The two directors of a firm accused of lying to their investors to claim they were authorised by the FCA were told by their own lawyer they would have to be “18 years old” to convince anyone they had made an honest mistake, a jury was told.
Collateral (UK) Limited was a finance company which facilitated investments crowdfunded by members of the public. The firm and two related companies entered administration in April 2018.
The two defendants, Andrew Currie, 57, and Peter Currie, 59, both deny two charges under the Fraud Act 2006 and one charge under the Proceeds of Crime Act 2002 in this criminal prosecution brought by the Financial Conduct Authority.
For further information about the case, and to see our reporting of other days please visit our main trial information page.
Coverage of this trial has been generously funded from donations to our gofundme page. Please consider adding an amount to support crowd-funded journalism of the peer-to-peer lending sector.
Contemporaneous reporting by Joe Morgan who tweets @nottherealjoe
In evidence brought by the prosecution heard at Southwark Crown Court, the 59-year-old Currie attempted to blame advice given to them by DWF and SimplyBiz.
In emails shown to the jury, legal advisors however repeatedly warned the director’s actions would be seen as misleading investors.
WITNESS: ANTONY LAMBROU
The IT consultant who created the “industry-leading” system Collateral was based on told of the moment he was told to block investors from making any more deposits.
Antony Lambrou, the MD of White Feather Designs, said the Currie brothers had been paying him £65,000 plus VAT (£78,000) in instalments in order to purchase the leading eCommerce system behind the website.
An IT professional of 35 years, he said he first met Peter Currie in 2015 through a mutual acquaintance.
He charged the brothers £4,450 for the initial work of creating the website and then £6,000 plus VAT for six months rental.
He said the back end of the system was launched around 14 April 2016 where loans and assets could be launched and this was mainly led by Peter Currie.
Assisting the prosecution for the FCA, Thomas Coke-Smyth asked Mr Lambrou if there had ever been discussions regarding a company called Regal Pawnbroker.
The prosecution has earlier argued Peter Currie, who directed the company, deliberately misled investors in 2013 by simply editing the name of ‘Regal Pawnbroker Limited’ that he had run on the FCA’s register of interim-authorised companies.
This made it look as if his new business was interim-authorised and regulated as a consumer credit business when it was not.
Mr Lambrou said: “He said he had a company he used to have, but it wasn’t something that was my concern.“
During his once-a-month visits, he said he would see the directors of the company and remembered one time when investors visited the office in Manchester.
“From what I remember of one visit, two investors came in to make sure the company was real and there were people that were doing what they should be doing.“
HOLDING PAGE
The prosecutor then outlined that in March 2018, the IT consultant was told to put a holding page up to prevent investors from depositing any money.
“I was asked to put a holding page up [in March 2018],” Mr Lambrou said. “Peter asked me to put a holding page up to stop any more investments occurring.
“[Peter] mentioned the FCA had spoken to him about changing the name of the company.
“Peter explained when he went on to the FCA website and changed the company name to Collateral, it allowed him to do it and as far as he was aware of that was OK.
“He then got an email from the FCA saying that wasn’t allowed. That’s what I understood.
“I was just asked to put the holding page up.”
Henry Grunwald OBE KC, defending Andrew Currie, in cross-examination, asked Mr Lambrou if interactions between the two of them were relatively rare and if his knowledge of IT systems was left to his brother.
“Would it be fair to say conversations between you and Andrew was largely about football?” he asked.
“Yes,” Mr Lambrou responded, with laughter.
Colin Aylott KC, for Peter Currie, described the system Mr Lambrou made as an “industry-leading product” and there was “inherent value in the actual software created”.
WITNESS EVIDENCE CONTINUES: WILLIAM WALSH
William Walsh, a technical specialist employed by the FCA to investigate, carried on his witness evidence from yesterday.
He was asked to explain the legend that was screenshotted at the bottom of Collateral’s website.
It read: “Collateral (UK) Limited is authorised and regulated by the Financial Conduct Authority FCA Number 656714 (IP Issued). Collateral (UK) Ltd is not covered by the Financial Services Compensation Scheme. Your capital is at risk.“
Mr Walsh explained: “A lot of regulated services fail and the FSCS is there to protect customers and will make good those debts. It’s a safety net if you like. Peer to Peer lending is specifically carved out of the FSCS.“
‘THIS IS SERIOUS’
Stuart Biggs, prosecuting for the FCA, then read several emails from the Curries’ lawyer Richard Tall, then of firm DWF, to the jury, sent in February 2018. DWF describe themselves as ‘a leading global provider of integrated legal and business services’ on their website.
