A CORRUPT businessman duped celebrities, sport stars and hundreds of other victims out of £115m in Britain’s biggest “Ponzi” investment scam, it was revealed yesterday.
Yorkshire and England cricketer Darren Gough and actor-turned-singer Jerome Flynn were among 800 people scammed as flamboyant fraudster Kautilya Nandan Pruthi claimed he was one of the richest men in London.
Investors lost life savings after being told they would get massive revenue returns unmonitored by the Financial Services Authority.
Police said parents of disabled children and a host of undisclosed well-known names fell victim as Pruthi and his associates lived in luxury homes, drove Ferraris and flew in private jets.
Even bankers with Merrill Lynch, one of the world’s leading financial management companies, were duped into believing Pruthi’s lies, a source said.
Pruthi made £38m from the swindle over three years while victims lost a total of £115m.
The con artist was arrested, with associates John Anderson and Kenneth Peacock, in May 2009 after City of London police launched a nationwide investigation into Ponzi fraud.
But divorced father-of-one Pruthi, 41, had already spent much of the cash during half a decade of womanising, extravagance and fast cars.
Officers, who say he was Britain’s most prolific Ponzi fraudster, fear they may only be able to return around £2m to victims.
Pruthi blew hundreds of thousands of pounds a month renting properties in central London along with a mansion in Ascot.
Bentleys, a Ferrari, a Jaguar XKR, a Maserati and even a private jet were purchased before the three were arrested.
Indian-born ringleader Pruthi also ploughed some of the millions into racing firm Apex Motorsports to impress investors.
Detective Superintendent Benjamin Flannaghan, who led the City of London police inquiry, said Pruthi was a “flashy operator”.
He said: “He always wore a cravat and only wore brightly coloured clothes and suits. His own defence counsel said in court that he was ‘mesmeric’.”
The private jet he owned was destined for tragedy. Five people were killed when it crashed after an engine shutdown in Farnborough, Kent, in March 2008 among them former British Touring Car Championship driver David Leslie and Apex Motorsport boss Richard Lloyd.
Actor Flynn, who found fame in 1990s TV series Soldier Soldier, was named during the Southwark Crown Court trial as one of hundreds of investors to fall foul of the scam.
Pruthi began taking deposits from investors around the world in 2005, offering a headline return rate of 156 per cent per year. He said he was using funds as high interest loans to distressed trading companies involved in the import and export of goods, whereby these companies would be charged 18 per cent per month.
Investors from Britain, Australia, Singapore, Hong Kong, Thailand and Spain were lured in at the prospect of easy money.
Pruthi, of Wandsworth, London; former accountant Anderson, 46, of West Hampstead, London; and Peacock, 43, of Camberley, Surrey, were all made bankrupt after their arrests.
Before trial, Pruthi pleaded guilty at Southwark Crown Court in London to four specimen counts of obtaining money transfers by deception, one count of participating in a fraudulent business, one count of unauthorised regulated activity and one count of converting and removing criminal property.
Anderson and Peacock were found guilty of unauthorised regulated activity but cleared of fraud and recklessly making a misleading, false or deceptive promise. All will be sentenced today.
Det Supt Bob Wishart, of City of London Police, said: “Pruthi used fast cars, helicopters and luxury houses to create an illusion of success and legitimacy.
“In reality he was a cold-hearted criminal driven by greed, with an unquenchable desire to steal and spend leading to the construction and collapse of the UK’s biggest Ponzi scheme.
“It took a complex and painstaking investigation over several years to blow away all the smokescreens and ensure Pruthi faced justice.”
Ponzi fraud, named after Italian fraudster Charles Ponzi, involves the payment of purported returns to existing investors from funds contributed by new investors.