A man has been jailed for seven years and six months after running a £1.3m Ponzi scheme from his bedroom.
Daniel Pugh, 35, set up the fraudulent Imperial Investment Fund (IIF) with another individual, taking money from 238 investors he largely targeted through Facebook adverts. Investors were promised implausible returns of 1.4% a day, 7% a week or 350% a year.
The FCA, which brought the prosecution, said Pugh received £96,000 from the scheme, which he spent on designer clothes, restaurants and cash withdrawals totalling £18,000.
The promised returns never materialised. Pugh duped investors into believing he was successfully trading and that their money was safe. Even when he knew the scheme was collapsing, he continued to attract new investors.
Steve Smart, executive director of enforcement and market oversight at the FCA, said: “Pugh made outlandish claims to hook in victims but in reality this was nothing more than a massive fraud. Fighting financial crime is a priority for the FCA. We will take action to ensure criminals face repercussions for their actions, including being denied access to any ill-gotten gains.
“People’s online personas are often at odds with reality, as was the case with Pugh. Claims that sound too good to be true are usually just that. Check the FCA Firm Checker before you invest.”
In sentencing, His Honour Judge Weekes said Pugh had committed “persistent and knowing breaches of the regulatory framework” and that any remorse “came woefully late”.
He added: “The consequences for the victims are marked, and apart from financial loss they feel embarrassment.”
The FCA is pursuing confiscation proceedings to deprive Pugh of his criminal proceeds and compensate victims.
Pugh has also been disqualified from being a company director for eight years, effective upon his release from prison. A further individual is wanted in relation to the same offences.
The FCA noted that in the past six months, it has secured criminal convictions against six individuals for offences including fraud, insider dealing and money laundering.
It warned that unauthorised investment schemes pose “a huge risk to consumers” and urged investors to use the FCA Firm Checker before parting with their money.