He said: “This is serious I am afraid. Do you want to have a chat with me beforehand to discuss what happened here. The FCA’s view will be, and the courts more or less back them up every time, that this was done intentionally and with a view to mislead. As usual, I am not taking their side, I am just saying how it is.
“Regal Pawnbroker has been dissolved hasn’t it?
“The other thing they have picked up is Andrew. I know they have alluded to him before and looking at Regal Pawnbroker I cannot see that there is any mention of him on any of the paperwork, but I have not done a deep dive on that.”
He added: “You’re going to find it very difficult to run the line that this is an innocent mistake.. Essentially to do that you would have to be 18 years old and not have been in business before.“
“The FCA’s line will be that you’re in breach of one of the main principles of business which is an open and honest approach to the regulator.“
“WE’RE NOT GOING TO BE ABLE TO FOB THIS OFF”
The next email read, in part: “Listening to the tape, I think you had two people from enforcement on. That is not good news at all, and I think it indicates they are going to go for the jugular here unless we can divert them from that.
“The primary issue is..they are treating this as if Collateral never had any permissions at all and consequently falls outside the interim permission regime.“
Mr Tall said, as read by the prosecutor: “They are saying because of that Collateral has been conducting regulated activities unauthorised. Essentially it needs to be looked a…all bets are off.
“What we need to do is… convince them that the transposition was totally innocent; try and convince them that based on that the fact that everyone was labouring under the same misapprehension as you then operated within the parameters agreed with them, and because nobody has suffered any loss it is unfortunate you were not authorised but you thought you were, as did they, and you all agreed what would happen and you did that.“
In the emails read out to the court, Mr Tall then asked Peter Currie about the data the FCA asked for.
He said: “I am going to say that you are going to respond with the data requested shortly, and also the other thing we need to deal with are the amounts invested in Collateral as they ask for in their letter. What are those amounts please? I can say those will be followed up in another letter but we need to be absolutely clear as to where the money has come from.“
Currie responded: “The current loan book stands at £17 million. We currently have 1668 investors signed up and 1081 active investors.“
Mr Tall then said: “Thanks Peter that does not answer the question, this is who about who has invested what into the platform, ie who has provided the investment capital needed for development.“
Currie said: “I have funded upwards of £150k and received private funding of £700k.“
Mr Tall then said: “Thanks Peter really sorry but they are going to massively focus on this. The reason they are asking the question is they suspect Andrew has some sort of interest. They are going to want to know the amounts invested, by what means, the terms, repayment dates…
“We are not going to be able to fob this off.“
Mr Walsh, investigating for the FCA, later said a watchdog rep had been told the loan book stood at £15 million – with at least one loan consisting of £5 million, with around 600 investors and up to 100 borrowers.
‘INNOCENT NAIVETY’
In a letter responding to the FCAs questions, the Curries’ representative said the client “acknowledges changes were made” to the details of Regal Pawnbroker Limited and Collateral.
It said: “We are instructed that our client did so as a consequence of its, and that of its director, misunderstanding of the concept of separate legal identity for bodies corporate in the UK.
“Our client would like to emphasise that the changing of the details was done not with the intent or desire to mislead any person but, we are instructed, simply as a matter of commercial expediency.
The letter continued: “We have counselled our client and its officer as to the nature of separate legal identity and made clear to each of them the perception which this would have created in the FCA’s eyes. Our client has assured us that it is not a perception it wished to create or wishes to subsist. You will note the immediate steps our client has taken to remedy the situation.“
The proposed steps hoped to continue operating “but that will only be open to lenders, be those individuals or bodies corporate, who are prepared to make loans exceeding £25,000 on an individual basis to borrowers” and that loans were only given for “business purposes“.
