Fraud trial: Elderly French couple thought they'd invested in factories

Wednesday 22 August 2018

A former financier on trial for a £2.7million alleged fraud let an elderly French couple with limited English skills believe they were investing £70,000 of their savings in 'factories', not 'factoring', the Royal Court has heard.

The claim came as the retired couple gave evidence through a translator at the trial of ex-Lumiere CEO Chris Byrne (50).

Amongst other charges, it is claimed that he didn't tell his clients - many of whom were elderly or vulnerable - all the facts about how and where their money was going when they made investments. He denies the charge.

In yesterday's sitting, the court heard that the couple, like many of their fellow investors, had known the accused for a long time and had "trusted him." They first met him when he looked after their investments at a local bank, and then stuck with him as he moved to a local investment firm, before setting up his own company.

In all the couple invested £70,000 with Mr Byrne. The money went into Providence – a company that made money through ‘factoring’ in Brazil. The mechanism, which many consider high-risk, involves making a profit by buying up companies’ debts at a price lower than their value, and then chasing up debtors for the full amount.

According to their daughter, who also gave evidence, the elderly retirees “are just ordinary people who’ve worked hard for what they’ve got" and "live by their own old-fashioned rules." She described them as unsophisticated investors who were very cautious and prudent.

The daughter attended a number of investment meetings with her parents and Mr Byrne, and would often translate. She mentioned that at one of those meetings Mr Byrne seemed to be “pushing them to invest” in a company in Brazil, promising very good returns of between 7 to 14%. Although they were surprised at these great rates and the fact that their money was safe, they had had similar returns in the past.

It’s claimed Mr Byrne then made the couple complete a risk profile. This aims to judge investors’ characters and to match them with likely products. The husband came out as ‘moderately adventurous’, the wife ‘balanced’. According to their daughter this surprised her and her parents. They raised the issue with Mr Byrne, but in her words he just seemed to shrug it off saying it was ‘mere paperwork’ and wasn’t the only information used to match clients and products.

According to the daughter Mr Byrne seemed to “have an agenda”. She also felt “the meeting was going too fast”, and that she had no idea “that the venture was high risk”. She went on to tell the court “If I’d have known that, I would have stopped it straight away.”

Pictured: Under cross-examination Defence Advocate Olaf Blakeley questioned whether language difficulties had led to confusion.

 Defence Advocate Olaf Blakeley honed in on a number of points raised by the daughter: how long meetings had lasted, how much explanation Mr Byrne gave the couple, and whether he showed them a video on a large TV screen he had on his office wall. But it was language issues, in particular how accurately things were translated, that took up most of his cross-examination.

According to the daughter, she’d had to pop out to take a phone call during one of the meetings and when she came back her mother spoke to her in French and said the Brazilian venture involved investing in "factories and small businesses." Mr Byrne, she said, never corrected them. Hardly surprising, said Advocate Blakeley, since the conversation was in French, and he doesn’t speak the language. But, the daughter, then went on to say she questioned Mr Byrne about this in English. She’d never heard of "factoring", and didn't know what was involved.

The couple will continue to give evidence – separately – on Thursday.

The trial could last up to six weeks. It’s being heard by Royal Court Commissioner Sir John Saunders and Jurats Charles Blampied and Robert Chistensen.