
FSCS Blames Advisers
However the Financial Services Compensation Scheme (FSCS) has determined that financial advisers are liable for investors’ losses in £60m property investment scheme Arck and has begun inviting claims.
It said it had established that failed financial advisers are liable for losses resulting from bad advice to invest in unregulated Arck related investments, which included Estrela Santiago, Paradise Beach, and Joyston, among others.
The scheme had previously said it was awaiting information from unnamed third parties – potentially the SFO – to rule on whether it would assign liability for losses in Arck to advisers and subsequently compensate the clients of now-failed firms that sold the investment.
In an update on 11 September, it added it was also satisfied that HD Administrators – in liquidation – is liable for losses in relation to Arck LLP investment schemes held in the HD self-invested personal pension (SIPP), “due to its responsibility as the SIPP operator”.
The FSCS indicated claims made against either advisers or HD Administrators would likely take about six months to process.
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