Another £14.5 million PONZI

Another day, another PONZI scheme

Freddy David the Managing Director of the now-defunct HBFS Wealth Management swindled his clients out of £14.5 million to fund his gambling addiction, as well as paying for his children’s school fees and exotic family holidays.

Freddy a financial adviser took the money from 55 people, many of whom were friends, in the Jewish community, some of who are now left destitute. Sums between £20,000 and £750,000 were individually invested.

Freddy David pleaded guilty to running a Ponzi scheme. He was charged with obtaining a money transfer by deception and fraud by abuse of position in June and was convicted at Southwark Crown Court yesterday.

He was found guilty of defrauding 55 victims, predominantly from the Jewish community, out of between £20,000 and £750,000 per person.

Freddy David was arrested last December after an investigation by the City of London’s fraud squad, which found that between 2005 and 2017 he had convinced his victims, some of whom were friends, to invest in a range of funds. These, he claimed, were invested in bank accounts paying interest of 5-8% a year, as well as monthly payouts, with the money locked up for between three months and five years.

The City of London Police were tipped off by the Financial Conduct Authority (FCA) tipped after becoming suspicious about activity around HBFS’s bank accounts.

It was later discovered that David transferred the clients’ money into the firm’s accounts, using some of this to fund the monthly interest payments, but he had also moved a large chunk of it into his personal accounts for his own use. Between January 2005 and November 2017 David spent £15.6 million on gambling sites, including £240,000 on one day alone.

Police investigator Katie Watkins said:

‘David took advantage of individuals who placed significant trust in him. He abused his position and as a consequence, this has had a devastating impact on the victims and their families, both financially and psychologically.

‘David was a well-respected member of his community who exploited this in his position as a managing director of a recommended financial advisory firm to gain trust from unsuspecting investors.’

She added: ‘This fraud has caused significant emotional distress and financial harm to the victims involved, many of whom invested their life savings in HBFS. Some victims are retired and are not in a position to recover the money lost.

‘The City of London Police has worked tirelessly to investigate this case and to ensure that David was brought to justice for his despicable crimes. We worked closely with the Financial Conduct Authority to stop David from committing more fraud and to stop him in his tracks.

‘Today’s sentencing reflects the severity of this fraud and should serve as a warning to those who think they can get away with such calculated and callous acts.’

FCA executive director of enforcement and market oversight Mark Steward added:

‘Freddy David abused the position of trust he had as managing director at a regulated firm to run this appalling fraud. The FCA have been working closely with the City of London Police throughout and will now be carrying out its own enforcement action against David on the back of the criminal conviction to prevent him working in financial services again.’

At IYE Global we see examples of people being taken in by slick advisers all the time. In this case, Freddy David was a trusted member of his community and he was on the FCA register of regulated individuals. As of writing this today, the register shows Freddy David as ‘Active’ it does show restrictions on the company and that’s a major part of the challenge, undertaking hard due diligence is simply not enough. It’s the intelligence behind the publicly available information that is most telling. It’s what IYE Global specialises in producing. Before considering any investment, call us today on: +44 (0)20 8914 7923 or use our contact form to let us help you conduct proper due diligence and background checks before you invest your money with someone you may not want to trust.