Three Ponzi fraudsters who blew the £78million they stole from investors on Bentleys, Porsches and yachts were jailed for a total of 20 years today (tues).
Spencer Steinberg, 46, Michael Strubel, 54, and Jolan Saunders, 40, claimed they had won a contract to supply electrical goods to the Olympic Village ahead of the 2012 London games.
They said Saunders Electrical Wholesalers Limited (SEWL) also supplied goods such as including trouser presses and kettles to major hotel chains.
But SEWL was just a shabby high street electrical retailer in east London – a ‘one man and a van operation’.
Saunders and Strubel were both jailed for seven years while Steinberg was jailed for six years and nine months at Southwark Crown Court on Tuesday.
Judge Michael Grieve QC told them: ‘Over the four years a total of about £78million was received fraudulently from some 91 investors in ever increasing amounts.
‘You did repeatedly and over time extract from them ever mounting funds that were necessary to feed the fraud and keep it afloat.
‘Amongst smaller investors were many who lost more than they could afford.’
The judge conceded that not all investors had suffered financially and said one had even made a £2million profit which helped encourage others to invest.
‘It is in the nature of a Ponzi scheme that there will be winners as well as losers when the music stops.’
Judge Grieve told Saunders: ‘You are a confidence trickster of the very highest skill.
‘The fraud that was SEWL was your brainchild and it was you who was able to convince almost everyone that it was a business of tens of millions.’
Saunders was described as the ‘lynchpin’ of the operation by the judge before he was sent down.
Turning to Strubel, Judge Grieve said the fraud financed his ‘lavish lifestyle’ of Ferraris, Lamborghinis, Bentleys, Rolls Royce and a yacht.
‘You fell or succumbed to the wealthy lifestyle and the admiration from your peers that you thought a wealthy lifestyle would bring.’
Strubel and Steinberg were said to have gained £2.8million and £1.8million respectively while no figure was given for Saunders’ profits.
Victims were persuaded to invest hundreds of thousands over a period of two months so SEWL could meet urgent orders, then paid seemingly sky-high returns.
Participants were asked if they would ‘roll over’ their investment for another two months while the trio used bogus accounts to impress clients into parting with their cash.
Two investors parted with £2m after being shown fake company invoices that showed they were supplying the Olympic Village.
Others were fooled after Saunders started using doctored invoices from the Park Plaza chain of hotels that suggested they were a major supplier.
The trio were not investigated until the scandal of US investor and notorious fraudster Bernie Madoff hit the headlines in 2008, jurors heard.
Prosecutor Sarah Forshaw QC said the trio raked in £79.5million of investor cash and ‘lived the life of riley’.
She said: ‘The defendants persuaded people to part with their money on the promise they were going to invest it for them in a good, profitable business, then effectively pocked the money themselves.
‘It made them rich, rich at the expense of people they defrauded – you will hear about Bentleys, Ferraris, Porsches and Rolls Royces, you will hear about yachts and million pound houses.’
Ms Forshaw stressed that many of those who had lost out due to the scam were close friends and family of the three fraudsters.
Jeremy Stone, an old school friend of Saunders’ at the prestigious Chigwell School in east London, told how he lost £17million in the scam.
Mr Stone told the court he ploughed £27million into the scheme and had £10 million handed back in ‘returns’.
Neither his family nor any of their co-investors have been able to recoup any of the outstanding money.
In his victim impact statement read to the court Mr Stone spoke of the effect his old school friend’s scam has had on his family.
He said: ‘There have been some very dark times where I considered life was not worth it any more.
‘He ripped a loving family apart and he did it right in front of their faces with no shame.’
The trio ran the Ponzi scheme for four years between 2006 and 2010 until they were investigated by the Serious Fraud Office.
Ms Forshaw explained that 91 investors have been identified but that there might be others who have not been found.
Steinberg and Strubel claimed they had no reason to suspect the business was anything but legitimate.
When the Bernie Madoff scandal broke in 2008, one investor told Steinberg he was ‘spooked’ by the seemingly sky high returns he was getting from SEWL.
Steinberg said he was not concerned because Madoff’s business was ‘a city company’.
‘It was a completely different business to Saunders. I didn’t think SEWL was a Ponzi scheme,’ he said.
But the court heard how he had been able to buy himself two Porsches with his profits – one for racing, one for driving – and a new house where he could host lavish parties.
Steinberg, of Lodge End Radlett, Herts and Strubel of Princes Park, Manor Royal, New Southgate, north London, were both convicted of conspiracy to defraud and were jailed for six years and nine months and seven years respectively.
Saunders, of Almonds Avenue, Buckhurst Hill, Essex, admitted the same charge and acting as a company director while disqualified and was sentenced to seven years jail.