Two former trustees have been sentenced to serve jail time for fraud by abuse of position as part of a criminal prosecution brought by The Pensions Regulator (TPR) at Southwark Crown Court (pictured) on 22 April.
Alan Barratt of Althorne, Essex and Susan Dalton of Rochdale, Lancashire were found guilty of fraud by abuse of position in breach of the Fraud Act 2006 after they were accused by TPR of persuading 245 savers to transfer pension savings totalling £13.7m into ten fraudulent workplace pension schemes between 2012 and 2014.
These schemes were controlled by the defendants in their capacities as trustees across all ten of the UK-based schemes - positions they operated from Spain where they had both been living.
Following a lengthy procedure including a High Court case and Barratt's extradition from Spain, Barratt received a sentence of five years and seven months prison, while Dalton received a sentence of four years and eight months.
Barratt was the trustee of six of the fake occupational schemes, which in turn were linked to shell companies set up by now-deceased fraud "ringleader" David Austin. Within these schemes, 139 victims have been identified as having transferred £7.7m in pension monies.
Dalton acted as trustee of the four other schemes in the scam into which 103 victims, including Dalton's brother, transferred a total of £5.9m in workplace savings.
In Southwark Crown Court today International Investment's sister brand Professional Pensions heard the fraud described as "sophisticated" by Judge Perrins. The court heard the scam was engineered in the most part by Austin - a previously bankrupt businessman known to use false identities to carry out business dealings. However, Judge Perrins said supposed lack of understanding of the duties expected of trustees on the part of Barratt and Dalton did not excuse their participation.
"People had worked hard, saved for their future and have been robbed of their financial security. I heard about depression, anxiety, divorce and suicide attempts. Each account is a story of a life ruined and you should be ashamed of bringing such misery to so many innocent people," Judge Perrins told the court.
"These are undoubtedly extremely serious offences in which each of you carried out the role of trustee dishonestly and, put simply, had you not done so, many people would not have had their lives ruined."
The court heard that the total amount taken from the schemes by Barratt and Dalton for their personal benefit was £250,416 and £126,624 respectively.
TPR executive director of frontline regulation Nicola Parish said the prosecution and "substantial custodial sentence" sent "a clear message" from the regulator that courts will take tough action against fraud.
"Pension scams ruin lives," she said. "This is a despicable case which highlights the devastating impact pension scammers have on their victims. Barratt and Dalton were part of a criminal enterprise that tricked hundreds of savers into transferring their hard-earned pension pots into scam schemes under their control.
"In their role as trustees, the pair enabled millions of pounds to be taken from the schemes and channelled offshore, where it was used to enrich others involved in the criminal enterprise and to profit themselves."
Pensions and financial inclusions minster Guy Opperman said he welcomed the sentencing and commended TPR for its role in the case.
"Last year's Pension Schemes Act made pensions safer and reduced the chances of scams like this happening again. But we're not stopping there, knowing that as scammers' techniques evolve, so must our defences," he warned. "That's why we're continuing to work side-by-side with industry, regulators and law enforcement to enhance consumer protections, stop scammers in their tracks, and make sure pension savers can enjoy the best retirement possible."
Pension Scams Industry Group chair Margaret Snowden added: "This is very good news in the fight against scammers and a great result for TPR. To send scammers packing, we need to make it harder for them to win. The collaboration between government, regulators and industry in this is making a real difference."
Barrett and Dalton have both also been disqualified from serving as directors for eight years.