Pensioners were left penniless in a multi million pound investments swindle allegedly conducted by a Merseyside businessman.
A court heard that Wirral man Malcolm Barber, 70, allegedly played a leading role in two companies which promised "complete security" and "guaranteed high interest" fixed rate bonds.
But many investors, who put their life savings and retirement funds into the investment vehicles, were left with nothing after the two sister companies collapsed owing around £5m.
One 75 year old victim who lost her £329,000 retirement fund said the last five years of her life had been a "disaster".
Barber, of Links View, Wallasey denies four charges of fraudulent trading between December 2002 and autumn 2010 and one count of carrying out a unauthorised investment business.
In October last year Barber quit his role as honorary treasurer of the Liverpool and District Cricket Competition (LDCC) saying he would fight "to the bitter end" the charges he faces.
He claims he did not play a management role at the companies during the time in question.
A second man, Terry Warrington, from Morecambe, has already pleaded guilty to fraudulent trading.
At the opening of a trial at Preston Crown Court Brian Cummings, prosecuting, told jurors that Barber played an active role in the scheme from behind a "smokescreen".
He told how, as of 2002, the two companies, Gentry IT and Dublin CF, were incorporated in the Bahamas with a financial management firm acting as trustees in Guernsey, in the Channel Islands. Earlier incarnations of the companies, based in the Isle of Man for tax purposes, were dissolved in 1998.
The business model was to use bond holders' cash to loan out to borrowers, who could not secure high street loans, at high interest rates. That interest was then used to make repayments to the bond holders and any surplus was profit for the company.
But the court heard the businesses were not authorised to deal in bonds or loans.
Mr Cummings explained: "The company would make interest payments to the bond holder at an agreed rate on a monthly or yearly basis. At the end of the period the bond holder could either call for repayment of the deposit or could re-invest it and carry on receiving interest.
"In practice, bond holders routinely reinvested their money at the end of the fixed period, and some bond holders carried on doing this for 20 plus years."
The court heard that in 2005 that the companies appeared in serious financial difficulty and by 2007 bond holders had £3.5m and £1.8m invested in Gentry and Dublin respectively.
Mr Cummings said: "The survival of the business was dependent on bond holders leaving their money in the scheme – by continually reinvesting their bonds rather than cashing them in at any stage. If any major investor were to seek to cash in his or her bond, it would be apparent that there was no money to pay out.
"Eventually, in April 2007, the inevitable happened. An elderly investor, Agatha Waterhouse, who had been investing and re-investing in Gentry and Dublin bonds for years, passed away, and the executors of her estate sought to cash in the bonds and recover the money due on them, approximately £450,000.
“There was no money to pay to the estate. Other investors also experienced difficulty in obtaining payments due to them and, ultimately, complaints were made and a police investigation was commenced.”
Pauline Cheshire, 75, and her husband deposited £329,000 with the companies and were due a £412,000 windfall from their six bonds.
Asked how much they had received back, the Wallasey pensioner broke down as she told jurors: "Nothing, not a penny.
"We just don't know which way to turn to get our money back. It is such a lot of money for our retirement. For five years, we’ve had nothing but a disaster.
"It is with us all the time."
Morecambe businessman Terry Warrington, of Michaelson Avenue, who set up Gentry in 1986, pleaded guilty to fraudulent trading before Barber’s trial began.
Barber claims that he was not involved with the running of the companies from 1999 and had an arm's length consultancy role with Warrington through a separate Wallasey company, Business Assistance.
But the prosecution claim that both men used nominee directors – people who appear on company documentation but take instructions from others – and "other arrangements" to "hide the fact they were running the companies".
Mr Cummins added: "It is a fact that creditors of the company ultimately lost a lot of money when the companies collapsed.
"The prosecution say that was not mere misfortune, but that those running the companies carried on trading long after they must have known that the companies could not discharge their liabilities."
(first appeared in the Liverpool Echo)
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