Two pawnbroker brothers were jailed for a combined eight years earlier today after trying to pass off FCA permissions they had for a reality TV show as a big money finance lending company which led to over £11 million loss to investors.
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 denied 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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Contemporaneous reporting by Joe Morgan who tweets @nottherealjoe
The first count of fraud alleges they dishonestly made a false representation to investors and potential investors that the company Collateral UK Limited was authorised and regulated by the Financial Conduct Authority.
Peter Currie was found GUILTY
Andrew Currie was found NOT GUILTY
The second count of fraud claims the Curries abused their positions, in which they were expected to safeguard, and not act against, the financial interests of the company by transferring £275,000 from Collateral to Auri Developments Ltd.
Peter Currie was found GUILTY
Andrew Currie was found GUILTY
The third charge relates to converting criminal property, suggesting the Curries converted credits to the total value of £372,299.52 to bank accounts owned by Andrew Currie, knowing or suspecting it to be proceeds of crime, namely fraud by misrepresentation.
Peter Currie was found GUILTY
Andrew Currie was found GUILTY
Football chairs, property magnates and many small at-home lenders were fooled into investing into the peer-to-peer company Collateral UK Limited.
The easy-to-use loan platform created for Peter Currie, 59, and Andrew Currie, 57, was considered a ‘game-changer’ and could have made the Lancashire brothers into multi-millionaires.
Collateral UK Limited’s platform launched in 2015 where members of the public would make investments on an online platform holding against property, jewellery and luxury cars – including those belonging to former Bury FC chair Stewart Day.
The Financial Conduct Authority rumbled the brothers in 2017, spotting they had changed the company name from the pawnbrokers created for the History channel show Pawn Stars UK to the one more suited for City bankers.
A jury at Southwark Crown Court unanimously convicted Peter Currie of dishonestly making a false representation to investors and potential investors that the company Collateral UK Limited was authorised and regulated by the Financial Conduct Authority while acquitting his brother on the same charge.
Both brothers were convicted of abusing their positions as directors by transferring £275,000 from Collateral to Auri Developments Ltd, a company in the name of Andrew Currie’s girlfriend.
The third charge they were found guilty of was on converting criminal property, sending £372,299.52 to bank accounts owned by Andrew Currie, knowing it to be proceeds of crime. The judge considered Andrew Currie to be the “driving force” of counts two and three.
PROSECUTION SENTENCING NOTE
Barrister Stuart Biggs, representing the FCA, said: “This case involves an online lending platform run by Collateral UK Limited where these two defendants were directors at different times, Peter Currie throughout and Andrew Currie at different points.
“The platform ran from 2015 to March 2018, the date range for count one. Peter Currie was convicted at trial of count one.
“In very short terms he was to take the interim permission from a different company, Regal Pawnbrokers, effectively a pawnbroker’s license, and he logged onto the FCA website using details of Regal and made a change to the register that showed Collateral UK Limited as having that interim permission.
“That interim permission was used to support many false representations that were made by email, on the website and in conversation with investors to the effect that there were FCA permissions for this business.
“The significance of this change, instead of waiting on applying for interim approval, seemed to be a complex one with conflicts of interests and so on.
“But this company immediately claimed to have interim permission and…used this to get investment and sold to people in their homes via a user-friendly website.
“On entering administration, 1,132 investors were identified with loans totalling £17.9 million pounds.
“BDO, who are the administrators, their best estimate of loss to investors was £11.3 million.“
He added: “The impact on investors is something commented on in the written submissions from all parties. The prosecution position on that is this, obviously when you have a range of 1,132 investigators there is a range of course.
“There were individuals, a number of them talked about having to rearrange their lives, using money they wouldn’t expect to use or going back to work. One said ‘I haven’t had a penny back since 2018.’ Waiting of course is a hardship.
“There is a fact that a website like this which was designed, [designer] Mr [Anthony] Lambrou said in evidence, designed to attract small investors who didn’t have experience of more sophisticated forms of lending or investing.
“But if you set up a system of that sort.. you will no doubt attract some vulnerable investors. There are plenty of investors that show individual hardship. 12 witnesses, one was called while 11 were read.
“Many investors would not have invested if they had known it was not authorised and did not have permission. Of course it’s right that the court hasn’t heard from every single investor to determine loss, so while it might be appropriate to come down from the £11 million figure, it is still well in excess of £1 million so clearly it is a top bracket case even if one comes down.”
The brackets mentioned refer to a so-called category 1 fraud as per the culpability table in the sentencing guidelines for fraud.
