Wealth manager Freddy David was considered great at his job – until his friends and clients found out he was managing his own wealth by stealing their money.
David, 49, was jailed for six years after admitting to running a scam which conned 55 people out of nearly £15 million.
He was convicted of obtaining a money transfer by deception and fraud by abuse of position at Southwark Crown Court.
For 12 years, starting in 2005, David manipulated a Ponzi scheme – a fraud that pays early investors out of the proceeds staked by new investors.
As managing director of wealth management company HBFS Financial Services Ltd, David ran the fraud at the same time as conducting a legitimate financial services business.
Luxury lifestyle
Investors gave him lump sums of between £20,000 and £750,000 to place in a high interest bank account offering interest rates of between 4% and 8%.
Some of the victims he swindled were friends.
The court heard that David explained to them their money would earn interest every month, but they had to lock in to a fixed rate for between three months and five years.
But auditors from the regulator the Financial Conduct Authority had suspicions about bank transactions and found David was transferring money to his personal account to fund a luxury lifestyle and to pay private school fees for his children.
Later, the investigation uncovered a hugely expensive personal gambling habit as well – with £240,000 spent in one day.
Devastating impact
Katie Watkins, a City of London police investigator, said: “David took advantage of individuals who placed significant trust in him.
“He abused his position and consequently this has had a devastating impact on the victims and their families, both financially and psychologically.
“David was a well-respected member of his community who exploited this in his position as a managing director of a recommended financial advisory firm to gain trust from unsuspecting investors.
“This fraud has caused significant emotional distress and financial harm to the victims involved, many of whom invested their life savings in HBFS. Some victims are retired and are not in a position to recover the money lost.”
