BUSINESSMAN JAILED FOR FLOUTING COURT ORDER OBTAINED BY THE FSA

24 Oct 2001 12:00 AM

Mr John Edward Rourke, aged 61, of Colne, Lancashire has been jailed for 20 days for contempt of court in High Court proceedings brought against him by the Financial Services Authority (FSA).

John E Rourke breached an interim court order, granted on 4 April 2001, which required him not to accept or repay any deposits from members of the public. In spite of this court order, Mr Rourke obtained such deposits and used the money to repay other depositors. This breach of the court order meant that John E Rourke was in contempt of court.

In sentencing him, the Court made clear that the court would be failing in its duty to the public and depositors if it did not send Mr Rourke to prison. The case highlights the serious view taken by the courts of breaches of orders that have been granted to protect depositors and other members of the public.

In addition, the High Court declared that on various occasions between 1994 and 2001 Mr Rourke had accepted deposits totalling over #300,000 in contravention of section 3 of the Banking Act 1987 and that he had knowingly made false statements in order to persuade individuals to make deposits with him in contravention of section 35 of the Banking Act 1987. These statements included Mr Rourke stating that money deposited would be invested in a scheme that bought repossessed properties. Mr Rourke made other similar false statements regarding deposits being used for property related investments.

Only those authorised to do so by the FSA can accept deposits, as banks do, from members of the public. Mr Rourke has never had any such authorisation.

Consumers should always check with the FSA that any financial services firm they deal with is properly authorised before they hand over any money. Consumers can check with the FSA''s Consumer Helpline on 0845 606 1234. You can check whether a firm is on the Banking Act list via the FSA''s website, www.fsa.gov.uk. There is also a link from here to the Central Register where you can check the list of firms authorised to do investment business.

The FSA is continuing its investigation and would like to hear from any person who has provided, or been approached in recent years for, money by - or on behalf of - Mr Rourke. They should contact David Gilderdale or Dick Donoujzian on 020 7676 1000.

NOTES TO EDITORS

1. The case against John E Rourke was heard in the High Court on 18 and 19 October 2001.

2. Taking deposits, which means acting like a bank in taking money from the public with a promise to repay, requires authorisation by the FSA.

3. The FSA placed adverts in various local press in Yorkshire in mid-April 2001 in order to bring forward witnesses to assist in its investigation of Mr Rourke''s activities.

4. The FSA alleged in March 2001 that Mr Rourke had breached sections 3 and 35 of the Banking Act 1987 (the Act). Section 3 of the Act provides that no person shall in the United Kingdom accept a deposit in the course of carrying on a deposit taking business unless authorised to do so by the FSA or unless otherwise exempt under the Act. Any person who contravenes this section is guilty of a criminal offence. Section 35 creates the offence of fraudulent inducement to make a deposit where a person knowingly or recklessly makes a misleading, false or deceptive statement or conceals material facts to induce another person to make, or refrain from making, a deposit or to enter into an agreement for that purpose. Breach of section 35 is a criminal offence.

5. The FSA issued proceedings against Mr Rourke (trading as J E Rourke and Co) on 30 March 2001 at which time the court granted an order requiring him to not to accept or repay any deposits. This order was extended on 4 April 2001 until trial or further order. At the hearing on 18 and 19 October 2001 the High Court also granted final orders against Mr Rourke preventing him: (i) from accepting further deposits in his own name, his trading name of J E Rourke & Co or otherwise, and (ii) making misleading statements which he knows to be misleading for the purpose of inducing any person to make a deposit.

6. The FSA takes a serious view of breaches of court orders which it considers a vital tool in enforcement action against unauthorised schemes and in promoting its regulatory objectives of consumer protection and fighting financial crime.

7. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000; maintaining market confidence; promoting public understanding of the financial system; the protection of consumers; and fighting financial crime.

8. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.

ENQUIRIES Public: FSA Consumer Helpline 0845 606 1234

Website: http://www.fsa.gov.uk