Former director who stole £2.6 million jailed for seven years

Tuesday 03 July 2018

A 57-year-old man who admitted stealing more than £2.6 million from companies where he was a director to fund an "extravagant lifestyle which he could not afford," has been jailed for seven years and barred from corporate management and directorship for 15 years.

Richard David Arthur was charged with 19 counts of Fraud and Fraudulent Conversion and pleaded guilty to 10.

Setting out the case for the prosecution, Crown Advocate Nuno Santos-Costa said Arthur admitted several counts of fraud committed between March 2002 and September 2009. During that time, Arthur, a chartered accountant, was the Managing Director of BDO. He also owned Bianco Property Holdings Limited with his wife.

The Court heard he deliberately and falsely misrepresented how £2,478,401 belonging to Faircliff Property Limited would be used. At the time, Arthur was a director in the company which was owned by the Humberstone Trust, set up by Desmond Humberstone to the benefit of his daughters. Arthur lied to his colleagues to get them to agree to the transfer of the money to bank accounts that Arthur controlled, unbeknownst to them. He also lied to Mr Humberstone saying some of the sums had been repaid.

Arthur took money from Faircliff to buy an investment into Tangible Securities Limited and convinced his BDO colleagues to buy shares too but absorbed the funds. He also took money to pay the tax bill of Solar GB, a company into which he had invested and which was losing money.

Pictured: In March 2002, Arthur spent £750,000 on the purchase of a Formula One racing car and payments to his companies.

The Court heard that in March 2002 Arthur spent £750,000 “within days of its arrival” on the purchase of a Formula One racing car and making payments to a number of his own companies. While he argued the money was lent to someone for the purchase of the car, the Crown Advocate he could neither confirm or deny this.

Arthur also admitted fraudulently taking £69,000 from Library Place Investments Limited, which he then paid to Bianco. Arthur said he asked Alaric Coombs to make the payment with the agreement they would split the money. Arthur used £60,000 to pay Solar GB and subsequently paid £34,500 to Coombs. Coombs denied any agreement and said Arthur had told him the owner of Library Place had agreed to the transfer. He pleaded not guilty to the charge and was acquitted in a jury trial in June

In September 2009, Arthur said he falsely represented to an elderly client asking for £90,000 to fund an animal sanctuary and promising the man he would be repaid £95,000 within three weeks. The money was in fact used to pay an investor in Tangible who had demanded the return of his investment.

In total, Arthur admitted obtaining and using £2,637,401, of which only £709,000 was repaid.

Pictured: Crown Advocate Nuno Santos-Costa presented the case for the prosecution.

Arthur also faced four counts of falsification of accounts having falsified documents to hide from Mr Humberstone the money he had fraudulently taken from the Humberstone Trust and Faircliff.

Crown Advocate Nuno Santos-Costa explained that most of the victims were elderly clients. He said: “There can be no doubt that Arthur was very much in a position of trust and that his victims trusted him implicitly. There can also be no doubt that he abused that trust for his own benefit and personal gain.”

He said that between 2002 and 2009, Arthur was several hundred thousand pounds overdrawn and described his personal spending as unsustainable. He said Arthur used the funds for his own personal gain, “not only to finance his investment in Solar GB but also to finance his extravagant lifestyle which he could not afford.”

“His victims were vulnerable and the abuse of trust is completely inexcusable,” he added, before moving for a prison sentence of six years.

Pictured: Advocate David Steenson was defending Arthur.

Defending, Advocate David Steenson, challenged the calculations the Crown Advocate had made to reach his conclusions, saying “he had plucked figures out of thin air.”

He said Arthur’s focus was always on his family, something which had been shown by his behaviour since the matters first came to court over 10 years ago.

He accepted that there was “not very much mitigation” he could offer for Arthur as “getting other people’s money to fund deficits caused by disastrous investments” is a common story in fraud cases. He described Arthur’s reaction to his financial situation as hardly unusual adding that it showed the “desperate lengths people go to when they find themselves backed into a corner.”

Advocate Steenson said he was unable to “improve on the moving an eloquent letter” send by Arthur’s wife who said she hoped the Court could convey the other side of him. He said that thinking Arthur wasn’t sorry for his victims, “couldn’t be further from the truth.”

While he said one could understand how Arthur could be seen as a Machiavellian character plotting and scheming behind his victims, he said the other side of the story was that “he got in over his head and didn’t know what to do… He might have appeared utterly confident and arrogant… He was actually crying throughout. He was afraid to open his own post, meet with people… and started increasingly withdrawing into himself.”

Advocate Steenson also said Arthur wasn’t very good at fraud and or covering his tracks. “He got away with it because the checks and balances weren’t there,” he added. He said Arthur’s actions were simply born out of recklessness and that he took the easy way out of confronting his financial problems. “He didn’t stop to think… Do you really think he would have risked not seeing his girls whom he love so much for a number of years? Clearly not.”

He urged the Court to show mercy and keep the punishment as low as possible as Arthur had been “pretty mightily punished” in the time between the time the regulatory investigation into his actions started in 2004 and his eventual arrest in 2015, until his sentencing yesterday. “All of it is his own fault but it is a long time for someone to be under such scrutiny… It has been dragging along for three years, not as result of delays caused by him,” he said.

Pictured: Arthur was first arrested in 2015.

Handing out the sentence, Royal Court Commissioner Julian Clyde-Smith, who was sitting with Jurats Sylvia Milner, Robert Christensen, Charles Blampied, Rozanne Thomas and Pamela Pitman, described the case as a “really serious case of fraud by a defendant in the most senior position.” He said the offences had caused profound distress to his victims and damaged the integrity of finance sector in the island.

He sentenced Arthur to seven years’ imprisonment and disqualified him for the next 12 years. The reasons for the judgment will be published later and a decision regarding confiscation and compensation will be made in October.