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| Spencer Steinberg |
Three Ponzi fraudsters used fake contracts with the London 2012 Olympics and international hotel chains to swindle £40m out of family, friends and other investors, a court heard today.
A small east London electrical wholesale company was the vehicle used in the scam, which financed the purchase of Rolls Royce, Bentley, Ferrari's and Porsche cars for the organisers, plus yachts and million pound homes.
Chartered accountant Spencer Mitchell Steinberg, 45, of Lodge End, Radlett, Hertfordshire and garment storer Michael Strubel, 53, of Princes Manor, Royal Drive, New Southgate deny the charge in a trial expected to last two months.
Both men have pleaded not guilty to conspiring between January 1, 2006 and May 31, 2010 to defraud investors in Saunders Electrical Wholesalers Ltd; Zac Fashion; Camlet Capital Investments; Camlet Capital and Hole In One.
They are accused of falsely promising Saunders Electrical Wholesalers Ltd (SEWL) had high-value electrical contracts with blue chip hotel chains and with London 2012's Olympic Village.
Jolan Marc Saunders, 39, of Almonds, Avenue, Buckhurst Hill, Essex has pleaded guilty to the same conspiracy charge and will be sentenced at the conclusion of the Southwark Crown Court trial.
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| Michael Strubel |
He also pleaded guilty to contravening a company director disqualification order by running Saunders Electrical Wholesalers Ltd. between December 19, 2008 and May 31, 2010.
"Investment deals were around the massive supply of electrical goods to hotel chains and later on those involved in the construction of the Olympic Village in Stratford," said prosecutor Miss Sarah Foreshaw QC.
"These defendants, using the vehicle of a small electrical company, were saying: 'We've secured the contract for the whole of the athletes village.' The contracts to supply were fictitious."
Investors put money in with the promise they would receive up to 7% interest on contracts to supply the Hilton and Marriott hotel chains with trousers presses, lightbulbs, air conditioning units, television sets and other electrical equipment.
"The vast pool of money was never used to buy electrical goods for hotels," explained the QC. "The defendants skimmed off huge sums of money for themselves.
Ironically some investors joked the scheme, which ran from 2006 until May 2010, was a scam similar to notorious Ponzi fraudster Bernard Madoff, 77, serving 150 years for an $18 billion fraud.
"You will hear the name Madoff in this case. Ironically his sentence in 2008 made the news and some of the investors joked whether this was a similar Ponzi scheme because it all seemed too good to be true.
"They were assured by the defendants that it was not. In their joke they had hit upon the truth.
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| Jolan Saunders |
"This fraud involves persuading people to part with their money on the promise these defendants were going to invest it for them in a very good profitable business, but they effectively pocketed the money for themselves.
"It made them rich. Rich at the expense of their investors.
"You will hear about Bentley's, Ferrari's, Porsche's, Rolls Royce's, yachts and million pound houses. You will hear that these defendants, for a while, lived the life of Riley.
"When it all unravelled and the victims discovered what they had done there were tears and expressions of regret from both these defendants.
"Some of those tears may have been genuine because they knew by then they were in trouble, they had been found out.
"Many of those who lent money were friends, they trusted them. The defendants hoped the fraud would continue for longer so the closest of their friends and family members would cash out when the scheme imploded.
"The tears of regret were as convincing as the lies they told to convince professional people to invest money. They are conmen and they do it well."
The trio were arrested in December 2010 by the Serious Fraud Office, assisted by officers from the Serious Organised Crime Agency, Met, Essex and Hertfordshire police raided five residential addresses and one commercial premises during Operation Canon.
"Saunders Electrical Wholesalers Ltd (SEWL) was a one man and van set-up," explained Miss Foreshaw.
"It did sometimes do business with hotels on a small scale and that was useful because it had some genuine purchase orders and invoices from electrical suppliers.
"They provided useful templates to create documents that suggested SEWL was involved in a fantastic multi-million pound contract.
"The basic lie was that SEWL had mega-orders that required large short-term financing.
"Bank statements and company accounts were falsified and emails doctored.
"Vulnerable victims parted with tens of thousands of pounds and sometimes their life-savings.
"Many were business acquaintances, many were from the Jewish community in north and east London, friends, family, people who trusted them, some knew them from childhood.
"The defendants, caught up in gold fever and with the trappings of wealth ploughed on."
Saunders rented space for SEWL at a warehouse run by Strubel in Hainault Business Park, Fowler Road, Ilford.
Strubel has a background in the garment trade and ran Zac Fashion - a storage company - and his accountant was Steinberg.
Both Steinberg and Strubel handed over cash-stuffed envelopes to investors. "They were, these three, the prosecution say, as thick as thieves.
"They bought properties together and went on holiday together during the fraud," said Miss Foreshaw.
"All grew rich from the fraud and Strubel, in particular, treated himself to luxury cars and a yacht."
Saunders forged genuine hotel purchase orders to impress investors, in one case doctoring a genuine £120 lightbulb order to show a fictitious £90,000 order and on another occasion a £4.71 order became one for £79,000.
Trial continues…………
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