Bradleigh Anthony Caley and John George Evans who duped people into investing in a worthless wine business have been disqualified from acting as company directors for 12 years each by the High Court in London.
The bans, which follow an investigation by the Insolvency Service, took effect on 20 March 2013. The disqualification restricts Mr Caley and Mr Evans from managing or controlling limited companies in any way for the duration of their 12 year bans.
Investigators found that Mr Caley, a director of Fine Wine Vintners Limited and Mr Evans, who was not a registered director of the company had both caused the company to trade in a manner that lacked commercial probity.
The court heard that between 25 August 2009 and 8 October 2010, Mr Caley and Mr Evans caused Fine Wine Vintners Limited to encourage members of the public to invest 1,562,888 on the understanding that this would be used to purchase wine.
In reality, only 446,756 was used to purchase wine on behalf of customers. In fact over 1 million invested by members of the public over 14 months was not used to purchase fine wines but to fund their own lavish lifestyles.
The investigation uncovered that in excess of 500,000 was used to make payments to Mr Caley, Mr Evans and their friends, families and associates. The remainder was used to purchase properties, fund visits to restaurants, gentlemens clubs, bars, and cash withdrawals.
The court heard that Fine Wine Vintners was set up in 2009 to encourage members of the public to invest in fine wines, predominantly from the Bordeaux region of France. The majority of the wine recommended by the company was En-Primeur which implied it traded in wine futures, where wines are purchased whilst the vintage is still in the barrel and thus not bottled or available to be shipped for at least a year.
Purchasing wine in this manner is very risky as the true value of the vintage is not known until it is bottled. However, the company used various tactics to convince the public that it was a genuine wine broker. Some of those tactics included having a Mayfair address, which was actually a virtual office, whilst their employees worked out of a boiler room in Bromley, Kent.
In addition they used a slick-looking brochure that claimed Fine Wine Vintners was one of the UKs leading fine wine traders and used financial discipline, market insight and wine knowledge to optimise returns. Furthermore, Fine Wine Vintners claimed to have a network of contacts throughout the UK and Europe and could arrange the re-sale of wines at a moments notice.
In reality, the company had only been incorporated in 2009 and their brokers worked from a script and the only contacts the company had were those of internationally known wine merchants and wholesalers whose details are readily available to the general public.
In addition to the slick brochure sent to clients, Fine Wine Vintners employed brokers who used a technique of hard selling via telephone and adopted pseudonyms to hide their true identities.
Brokers would call prospective investors using a list of names and persuade them to purchase fine wines at a price that was grossly inflated and made the prospect of gaining a meaningful return extremely difficult or non-existent.
Mr Caley or Mr Evans were not present in court and did not assist the Insolvency Service with their enquiries.
Commenting on the disqualifications, David Brooks, a Chief Examiner for the Insolvency Service stated:
Where investors are told that their funds will be used for a certain purpose the directors ought to ensure that the company does what it says it will do.. The fact that clients trust was broken and their money lost with limited wine purchased for them makes this case all the more serious.
This disqualification should serve as a reminder that the Insolvency Service will investigate and take action against unacceptable conduct by company directors and those who are not appointed but still act as directors.