Man accused of directing savers to UK ‘Ponzi scheme’ hit by asset freezing order

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An ex-police officer who is accused of netting about £12mn by directing members of the public in the UK to an alleged “Ponzi scheme” is to be hit by a freezing order on his property.

A High Court judge on Monday said he would impose asset restrictions on Paul Careless, who is accused of being a main beneficiary of one of the UK’s biggest retail savings scandals in recent years.

Careless is among a group of individuals being sued by administrators to the failed financial services firm London Capital & Finance. Almost 12,000 individual investors were promised high returns through “minibonds” offered by LCF, but lost a total of £237mn when it collapsed in 2019.

Victims had been directed to LCF by Surge Financial, an online marketing company established by Careless that received commissions of 25 per cent for each referral. The claimants have alleged Careless himself netted about £11.9mn.

Administrators have described LCF as “a Ponzi scheme”and said that while the firm purported to use the funds raised to provide much-needed finance to small and medium-sized enterprises, those it had lent to were not independent but were connected with people behind the firm.

Careless has previously denied the claims against him, and said he had no knowledge of impropriety.

The judge, Mr Justice Miles, is yet to rule on the merits of the underlying case, which concluded this month. But he said on Monday that he would grant a request made by the administrators to restrict how Careless can use proceeds from the sale of his property in the Cotswolds, estimated to be worth about £2.25mn.

Administrators called on the judge to order that the cash be frozen and not used to cover the former police officer’s legal expenses, which the court heard had reached about £2mn.

Stephen Robins KC, for the administrators, told the court that there was “obviously a risk of serious, and possibly irremediable, prejudice” to the administrators “if, at the close of a long fraud trial, (Careless) is permitted to dissipate the proceeds of sale of his largest identifiable asset”.

The judge said he recognised that the order could be “tough” on Careless’s solicitors, who had “agreed to act on credit, and now find themselves in the unfortunate position of not being able to be paid”.

The claimants’ application for a freezing order was granted in principle, although court officials said the final wording was yet to be finalised.

The judge added there was “very substantial evidence” about the “very large amounts of money” received by Careless, and it was unclear what had happened to it.

A ruling in the case is expected in coming months.