Four convicted in UK for $10 million Ponzi-style scheme

LONDON (Reuters) - Four men were sentenced to a total of more than 10 years in jail on Friday after conning investors out of around $10 million in a Ponzi-style fraud, British investigators said.

Investors from around the world put at least $100,000 a time into the British-based scheme that promised returns of up to 100 percent within 12 months through a bank trading program.

Their money was either recycled to pay earlier investors or sunk in to an aborted scheme to extract gold from spent ore.

The Serious Fraud Office (SFO) said it was one of the most complex investigations it and Cheshire Police had ever conducted.

About 30 investors from the United States, the Netherlands, Bulgaria, Hungary, Canada, Spain, the UK and Singapore were affected, with one American losing $2 million.

The scam was run by former Cheshire police officers Frederick Taylor and Martin Shaughnessy, solicitor Christopher Darke, businessman Paul de Rome and financial consultant Ian Whittock, the SFO said.

Taylor and Shaughnessy lured wealthy individuals between 1996 and 1998 to invest in two companies based in Cheshire, northwest England, called Maincrest Investments and London & General Finance.

The victims were falsely told their money was secured by bank guarantees and insurance and were persuaded to transfer funds to an U.S. account controlled by Darke.

The promised bank trading program was not conducted and instead early investors were paid with later investors' money in what investigators said was essentially a Ponzi scheme.

When the companies were unable to pay later investors they looked for other ways to generate income and money was passed without investors' knowledge to de Rome, who had set up a company in Texas to extract gold from spent ore, the SFO said.

But the company, Anglo American Metals, failed to go into production and generated no returns.

Darke, who was a director of the Texas company, together with financial consultant Ian Whittock promoted investment in the business.

To raise money to pay the investors, de Rome set up a scheme to sell shares in other companies he controlled, but only some early payments were made.

De Rome was sentenced to 46 months at Liverpool Crown Court after he pleaded guilty to conspiracy to defraud and making false and misleading statements.

Taylor was jailed for 36 months and Darke 28 months for conspiracy to defraud. Whittock was given a 14 months sentence on the same charge, suspended for two years.

Shaughnessy, who admitted to fraudulent trading, was sentenced to 16 months in September 2008.

(Editing by Tim Castle; editing by Andre Grenon)