Collateral paid director Andrew Currie’s girlfriend’s company £275,000 just before the company went into administration which led to purchases of properties in Lancashire and Spain, a court heard.
The Financial Conduct Authority investigated bank statements that found where monies went in the days just before lending was officially stopped, jurors were 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.
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The administrator appointed with the insolvency of the firm accused of lying to investors about being authorised by the FCA also delivered a “misleading” report, Southwark Crown Court was told.
William Walsh, the technical specialist employed by the FCA to investigate, carried on his evidence from yesterday.
In evidence brought by the prosecution heard at Southwark Crown Court, the witness said the appointment of Gordon Craig from Refresh Recovery was “invalid” and an administrator had to be picked out by the FCA.
WITNESS EVIDENCE – WILLIAM WALSH
Stuart Biggs, prosecuting for the FCA, asked Mr Walsh about the hearing where the FCA made an application at the High Court on 15 March 2018.
He said: “It was a two-fold declaration of the High Court that the administrator of Gordon Craig was invalid and in second place to appoint alternative administrators nominated by the authority.“
At yesterday’s hearing, the jury was told the FCA had investigated that Mr Craig was a friend of Andrew Currie’s, having been a Facebook friend for a number of years, and the prosecutors suggested this was a conflict of interest.
Mr Craig’s company, Refresh Recovery, opposed this and argued for an adjournment, the court was told.
In an email opposing Mr Craig’s appointment, the FCA said:
“The Authority consider that each of the Collateral Companies are carrying on, or have carried on regulated activities in breach of the general prohibition and that the failure to obtain the Authority’s written consent renders the appointment of Mr Craig as administrator in respect of each invalid.
“The Authority intends to apply to the court for a declaration that the appointment of Mr Craig in respect of each of the Collateral Companies is invalid, and, at the same hearing, to apply to appoint other insolvency practitioners as administrators to each of the Collateral Companies. It is the Authority’s intention to apply to the court on an urgent basis and to seek to have a hearing listed as soon as possible.“
It was agreed at the hearing that Andrew Currie would transfer £40,000 to JMW Solicitors to hold in their escrow account.
It was also found that a portion of the £88,000 already paid to Refresh Recovery would be ring-fenced, £48,000, with Mr Craig holding that in a separate account, Southwark Crown Court heard.
REFRESH’S REPORT
Mr Walsh also outlined how the initial report by Refresh Recovery was “misleading“.
It read, in part: “Despite legal opinion that the group was operating unregulated investments Mr Currie thought it best to operate in such a way which would fit within the FCA guidelines for credibility within the industry.“
It added: “Despite Mr Currie’s best efforts and continued co-operation with the FCA, including multiple conference calls and meetings, the FCA contacted Mr Currie on 29 January 2018 and advised that the FCA deemed them not to be regulated and that all reference to the FCA had to be removed from the website.“
Mr Craig wrote that Peter Currie was “struggling with the ongoing matters” and asked his brother Andrew to come back and be a director at the business to assist going forward.
“The directors didn’t have clear advice on how to to deal with the Group going forward, and despite trying to discuss matters with the FCA, no issues were being resolved.“
On the appointment, Mr Craig said: “The Administrator considered the position prior to accepting the appointment and, having regard to the [Institute of Chartered Accountants in England and Wales]’s ethical guidelines, considered that there were no circumstances preventing him from accepting the Appointment.
“The Administrator was therefore subsequently appointed on the Appointment Date.“
He added: “Based on this review the Administrator did not seek the permission of the FCA to the appointment of an Administrator as all the evidence was that the Company was not regulated and as such this permission was not required.“
The court heard the client account balance at Collateral was £395,404 which principally relates to 777 individuals who have deposited money amounting to £370,553.
“Should the Group have continued to trade the individuals would have been able to withdraw these funds as and when they wanted,” Refresh’s report said.
“It was the intention of the Administrator to return these monies to the individuals.“
Mr Walsh said in response: “We were concerned as the report was a misleading account of the business.
“We took steps with the intention…to make sure it was not distributed.“
But on 2 April 2018, the court heard the report had been published on a financial commentary website www.financialthing.com.
Mr Walsh, investigating for the FCA, said the authority then applied for a freezing order and appointed BDO as Collateral’s administrator.
“LESS THAN OPTIMAL DELAY”
In cross-examination, Mr Walsh admitted there was a “less than optimal delay” in responding to Collateral’s wishes for FCA approval on their notice to investors.
Colin Aylott KC for Peter Currie said the company had received legal advice to get a notice up as soon as possible to inform them the platform was not accepting any action.
The Curries’ lawyer Richard Tall, then of firm DWF, told them in February: “I would get the notice up now, get it to the FCA and tell them it has gone up but it can be amended of course. Point about getting it up as it shows customers what is happening.“
Mr Aylott said: “You accept Mr Currie seeked approval on the notice but did not receive a response until two weeks later.“
Mr Walsh said, in response: “Our priority was stopping any lending from taking place and… part of that was needing the client data.
“On the face of the emails, there was a less than optimal delay.“
BARRY RYAN
Barry Ryan, FCA investigator, resumed his evidence to discuss tracking of monies out of Collateral from February to April 2018.
12 February – FCA letter warning Collateral activity in breach of General Prohibition.
13 February – £309,287 is paid to Andrew Currie in broker fees.
13 February – Andrew Currie is reappointed director of Collateral.
15 February – £275,000 is paid to AURI Development Ltd
20 February – £251.52 is paid to Andrew Currie
26 February – £62,691 is paid to Andrew Currie with the reference ‘broker fees’.
27 February – £88,000 is paid to Refresh Recovery, the Currie’s desired administrator, and £20,000 is paid to Andrew Currie as a consultancy fee.
28 February – £8,000 is paid to Andrew Currie.
In total, between 13 and 28 February, between the FCA letter and being placed into administration, the total money paid out was £763,299.52.
Mr Ryan said that Ms Gayton, the partner of Andrew Currie, was a relatively small borrower at £3,600 with Collateral and AURI Development Ltd, from 30 November, was a “dormant company“.
Investigations into her bank accounts found large amounts of money from Collateral paid into AURI two weeks before the Curries sought administration.
Ms Gayton, through her company, paid monies including £122,009 on Ratio Law, over £5,000 at home decor shops in Spain, and £703 at the Manchester United ticket office.
Southwark Crown Court also heard former Bury FC chairman Stuart Day also had connections with Collateral.
Mr Ryan said his company, Mederco, a commercial developer, appeared in the loan book “quite a lot“, according to Mr Ryan.
Investigators discovered an email sent by the ex-football chief said he was originally going to work with Andrew Currie on the purchase of former Harlequins Nightclub in Fleetwood.
But he wrote to his solicitor: “No, not proceeding now on this one, something Andy is going to do I think on his own.“
Outlining the timeline, the prosecutor Mr Biggs told the jury:
15 February – £270,000 paid to Collateral to Auri
16 February – Stuart Day tells Ratio re Fleetwood property: “Andy is going to do I think on his own“
20 February – ND Holdings incorporated
26 February – £62,691 paid by Collateral to Andrew Currie in broker fees
9 March – £120,000 paid from Auri Developments paid to Ratio Law for the purchase of Fleetwood property.
16 March – Planned exchange and completion for ND holdings purchase of Fleetwood property
23 March – Fleetwood property purchase by ND Holdings completed for £120,000.
5 April – £102,922 transferred from Auri for purchase of Spanish property
6 April – Freezing order of Peter and Andrew Currie accounts.
27 April – BDO appointed as Collateral administrator.
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
27th 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.
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