Those involved in a ‘Ponzi’ investment scheme which caused people to lose their life savings are liable to pay millions in damages, the High Court has ruled.

London Capital & Finance (LCF) raised £237 million from over 11,600 investors by issuing mini-bonds before being placed into administration in 2019. Mini-bonds are an investment that typically offers high returns .

Previous court documents said directors, including individuals from Surrey, used money to buy properties, super cars, pay for luxury trips and make donations to the Conservative Party.

Another court hearing could take place in December to decide how much compensation will be paid.

The High Court in London concluded that it was a Ponzi scheme to pay old bondholders with money from new bondholders between 2013 and May 2018.

Judge Robert Miles concluded Thursday that LCF had presented itself to the public in a “generalized, fundamental and systematic” form.

People from across the country have invested money in the minibonds, including Sussex, Surrey and Kent.

Ponzi schemes often advertise attractive rates of return to investors in order to attract money, but the returns are paid from money received from other new investors.

This happens until the plan ends up owing more than it holds in investments.

The court ruled that former managing director Michael Thomson and his partner Spencer Golding were found liable on November 14 for breaches of their duties as directors.

Three other men – John Russell-Murphy, from Eastbourne, Paul Careless, who was managing director of Brighton-based Surge Financial, and Robert Sedgwick, all “dishonestly assisted” Mr Thomson and Mr Golding, it has been learned the court.

Judge Miles said LCF “presented itself to investors as a commercial lender” to small and medium-sized UK businesses.

But a “substantial” amount of money was taken and used to make payments to defendants who used the money “however they wished”.

The plaintiffs previously said this included private clubs, investments, luxury jewelry and shotguns.

He added that all of the defendants “all knowingly participated in the fraudulent conduct.”

Colin Hardman, of Evelyn Partners, on behalf of LCF’s joint administrators, said: “This fraud was perpetrated against more than 11,500 bondholders, many of whom suffered significant financial hardship as a result of this wrongdoing.

“Not only did investors unwittingly mis-sell bonds, but, unbeknownst to them, the funds were then fraudulently diverted to benefit the fraudsters’ lifestyle and business interests.

“We hope that the outcome of this trial, together with stricter regulations that were subsequently introduced, will act as a deterrent in the future. »