10-Year Prison Sentence Is Longest Ever For British Ponzi Scheme

A British man was sentenced to serve a ten-year prison sentence for operating a currency trading Ponzi scheme - the longest sentence ever handed down to a Ponzi schemer by the U.K. Financial Conduct Authority ("FCA").  Phillip Boakes pleaded guilty last week to two counts of fraudulent trading and three counts of using a forged instrument after having previously entered a guilty plea to charges of accepting deposits without authorization.  A British judge imposed sentences of varying length for each of the charges, and Boakes will ultimately serve a ten-year term given that some of the sentences will run concurrently.  The judge also disclosed that Boakes' sentence would have been 13-14 years had there been no early guilty pleas.

Boakes operated CurrencyTrader Ltd. ("CurrencyTrader"), which held itself out as a highly profitable and experienced in foreign exchange spread betting.  Potential investors were guaranteed annual returns of 20% or more, and many were led to believe that Boakes continued to hold his licensure as an FCA-approved Independent Financial Advisor.  In total, Boakes raised several millions of dollars from dozens of investors.  

However, according to the FCA and as later admitted by Boakes, CurrencyTrader's outsized returns were simply too good to be true.  Boakes was not the skilled currency trader he held himself out to be; rather, Boakes ultimately suffered trading losses of narly 50% of his total investments.  In order to generate the promised returns, Boakes depended on a constant stream of incoming investor funds - a classic hallmark of a Ponzi scheme.  In addition, Boakes used investor funds to support a lavish lifestyle that included luxury automobiles and foreign travel.  

The sentence, while ranking as the longest handed down by the U.K. Financial Conduct Authority, pales in comparison to the significant sentences that have been imposed by American courts.  For example, the longest sentence handed down to an American Ponzi schemer is the 150-year sentence appropriately handed down for the massive Ponzi scheme operated by Bernard Madoff that ranks as the largest in history.  Coupled with tougher penalties for common fraud offenses and greater discretion afforded sentencing judges, American courts typically hand down significant penalties.  Indeed, the average sentence handed down to Ponzi schemers in 2012 and 2013 exceeded ten years.