“In relation to count two and count three, when the court approaches Andrew Currie he was acquitted on count one and there is no fraudulent trading charge here, the court must work on the basis that he worked at Collateral throughout and the prosecution say it was only a matter of convenience that he stepped back from a director role. In February 2018, he resumed responsibilities of a director, he learned from the FCA correspondence and his contact with solicitors and advisers which he gave there had been false representation.
“Having found that out in February 2018 it is beyond doubt he did two things to get money out. Firstly he made a cynical advance to a company set up in his partner’s name Auri Developments Ltd. In another company ND Holdings, there was a sale agreement which didn’t seem to correspond with the payments made.
“Your honour may also recall an email from Stewart Day, from the conveyance solicitors, that ‘Andy is going to do this deal on his own’.
“That was a payment for his benefit and it was advanced without any permission from Collateral. That was in breach of the duties he had taken on as his role as a director – it was an abuse of trust.”
COLIN AYLOTT KC, MITIGATING FOR PETER CURRIE
He said: “Our principal submission is that the court has to assess criminality by looking at the business. We submit this was a legitimate business underpinned enhanced and enabled by the dishonestly obtained regulated status as reflected in count one. We don’t try to diminish what has happened and we equally accept as we have done in our written submissions the regulated status would have been quite germane for many investors.
“A proper distinction has to be made towards a company that was set up for fraudulent purposes and a matter like this. We say this one was run legitimately but we accept it was underpinned by this false representation whether it be in person, in emails or on the website.
“We accept it was a prominent feature that they would have seen as FCA regulated. However the court has to we submit take account that the business it did we say operate legitimately over the two years it was running”
He added: “We do say it is relevant to what he drew out of the business. The court will be familiar with companies that are set up directly for fraud and often see significant withdrawals by the director and the lifestyle expenditure. We say this is absent in this case and this points to its legitimacy.
“The fact there was a significant investment in the regulatory application that was made by Collateral through lawyers or SimplyBiz again supporting evidence of the legitimacy of the business. Those are important factors to bear in mind considering the level of criminality in this case.
“We do not accept this was a sophisticated fraud. We submit the alteration from the register was a simple exercise that involved nothing more than changing the company name. He did not in fact have to do anything more.
“There was no creation of documentation that disguised what had happened. I take on board the comments of the FCA not being on trial, but one issue that survives the verdict of the jury is that this was easily discoverable. The fact the FCA register had been changed was easily discoverable.
“We submit this diminishes any suggestion the ultimate fraud was in any way sophisticated. While it was a complex business, it was a complex legitimate business.
“It was not a complex fraud that was supported by documentation or a paper trail to cover the disguise that betrays sophistication. We say that is absent.”
In personal mitigation, Mr Aylott said: “The court I hope will appreciate that having seen Peter Currie give evidence he is a man of nearly 60 years of age, of good character, and I hope the court will accept the verdicts had a profound impact on him and his family and the prospect of inevitable custodial sentence.
“When one speaks to Peter Currie he feels that he was ruined in 2018 in those years since then he feels he has lost everything ignoring the money and the business and in those years since 2018 he has had to borrow from family just to survive.
“He had deep anxiety going through the trial and the court. There was a huge blow of losing his father days before the trial was due to start. … I hope Your Honour saw the dignity he and his brother displayed that time in the way they came to court and to my memory with one of them continuing to give evidence.“
[The mouseinthecourt chose not to report this detail during our reporting of the trial however we are doing so now because it features as part of the defendants mitigation]
“No application was made in relation to this other than a day to go to the funeral. This has been a difficult time and he’s truly in the depths of despair due to the convictions by the jury.
“When you read the references from his family there is a shared grief due to his conviction. I won’t quote from the references as I can’t do justice to them.
“The references from his family are heartfelt…nothing I can quote from them will do justice but they should be read as a whole. We ask the court to bear in mind the impact he would have had on his family. He’s had to wait for five years. I make no criticism, bear in mind, this has been a long process. He has to start again when he comes out of prison and as a man of his seniority consider the impact this would have.”
HENRY GRUNWALD KC, MITIGATING FOR ANDREW CURRIE
He said: “Your honour knows [Mr Andrew Currie] is acquitted on count one. We would say… this was not a normal fraud if I may put it in this way. The dishonesty occurred in December 2015. But the business was conducted as far as other people involved in it as thereafter was an ongoing and successful business. This is important in regards to Andrew Currie: he never wanted the business to be regulated in the first place…
“On the basis he conducted its business, there were no complaints from investors during that time and over the company’s lifetime investors earned £2 million interest in loans without any loss occurring for anyone.“
The court heard he had a conviction for a minor assault which led to a £50 fine in 1984 and two driving matters in 2015 and 2016 but the jury was directed to treat Andrew Currie as having good character.
