Bank manager and stockbroker brother defrauded friends and relatives of £2m life savings in Ponzi scheme to fund gambling and holidays

  • Caryn Bates and Matthew Sullivan defrauded their own friends and relatives
  • They said the money would be invested in stock market bonds and shares
  • But they blew the cash on gambling, luxury holidays and the high life

By Damien Gayle

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A bank manager and her half-brother defrauded their own family and friends the the tune of £2million pounds in a bogus investment scam.

For four years Caryn Bates, 41, and Matthew Sullivan, 53, duped close friends and relatives into handing over their life savings for stock market shares and bonds that did not exist.

As investors anxiously waited for a return on their investments, the pair blew the cash on gambling, luxury holidays and living the high life.

Caryn Bates, 41, of Edenbridge, Kent
Matthew Sullivan, 53, from Dymchurch, Kent

Con artists: For four years Caryn Bates, 41, and Matthew Sullivan, 53, duped close friends and relatives into handing over their life savings for stock market shares and bonds that did not exist in a Ponzi-style scam

To maintain the illusion that the investments were paying off, some of the cash they took from investors was used to fund monthly returns to others - the modus operandi of a classic 'Ponzi scheme'.

Bates, a former bank manager, was jailed for five-and-a-half years, and stockbroker Sullivan received a seven-year sentence at Maidstone Crown Court, Kent, yesterday.

A judge heard the pair ran their bogus scheme from March 2006 to October 2010.

 

They traded off their expertise in the financial markets to convince their victims they were running a genuine investment company called World Trading.

They knew many of their 40 victims personally, and persuaded them to pour their life savings into the project, which they promised would deliver a guaranteed return of between two and five per cent per month.

Go directly to jail: After pleading guilty to investment fraud, Bates, a former bank manager, was jailed for five-and-a-half years, and stockbroker Sullivan received a seven-year sentence at Maidstone Crown Court

Go directly to jail: After pleading guilty to investment fraud, Bates, a former bank manager, was jailed for five-and-a-half years, and stockbroker Sullivan received a seven-year sentence at Maidstone Crown Court

CHARLES PONZI: ITALIAN WHO GAVE HIS NAME TO THE FAMOUS SCAM

1910 police mugshot of Charles Ponzi

Named after one of the most notorious conmen in US history, the Ponzi scheme is an elaborate version of the oldest scam of them all - pyramid selling.

In its classic form, a Ponzi fraudster sets up a fund with a 'fail-safe' business plan. Investors join in their droves, lured by the huge returns on offer.

But the fraudster will merely pay off old investors with new money that comes into the fund. Eventually, all Ponzi schemes are doomed to collapse under the weight of new money flooding in.

The fraud was named after Charles Ponzi, pictured above right in a 1910 police mugshot, an Italian who emigrated to America in 1903 with $2.50 in his pocket.

After a spell in prison for fraud, he set up an investment scheme to exploit differences in the price of postage stamps in Italy and the U.S.

At the height of his success in 1920, Ponzi was making $250,000 a day - a mammoth sum for the era.

When his scheme collapsed, Ponzi pleaded guilty to fraud and was sentenced to five years in a federal prison.

The scheme ran along the lines of the fraudulent investment scam made infamous by Charles Ponzi at the beginning of the 20th Century, paying returns to investors from the money paid by subsequent victims.

But, the court heard, most of the cash was used to fund Sullivan's gambling habits and maintain lavish lifestyles for him and Bates.

When a growing number of clients started to ask for their money back in 2009, Sullivan started offering them three month bonds, offering a guaranteed return of five per cent per month.

It was not until late 2010 that the majority of investors realised that something was amiss.

Sullivan and Bates tried to hold off disgruntled investors with excuses about the length of time to release money from offshore accounts.

The fraud was brought to a halt in 2011 after clients upset at being unable to get their money back started to make complaints to police.

After they were sentenced, Detective Constable Mark Agnew, from the Serious Economic Crime Unit said: 'Sullivan and Bates conned their family and friends out of millions of pounds.

'Their clients trusted them to invest their money wisely and legally with the promise of solid returns on their capital.

'What they didn’t realise, until it was too late, was Sullivan and Bates used the cash to fund their lifestyle.

'They were happy to live off their family and friends’ life savings without a care in the world.'

Bates, of Edenbridge, Kent, and Sullivan, from Dymchurch, Kent, had pleaded guilty to the investment fraud at an earlier hearing.

As well their long jail terms, the pair were banned from being company directors for 10 years.

Sullivan will also be subject to a crime prevention order for five years after his release.

The comments below have been moderated in advance.

Pathetic sentences. Yet again, crime pays.

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Bank investors up and down the country got off scot free for bankrupting this country, why because they have the politicians in their back pocket.

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If it looks too good to be true........................... 2%-5% per month? Tell me where you can get half a percent per month per month!

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Sexist sentencing!!

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So what's the difference between a ponzi scheme and the way the banks work?

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I blame the victims here too- I would never trust anyone with my savings- my brother in law has been trying to get his hands on my money for years for a 'can't lose, fantastic return' scheme- they don't exist, and I'm waiting for him to appear in the papers sometime soon!

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So what's the difference between a ponzi scheme and the way the banks work ?

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A Ponzi scheme doesn't sound much different from the system banks use - i.e. take investor's money and lend money they don't actually have. If every single investor turned up at a bank at the same time and demanded their money back, the bank would cease to exist - they'd go bust overnight. I can't see much of a difference really.

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there should be a psychiatric test for people who want to become bankers and financiers to make sure they are mentally capable and of good character before doing this job. as most of them would fail miserably before they get into those positions.

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These sentences in no way reflect the gravity of their crimes. Not only did they steal £2m but they stole from family and friends. The victims should get this sentence challenged and increased if possible.

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