Truffle Farms and Pension Scams

David Austin, Susan Dalton, Alan Barratt and Julian Hanson of Friendly Pensions, were identified as the masterminds behind a £13.7 million pension scam and have now been banned from being trustees of pension schemes.

Funds raised were used to line the pockets of the trustees, with more than £10.3 million shunted into firms owned or controlled by ringleader David Austin, a former bankrupt.

The scam cheated 245 victims out of their pension savings after they were persuaded to transfer funds into one of 11 fraudulent schemes, which included a bogus Somerset truffle farm.

Via cold-calling and web marketing, victims were convinced that if they transferred their pension pots they would receive a tax-free payment, known as a commission rebate, from investments made by the pension scheme.

The Pensions Regulator (TPR) brought proceedings against the four individuals in the High Court and in January 2018. They were ordered to repay the millions of pounds they took from the schemes. At the conclusion of the case, judge Mark Pelling QC ruled that Austin had been the primary mastermind of the scam.

Part of the pension scam involved £120,000 of scheme funds being moved to an organisation whose directors included Austin and his daughter, Camilla. In addition, Austin moved funds from the schemes to his and family’s bank accounts in the UK, Switzerland and Andorra, through a number of businesses in the UK, Cyprus and the Caribbean. He and his family gained an estimated £1.3 million. Barratt, Dalton and Hanson were paid more than £380,000, £168,000 and £7,000, respectively.

Austin had not been appointed as a trustee of any schemes, but TPR’s determinations panel ruled that action should be taken to ban him from being so, as he had been dishonestly involved in the misuse or misappropriation of scheme assets. Austin has also been disqualified from acting as a company director for 12 years, and his daughter for four years.

The TPR stated: “The panel concluded that the evidence in relation to Mr Austin’s conduct was so serious, and his involvement in the receiving schemes was so close and influential, as to warrant his prohibition from acting as a trustee of trust schemes in general.”

The panel also ruled that Dalton, Barratt and Hanson should be banned from being trustees both as a result of their dishonesty and due to the amounts of money they took from the schemes.

Shocking as all of this is, it also clearly demonstrates that pension scammers should be prosecuted early before they go on to scam others. For example, Julian Hanson – an integral part of this scam was also an integral part of an earlier pension scam in 2010/11 where he acted as an introducer/adviser where it is estimated he scammed over 100 victims out of their pensions – totalling around £5.5 million worth of retirement savings.

In that case, Hanson had promised his victims their pensions would be profitably invested in “high-end London residential property” and would grow sufficiently to discharge the 50% they were allowed to take from their funds. This, he assured the victims, would NOT be taxable. In both these cases, the victims are left facing not only the loss of their pensions but a bill from HMRC for 55% of the value.

In our view, as soon as the Regulator is made aware of the involvement of anyone operating such a scam, they should be banned from operating immediately. In fact, we would like to see them prosecuted to the full extent of the law, including penal sentencing. If that had happened some of these more recent victims would not have had their financial futures devastated.