Fraudulent Caribbean resorts owner convicted after SFO investigation
3 Aug 2022 03:57 PM
The Serious Fraud Office (SFO) has successfully convicted the individual behind a £226 million fraud involving celebrity-endorsed luxury resorts in the Caribbean.
David Ames, 70, was today found guilty by a jury at Southwark Crown Court on two counts of fraud by abuse of position. He offered no evidence in his defence.
An SFO investigation uncovered how Ames deceived over 8,000 UK investors in the Harlequin Group, a hotel and resorts development venture. Victims were led to believe they had a secure investment in property whereas, in reality, Harlequin Group was never operating as promised.
The business model relied upon investors paying a 30 percent deposit to purchase an unbuilt villa or hotel room, half of which went toward fees for Harlequin and relevant salespeople, while Harlequin put the remaining 15 percent toward construction. Investors were fraudulently told that the building of the properties would be further funded by external financial backing.
With no additional source of funding, three properties needed to be purchased to finance just one of the luxury accommodation units. This led to the exponential expansion of the scheme, the diversion of investor money between resorts and ultimately a funding shortfall of over £1.2 billion by 2012 – seven years after Ames launched the scheme. By this point, an expert accountant told Southwark Crown Court that investors were exposed to a near 100 percent risk of loss, which Ames did not contest.
The SFO investigation revealed that by the time it went into administration in 2013, Harlequin had sold around 9,000 property units to investors, with less than 200 ever actually being constructed. Throughout the entire eight year project, only 28 of over 8,000 investors ever completed on a purchase, leaving well over 99 percent with no return on their investment. The Harlequin Group ultimately lost a total of £398 million of investor funds.
Several thousand victims lost pensions and life savings to the fraud, while Ames enriched himself and his family by £6.2 million. The Harlequin companies were family businesses, employing at certain times both David Ames’ wife and his son, who was paid £10,000 per month.
Chairman of Harlequin
Ames had been temporarily barred from serving as a company director due to a previous bankruptcy and therefore styled himself as the “Chairman of Harlequin”.
The SFO uncovered how he repeatedly ignored warnings that the business was likely insolvent, while concealing this reality and continuing to sell more units to investors. Ames sacked associates who raised the alarm, and on one occasion told colleagues that concerned investors needed “to be put in their place” to avoid attracting “bad press”.
Ames made publicity a key priority, promising celebrity-sponsored tennis, golf and football academies with marketing videos in which he personally explains his vision for the resorts. Predicting major tourism development opportunities, he even secured the endorsement of politicians in the region, including the Prime Ministers of Barbados, St Lucia, and St Vincent and the Grenadines.
Lisa Osofsky, Director, Serious Fraud Office, said: “David Ames committed fraud on a huge scale, knowingly exposing thousands of UK investors to losses totalling hundreds of millions of pounds.
“Diligent SFO investigators reviewed millions of documents, traced over 8,000 investor deposits and called on more than 25 witnesses, to expose the full extent of Ames’ deception.”
Mr Ames will be sentenced in September 2022.
Notes to editors:
- This is the second successful conviction of the SFO’s eight trials this year.
- This is the third case in which the SFO has convicted individuals for fraud by abuse of position, the others being Afren Plc (2018) and Weavering Capital (2015).
- Fraud by abuse of position can be defined as dishonestly exposing investors to loss or a risk of loss, intending thereby to make a gain for oneself. A full legal definition can be found here.
- The indictment period of 2010 – 2013 saw investors lose £226 million. Over the seven year course of the scheme, investor losses totalled an estimate £398 million.