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An NRI businessman and two of his British accomplices have been arrested here on charges of duping over 600 people, including celebrities like former cricketer Darren Gough and singer Jerome Flynn, to the tune of 80 million pounds in a 'Ponzi' scam.
The alleged mastermind of the scheme Chelsea-based Indian entrepreneur Nandan Pruthi and his business partners
Kenneth Peacock and John Anderson were arrested after a series of raids conducted by the London police in the city, the
Observer newspaper reported on Sunday. The Financial Services Authority has frozen assets of Pruthi. Sports cars, jewellery and 250,000 pound in cash are among assets police and the FSA have managed to recover from Pruthi and his colleagues, though their value is less than two million pound.
There has been some speculation that money may have been salted away in Dubai, the Cayman islands or Thailand.
Former England cricketer Darren Gough, Rising Damp actress Francis de la Tour and singer Jerome Flynn are among
the victims of the scam. A 1960s pop singer, as yet unnamed, is also among the victims while cricketer Kevin Pietersen has
confirmed that he was approached by the suspected fraudsters but he decided not to hand over any of his money.
Several people are pursuing civil claims against Pruthi for the return of their money. Pruthi has filed a defence claiming he has instructed his bank to make payments to investors but they have been blocked by the freezing order.
Police, however, believe his protestations are unsustainable. The money simply is not there. Behind the facade of token investments, Pruthi and his partners are believed to have recycled millions of pounds from new investors on to existing ones in order to maintain the illusion of a successful investment strategy generating huge returns. Much of the cash is thought to have been churned through accounts with HSBC.
Monthly payback rates of between 8 per cent and 13 per cent were said to be available to those making "loan" investments with the trio. Marketing material for Pruthi's Business Consulting International suggested money was invested as venture capital in small or struggling businesses. Some victims said they believed their "investments" were deployed in overseas bond trades or in highly lucrative vulture fund operations - all of it on the promise of get-rich-quick returns.
Police believe vast majority of cash was churched among Pruthi's victims in the manner of a classic 'Ponzi scheme' - named after US fraudster Charles Ponzi. Scores of seasoned entrepreneurs and professionals were among those duped by Pruthi, Peacock and Anderson. Many of them were groomed through entrepreneurial networking groups and sporting clubs frequented by the men who all worked out of the same three-room headquarters on Relton Mews in Knights bridge.
Some of the victims have been made bankrupt, lost homes or even attempted suicide, police said.