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Developer who turned Caribbean dreams into nightmares in £226m fraud | Crime | #phishing | #scams | #hacking | #aihp

The Essex businessman David Ames lured investors with the promise of a Caribbean dream, but the £226m fraud he perpetrated left thousands with the nightmare of losing life-savings and pensions.

Through glossy brochures, slick marketing events and the pulling power of celebrities, including former sports stars such as the tennis player Pat Cash, the golfer Gary Player and the footballer Andy Townsend and Liverpool football club, he persuaded people to invest in off-plan holiday cabanas and apartments across the Caribbean and in Brazil.

Ames, 70, who was twice bankrupted through companies selling garden furniture and windows, and had experience of timeshare, set up the Harlequin group, an international network of resort development companies, in 2005. By the time the company went into administration in 2013, he had sold 8,200 units in seven resorts.

The problem was, less than 200 units were ever built and they were all at the same resort, Buccament Bay in St Vincent and the Grenadines, which was the only one out of the seven that Ames managed to construct. When it collapsed, Harlequin faced a £1.2bn shortfall.

As the self-styled “highly charismatic” Harlequin chair, Ames believed he was a “visionary”, but has been described as a “Walter Mitty-type figure”. He was in charge of the day-to-day running of Harlequin, with his wife, Carole, and son Dan, as directors. Another son, Matthew, who in 2014 was imprisoned for three years for a fraudulent carbon credit investment scheme, managed marketing.

David Ames was found guilty on two counts in August. Photograph: SFO/PA

The family enriched themselves by £6.2m through the Harlequin business, enjoying a luxury lifestyle flying to and from the Caribbean, with Ames employing his own chauffeur. Some family members were paid £10,000 a month, the Series Fraud Office said. Ames was even in the process of trying to build his own airline, Harlequin Air, to fly guests to and from the then non-existent resorts. His wife and sons have not been charged with any offence.

Ames was convicted by a jury on 3 August on two counts of fraud by abuse of position after a five-year SFO investigation that began in 2012. The charges covered the period from 2010 – and not from the time of 2005 when Harlequin was set up – because by then the state of the business was such he must have known he was exposing investors to risk, the court heard.

In 2011, Ames was advised by restructuring and insolvency practitioners he might be trading while insolvent. But he did not stop selling. In fact he increased sales. By the time Harlequin collapsed, its overall losses were £398m.

The SFO argued Harlequin’s business model was fundamentally flawed. Investors paid a £1,000 reservation fee and a 30% deposit, half of which went towards fees for Harlequin and relevant sales people, with the remaining 15% towards construction.

Investor funds were not ringfenced for particular resorts or properties, but spent throughout the Harlequin company. Ames never obtained any external funding, so its operation was wholly dependent on new investor funds. To build one unit, you needed to sell three. It became a type of pyramid structure – that exponentially grew ever larger. Only 28 of more than 8,000 investors ever completed purchase on a unit.

Ames used 2,000 to 3,000 intermediary sales agents, some of them on commissions as high as 10% of the purchase price, the SFO argued. He also used a network of independent financial advisers (IFA) who were incentivised by 10% commissions with no claw-backs, even if the investor subsequently dropped out.

Investors advised by an IFA have been able claim a total of £125m through the financial services compensation scheme. However, the remaining half of investors – many who put in money from their self-invested personal pension (SIPP) – lost thousands. Among victims are many of pensionable age, now forced to work on into retirement. Some investors would only get back one or two pennies for every pound they had invested.

They were attracted by Ames charismatic pitches at high-profile sales events in golf clubs, conference centres and exhibition centres across the UK. Harlequin’s appeal was bolstered by stars such as the Wimbledon champion Cash, who was to endorse tennis academies at the resorts, Player, a nine-times winner of major golfing championships who it was said was to design a golf course at a resort that was never built, and, according to Harlequin’s promotional YouTube video, Liverpool FC, which would be associated with football training at the resorts. Ames had a corporate box at Wembley stadium. Senior Caribbean politicians were also persuaded to support the scheme.

Ames did not give evidence in his trial, but blamed Harlequin’s failure on his accountants, whom he said were negligent, and on his Irish building contractors, ICE, which he said defrauded him. He also blamed a “Harlecon” website set up to raise concerns about the company, as well as the global economic crisis, the tightening of regulations over SIPP investments and the SFO’s investigation into him.

Said to be extremely litigious, and who threatened legal action against investors who went public with complaints, and also the BBC over its reporting on Harlequin, Ames sued ICE and the accountants Wilkins Kennedy.

Harlequin paid ICE $52m (£45m) to build the Buccament Bay resort, with no written contract, or any detailed agreement over scope, monitoring or valuation of works. In 2013, ICE boss Padraig (Paudie) O’Halloran was ordered by an Irish court to pay €1.57m (£1.38m) in damages to Ames over misappropriating Harlequin funds to his personal bank accounts.

There was “persuasive” evidence, the judge heard, of O’Halloran diverting other substantial sums from Harlequin to items unconnected to Buccament Bay, including buying a private jet, a racetrack in St Lucia, expensive gifts including a $65,000 diamond ring for his girlfriend, a quarry and renting an expensive mansion in Barbados.

In separate civil proceedings in London, Ames claimed negligence by Wilkins Kennedy, whose partner Martin MacDonald was alleged to be too close to O’Halloran. A high court judge awarded Ames $11.6m, only half the amount claimed in damages, because of Ames’s contributory negligence, and also ordered the amount be placed in an escrow account, which may now go towards refunding investors.

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