Millions of pounds taken from nine defrauded pension schemes were transferred to two shell companies before being disseminated to a multitude of "risky" investments, a court heard yesterday.
Southwark Crown Court heard the underfunded schemes were targeted by defendant Tony Morris after his company The Money Portal bought out GP Noble, a Nottingham-based independent trustee firm, in 2006.
A total of £52m was removed from the schemes in two separate "sweeps" in 2007 and 2008.
Prosecution counsel David Farrer QC yesterday described the transactions as a "farce".
He told jurors the investment vehicle to which about £31m of pension fund money was transferred in August 2007 was "about as unsuitable vehicle for pension scheme investment as you can imagine".
The vehicle, Fareston, was an off the shelf company set up by a Swiss firm and registered in the British Virgin Islands.
The money was disinvested from funds properly managed by companies such as Legal & General, Scottish Equitable and Norwich Union, the prosecution said.
After its transfer to Fareston it was earmarked for risky investment deals things such as Thailand beach front properties and a pizza parlour.
The second tranche of cash - £21.5m - was transferred to another company associated with Morris, Multiple Unilateral Financial Futures (MUFF) in April 2008. Both BVI companies had Swiss bank accounts.
The court heard Morris also planned to use a large chunk of the money to buy an Australian-based online bookmaker but that deal fell through.
Farrer said Morris' co-defendant Malmstrom was "also involved, especially with the first sweep of funds".
The prosecution went on to outline how money was used to pay massive up-front investment management fees to other parties and loans to Morris. Morris also used some of the money to pay off his divorce settlement.
However, Farrar said when the Pension Protection Fund raised the alarm about the unusual use of pension scheme money a police investigation ensued which prevented the further dissemination of the missing millions.
The Serious Fraud Office investigation managed to freeze Swiss bank accounts, where much of the cash remained.
The court heard: "Substantial funds were brought back to this country. Although it still left very large losses and large amounts of money outstanding. The Pensions Regulator (TPR) appointed replacement trustees to look after what remained of the pension funds."
Morris and Malmstrom deny all counts of theft and fraud.
The trial continues...
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