THE SERIOUS Fraud Office (SFO) has successfully convicted the individual behind a £226 million fraud involving celebrity-endorsed luxury resorts in the Caribbean. David Ames, 70, has been found guilty by a Jury presiding at Southwark Crown Court on two counts of fraud by abuse of position. Ames offered no evidence in his defence.
An SFO investigation uncovered how Ames deceived over 8,000 UK investors in The Harlequin Group, a hotel and resorts development venture. Victims were led to believe they had a secure investment in property whereas, in reality, The Harlequin Group was never operating as promised.
The business model relied upon investors paying a 30% deposit to purchase an unbuilt villa or hotel room, half of which went towards fees for Harlequin and relevant salespeople, while Harlequin put the remaining 15% towards construction. Investors were fraudulently told that the building of the properties would be further funded by external financial backing.
With no additional source of funding, three properties needed to be purchased to finance just one of the luxury accommodation units. This led to the exponential expansion of the scheme, the diversion of investor money between resorts and, ultimately, a funding shortfall of over £1.2 billion by 2012 (seven years after Ames launched the scheme).
By this point, an expert accountant told Southwark Crown Court that investors were exposed to a near 100% risk of loss, which Ames did not contest.
The SFO investigation revealed that, by the time it went into administration in 2013, Harlequin had sold around 9,000 property units to investors, with less than 200 ever actually being constructed. Throughout the entire eight-year project, only 28 of over 8,000 investors ever completed on a purchase, leaving 99% of them with no return on their investment.
The Harlequin Group ultimately lost a total of £398 million of investor funds.
Several thousand victims
Several thousand victims lost pensions and life savings to the fraud, while in parallel Ames enriched himself and his family by £6.2 million. The Harlequin Group companies were family businesses, employing at certain times both David Ames’ wife and his son, who was paid £10,000 per month.
Ames had been temporarily barred from serving as a company director due to a previous bankruptcy and, as a result, styled himself as the ‘chairman of Harlequin’.
The SFO uncovered how he repeatedly ignored warnings that the business was likely insolvent, while concealing this reality and continuing to sell more units to investors. Ames sacked associates who raised the alarm and, on one occasion, told colleagues that concerned investors needed “to be put in their place” to avoid attracting “bad press”.
Ames made publicity a key priority, promising celebrity-sponsored tennis, golf and football academies with marketing videos in which he personally explained his vision for the resorts. Predicting major tourism development opportunities, Ames even secured the endorsement of politicians in the region, including the Prime Ministers of Barbados, St Lucia and St Vincent and the Grenadines.
Commenting on the case, Lisa Osofsky (director of the SFO) noted: “David Ames committed fraud on a huge scale, knowingly exposing thousands of UK investors to losses totalling hundreds of millions of pounds. Diligent SFO investigators reviewed millions of documents, traced over 8,000 investor deposits and called on more than 25 witnesses to expose the full extent of Ames’ deception.”
Ames will be sentenced in September.
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