Mr Grunwald continued: “He was paid a basic sum over the lifetime of his company not the sort of sum that would have expected of bringing in business to a legitimate business he would have been entitled to: there was not a level of concealment that sums were paid.
“Yes he may have put some pressure but the effect of that was Peter Currie clearly said to two other people that dealt with the payments that ‘Andy needed to be paid.’
“Given everything that was happening in the business at the time. It’s not a surprise that this was done. The monies went directly to one or the other of Andrew Currie’s bank accounts so to suggest he was in any way responsible for the concealment of payment of those sums does not stand up.”
Judge Griffith described the situation as knowing as “jig was up” and so he “helped himself to hundreds of thousands of pounds” and did so to “enrich himself at the expense of many other people.“
Mr Grunwald said: “Andrew Currie was not a signatory on the bank accounts and had no involvement in the way it was run. The company profits should have gone.“
Mitigating, he continued: “Your honour knows the underlying offence as far as count three is concerned occurred in December 2015, seven and a half years ago.
“His criminal involvement in these matters began in Feb 2018. We’re now in July 2023.
“I know your honour will take into account the delay bearing in mind none of that delay is due to him.
“We do say that it took an unconscionable length of time for the offence to be discovered.
“It happened in December 2015 and the FCA would accept it should not have been permitted to happen…until someone with a good eye and good sense picked it up in 2017.“
He said letters from family and friends show “honesty and integrity over his many years’ association with him“.
SENTENCING
Judge Martin Griffith, passing sentence, said: “It’s a great shame to have two people like you sitting in the dock having read all the pages submitted about you of the good qualities of your life.
“I have no doubt the jury is quite right to find you guilty of dishonesty in relation to Collateral UK Limited.
“It was a successful peer to peer investment machine built on the foundations of sand and dishonest representations.
“The offences concern when changes were brought in when the Financial Conduct Authority was created. Companies that had previous credit licenses were granted automatic interim permissions to continue.
“Peter Currie had a company, Regal Pawnbrokers Limited, had interim permissions.
“Collateral however was set up after the cut-off date and it never had a license nor was entitled to interim permission.
“You Peter Currie were convicted by a jury of an offence of dishonesty and you were the one that amended the interim permission register from Regal Pawnbroker to Collateral UK Limited therefore allowing you to say in person, on emails and on the website the company was regulated by the FCA.
“The company was not and could not be regulated unless a full and fresh application was made.”
He added: “The company was undoubtedly successful and at the time of entering administration had 1,132 investors with loans totalling almost £18 million.
“Before the years of the crash, successful loans advanced and paid back to all with all those concerned satisfied. It shows the success of the company. Part of the role of the company was to ensure lenders and borrowers were introduced.
The judge continued: “It was not a philanthropic concern. Without the fraud the company would not have been able to survive and I must approach it on this basis.“
He added: “[The FCA] discovered the true position of the company in 2017. Had they done so earlier it would have brought Collateral to an end.
“You knew that it was not lawful and it was bound to all unravel. I accept towards the end you were trying to find out the way out of a corner you had painted yourself.“
The judge found on count one, Peter Currie had high culpability as he was in a leading role and losses exceeded £1 million. He reduced the sentence by two years for his age, and two years due to his good character.
On counts two and three, he found Andrew Currie was a “driving force” and had higher culpability on those two charges.
The judge decided to give Peter Currie consecutive sentences on counts one and counts two and three as they occurred over a different period of time. Counts two and three were concurrent.
The 59-year-old was punished with three and a half years for counts one and two years for counts two and three.
Andrew Currie was imprisoned for two and a half years, more than his brother, to reflect his higher responsibility in the charge.
Both men were disqualified to act as a director for 10 years.
When it was announced Peter Currie would be imprisoned on consecutive sentences, his wife burst into tears.
In the dock, Andrew wore a black t-shirt, black bomber jacket and black cargo trousers while Peter wore a blue shirt, jumper and jeans. They appeared to betray no emotion throughout the hearing other than Peter shaking his head at the sentence.
THE FCA RESPONDS
In a press release issued shortly after the hearing Steve Smart, Joint Executive Director of Enforcement & Market Oversight said:
“Peter Currie fraudulently amended the Register to entice investors in, and together with Andrew, stole client money once they knew the game was up.
Unfortunately, the investors will now be left to pick up the tab for the loans that have turned bad.
The FCA has begun confiscation proceedings to recover the financial benefit obtained by the defendants, as well as compensation proceedings to recover investor funds.
We welcome these significant sentences which show we will take every enforcement action at our disposal to pursue criminals and protect consumers.“
Case details:
Courtroom 11 Southwark Crown Court
Before His Honour Judge Griffith
14th July 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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