Two pension liberation schemes, which extracted £18m from retirement funds, have been taken to the High Court after intervention by The Pensions Regulator (TPR).
Dalriada Trustees, an independent trustee firm appointed by TPR, has launched a High Court action against three investment companies and two former trustees in a bid to recover £18m of assets.
The firm took control of two pension schemes - the Pennines and Mendip schemes - from the former trustees, John Laurence Woodward and Jennifer Doris Ilett on March 28.
Dalriada alleges the trustees used the pension schemes as a vehicle to facilitate loans to members through a series of seemingly unconnected investment firms, Hedge Capital Investments Limited (HCIL), Hedge Capital Investment Group PLC (HCIG) and Hedge Capital Limited (HCL).
The defendants' lawyers had originally argued for a summary dismissal because the schemes were defined contribution in nature - which meant individual members could pursue a case but the trustee firm could not.
However, the Chancellor of the High Court dismissed the motion in June, saying Dalriada had "real prospects of success" and paving the way for a High Court battle.
Shortly after being appointed, Dalriada was granted a freezing order of £12m over assets held by Woodward, Ilett and the three investment companies.
According to court documents, Dalriada claims that between October 2011 and 28 March 2012, 476 individuals transferred approximately £19m from other occupational pension schemes to the trustees of the Pennines and Mendip pension schemes - with £18m then paid out to the three Hedge Capital investment companies.
The documents allege Woodward, the sole shareholder and controlling director of HCL, and John Davies - the majority shareholder and controlling director of HCIG and director of its wholly owned subsidiary HCIL - established the schemes as part of "a plan for pensions liberation" through HCIL, HCIG and HCL.
It claims the money was used to purchase 18 million preference shares in Hedge Capital Investment Group - with £6.5m then lent back to members from another of the investment firms.
This article continues...
What frequency delivers best for clients?
Alleged fraud occurred between 2011 and 2017
WMA to hold its vote on 31 May
First of two articles
Newer policies offer longer terms