A former hedge-fund manager who invested about 20 million pounds ($31.3 million) in a Ponzi scheme lost a claim against Royal Bank of Scotland Group Plc’s NatWest unit, which operated accounts used in the fraud.
Jeremy Stone, a former portfolio manager at Marble Bar Asset Management LLP, sued NatWest and an employee, Paul Aplin, seeking as much as 26 million pounds. He claimed Aplin and the bank were negligent for not spotting suspicious activity.
Stone and members of his family who were employed by his investment firm gave testimony that was “heavily colored by a very strong wish that they had not been duped as they were and a strong impulse to think” someone else must be to blame, Judge Philip Sales wrote in a ruling today.
Aplin, who managed the accounts, was an honest man, Sales said, adding he didn’t fault the bank for using automated systems to detect fraud.
The Serious Fraud Office said last year it was investigating the company at the center of the allegations, Essex-based Saunders Electrical Wholesalers Ltd., and made five arrests in 2010. Its founder Jolan Saunders appeared at the Stone trial and declined to give evidence because he is facing criminal charges, Sales said.
Stone’s lawyer Dan Morrison didn’t immediately respond to e-mails seeking comment. Adrian Ring, Saunders’ lawyer, didn’t respond to an e-mail or phone message seeking comment.
David Gaffney, an RBS spokesman, said the judgment indicated the bank and Aplin “acted entirely properly and honestly.”
“The court agreed with the bank’s view by dismissing each of the claimants’ allegations,” he said.
The company’s business supplying electrical equipment to hotel chains was “wholly fictitious,” Sales ruled, adding Saunders used money from new investors to repay loans and give the illusion of profits. Accounts linked to the firm took in as much as 300 million pounds, according to evidence Stone provided the court.
David Jones, an SFO spokesman, said in an e-mail the agency continues to investigate a suspected Ponzi fraud.
The case is: Jeremy D. Stone Consultants Ltd., Jeremy Stone v. National Westminster Bank Plc, Paul Aplin; High Court of Justice, Chancery Division; HC11C00276.