In summary, the lawyer said: “Our client acknowledges that to have made the changes to the Consumer Credit Register was unwise and the perception this will have created. However, as has been expressed, those changes were made out of innocent naivety rather than the intention to cause harm.“
‘HE IS A JOKE’
Behind the scenes, however, the court heard that Mr Tall from DWF requested £15,000 from Collateral “on the basis that they could shut you down tomorrow“.
This email was forwarded by Peter Currie to Andrew Currie, who allegedly only wrote in response: “So predictable he is a joke“.
In a letter responding to the proposed steps, the FCA told Collateral that they must cease unregulated activities.
Andrew Hayward-Wills, from the FCA, said: “I understand from your letter that it is accepted that Collateral does not hold, and has never held, authorisation or interim permission from the FCA to conduct regulated activities.“
PAYMENTS
The jury was then told of payments made to Andrew Currie just before Collateral went into administration.
Before this, the prosecutor said bank statements in 2017 found Collateral paid Andrew Currie £500 a week and could use company money for expenses, which at most would go to £3,000.
Mr Biggs said, in an unusual transfer of cash, Andrew Currie’s HBOS account received 21 payments totalling £210,419.52 and in a Lloyds account 16 payments totalling £161,810.
On 27 February, the court heard Andrew Currie’s bank account did the following:
– £88,000 paid to Refresh Recovery, an insolvency practitioner.
– £20,000 received with the reference ‘consultancy fee’.
On 28 February:
– Paid Gordon Craig, who worked at Refresh Recovery, £20,000 into his personal account.
Mr Biggs said the FCA later discovered Mr Craig was a Facebook friend of Currie’s going back to 2014, and suggested this was a conflict of interest.
On 1 March:
– Refresh Recovery paid Andrew Currie £40,000
On 2 March:
– Andrew Currie pays £20,000 to an entity called Mattanie, a company controlled by Peter Currie.
ADMINISTRATION
The prosecutor also outlined the correspondence between Peter Currie and the FCA when the Collateral director was told the case had been moved to the enforcement department.
This department is responsible for investigating and taking action against firms and individuals.
Four minutes later after this email was sent, Peter Currie claimed that the company was “inappropriately advised” by DWF and Simply Biz.
He said: “Based on our conservation…there is strong evidence that we received inappropriate advice about the nature of the permissions our business model required and we sense that this may be at the root of a number of the issues we have had.
“We are reviewing whether there is sufficient evidence to allow us to take action.“
He added: “It was not, and never has been, our intention to act outside the law.“
In an email from the enforcement department, Deidre O’Sullivan asked for a conference call to discuss the legitimacy of the business.
She said: “We are particularly interested in
i) your proposals for how to address unenforceable agreements that your clients have entered into as a result of your firm’s unauthorised activity
ii) whether your firm is able to continue to administer loans and
iii) whether you have a plan in place in the event of insolvency.“
Mr Walsh, on the stand, then said: “We [then] became aware that people in internet chatrooms had said Collateral had been put into administration.
“The FCA was not aware of Collateral going into administration.“
Both Curries deny two charges under the Fraud Act 2006 and one charge under the Proceeds of Crime Act 2002 in this criminal prosecution brought by the Financial Conduct Authority.
The trial continues.
Case details:
Court 12 Southwark Crown Court
Before His Honour Judge Griffith
26th April 2023
Case number: T20220056
CURRIE Andrew
CURRIE Peter
The Financial Conduct Authority are represented by barrister Stuart Biggs, assisted by Thomas Coke-Smyth.
Peter Currie is represented by barrister Colin Aylott KC, assisted by Ashley Hendron.
Andrew Currie is represented by barrister Henry Grunwald OBE KC, assisted by Oliver Renton.
The work on this site is protected by copyright laws and treaties around the world. All such rights are reserved.
You may print off one copy, and may download extracts, of any page(s) from our site for your personal use and you may draw the attention of others within your organisation to content posted on our site.
You must not modify the paper or digital copies of any materials you have printed off or downloaded in any way, and you must not use any illustrations, photographs, video or audio sequences or any graphics separately from any accompanying text.
Our status (and that of any identified contributors) as the authors of content on our site must always be acknowledged.
You must not use any part of the content on our site for commercial purposes without obtaining a licence to do so from us or our licensors.
Mouse in the Court 
One thought on “Collateral advisor told directors: “We are not going to be able to fob this off”, jury hears [Day 8]”