'British Madoff' took £14m from his investors – and lost the lot
To his clients, Terry Freeman had all the trappings of a multi-millionaire City trader with a reputation for risk-free currency investments.
Along with holiday homes in Cyprus and France, his wealth had bought him a top-of-the-range Land Rover, an executive box at Tottenham Hotspur and a £120,000 ring for his third wife.
The true source of the 62-year-old's profligate lifestyle was revealed in a south London court room yesterday when Freeman pleaded guilty to running a "Ponzi" scheme which defrauded about £14m from some 350 victims who were taken in by the bankrupt businessman's plush City offices and promises of unbeatable returns on their money.
Victims, who ranged from a roofing company owner who invested his £600,000 life savings to footballers and the ex-wife of golfer Colin Montgomerie, were shown paperwork from Freeman's company, GFX Capital, which showed their investments doubling or tripling in value – when in reality he was frittering away millions of pounds on botched trades and the toys of a tycoon.
The single biggest losers from Freeman's fraud were a couple who handed over £1.4m, including their family home. Investment updates suggested that their capital had risen in value to about £2.7m, but by the time the authorities caught up with the conman they had just £15,000 left in their account.
The extent of the deceit of the financier – dubbed the "British Madoff" after the American fraudster Bernie Madoff, who stole $18bn from clients – was only revealed in 2008 when Freeman gambled on a bailout for the US investment bank Lehman Brothers and bought large numbers of dollars.
When the bank collapsed, the dollar plummeted and GFX Capital, which operated from offices in Broadgate costing £14,000 a month in rent, was no longer able to conceal its empty coffers. In a cynical attempt to buy time, Freeman sought to quell his investors' concerns by announcing a 12 per cent profit in the same month and laughed off suggestions that he was "another Madoff".
As clients began to withdraw their funds, Freeman, who lived in a £500,000 house in Buckhurst Hill, Essex, with his 30-year-old Russian bride, approached police claiming he was being threatened by investors and admitted to losses of about £20m.
It was only when officers from the City of London Police began to examine the trader's trail of false money transfers around accounts he held in a Swiss bank that it became clear he was operating a Ponzi scheme – a fraud whereby funds from new investors are used to pay the "profits" of existing stakeholders, until funds abruptly run out when members withdraw or people stop joining.
Freeman, who was jailed in 1997 for four-and-a-half years for fraud offences, yesterday pleaded guilty to six charges, including fraud and trading while bankrupt, during a hearing at Southwark Crown Court. His victims claim the losses from GFX Capital could be as high as £44m.
Detective Superintendent Bob Wishart, who led the investigation, said: "Rub away the sheen and you find Freeman is the archetypal fraudster, happy to steal money and ruin lives. People invested their futures with GFX only to find they had been horribly conned by this criminal."
Such had been the success of Freeman at spreading word around the City by smooth-talking bankers at breakfast meetings that investors were queuing to buy into his schemes, the court heard.
Freeman will be sentenced next month. Judge Geoffrey Rivlin QC told the court there was not even a "remote possibility" he would be spared jail.