FundingSecure Art Fraudster fails at Court of Appeal

Three senior judges have unanimously dismissed a fraudsters appeal that 1,400 members of the public, hoodwinked as part of a £2.3m art-loan investment scam, should not be able to recover their money from his family pension scheme.

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Reporting by Daniel Cloake.

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Lord Justice Newey, Lord Justice Males and Lord Justice Arnold, handed down their judgment earlier today following a hearing at the end of September. See our coverage of the hearing here: “Judge delivered “fatally flawed” decision in Art Loan fraud recovery, Court of Appeal told“.

The 53-paragraph-judgment explains that former art dealer Matthew Green, 54, was made bankrupt in 2019 following a ruling that he was liable for a £3.2m debt (including interest). This was a result of the failed peer-to-peer lending company FundingSecure making a successful claim for dishonest breaches of contract. As a result of the debt being incurred by fraud it survives the bankruptcy.

The full saga can be read in “Great Green Art Fraud – How FundingSecure lenders were scammed“.

A quartet of investors purchased the rights to this litigation following FundingSecure’s collapse in 2019. They had sought to recover money from Mr Green’s family pension scheme relying in part on the decision in the case of Blight v Brewster:

“The idea that the fraudster and forgerer can enjoy an enhanced standard of living at his retirement instead of paying the judgment debt would be a very unattractive conclusion.”

In March 2022, Deputy High Court Judge Andrew Hochhauser KC accepted this argument and ruled that the investors should be able to access the funds. He told the court at the time “if someone acts fraudulently why on earth shouldn’t they be held to account“.

Dismissing all three grounds of appeal Lord Justice Arnold concluded “there is a very clear principled basis on which to exercise the jurisdiction, namely to achieve justice, or, more specifically, to enable a judgment debt to be (partially) enforced against a fraudster.“

Lord Justice Newey ruled:

“In the present case, the Creditors have the benefit of an unsatisfied judgment against Mr Green, whose only material asset is his interest in the Pension Scheme.

The Creditors thus have a clear interest in obtaining recovery through Mr Green’s pension rights, and facilitating that would be in line with “the policy of English law that judgments of the English court … should be complied with and, if necessary, enforced””

Bittersweet victory

The 1,400 members of the public who invested may take some comfort in knowing the borrowers pension scheme can be accessed however they look set to have a limited recovery as a result of the deal done by the administrators’ of FundingSecure.

Under the terms of that agreement, 25% of the recoveries from these proceedings will be paid to FundingSecure. The remainder will paid to the four-investors who took on the risk of this litigation.

The exact amount that can be recovered from the pension scheme depends on the value of the assets held. It is unknown when funds will ultimately be remitted back to investors.

Case Details

IN THE COURT OF APPEAL
CIVIL DIVISION
Case Number: CA-2022-000591 (BL-2018-001572)

25th October 2022 10.00am

Before:
Lord Justice Newey
Lord Justice Males
Lord Justice Arnold

Between:
Mr Matthew Green
Appellant

– And –

(1) David Bacci
(2) Michael Boyle
(3) Paul Mundy
(4) Marek Zwiefka-Sibley
(By way of an assignment dated 27 March 2020 by the Administrators of FundingSecure Ltd)
Respondents

Fenner Moeran KC (instructed by Mr Richard Quinn of Sehgal & Co) for the Appellant
Saaman Pourghadiri (instructed by CANDEY Limited) for the Respondents