One of the directors of Collateral charged with fraud insists he always wanted the business out of the hands of the FCA, claiming: “I’m not a regulatory person“.
Andrew Currie, 57, accused of having the company pay out over £370,000 to him before it was forcibly closed, also claims he lost the invoices for the money he claimed he was owed and that he only dealt with paper copies.
Collateral (UK) Limited was a finance company which facilitated investments crowdfunded by members of the public. The firm and two related companies entered administration in April 2018.
The two defendants, Andrew Currie, 57, and Peter Currie, 59, both deny two charges under the Fraud Act 2006 and one charge under the Proceeds of Crime Act 2002 in this criminal prosecution brought by the Financial Conduct Authority.
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Contemporaneous reporting by Joe Morgan who tweets @nottherealjoe
In evidence heard at Southwark Crown Court, the younger brother took to the witness stand to outline his role in the company, whether he had anything to do with the company’s name change on the interim permission register, why he stepped away from being director and why he returned just before Collateral entered administration.
Before this, the prosecution closed the case by reading out the agreed facts, which we’ve covered in a separate post.
ANDREW CURRIE – WITNESS
One of Collateral’s directors, Andrew Currie, took to the witness stand and confirmed his full name, his address of Southport, Lancashire, and his age of 57.
COUNTS/CHARGES
In the presence of the jury Andrew’s barrister Henry Grunwald OBE KC outlined the charges on the indictment.
The first count, fraud, says “Between 12 December 2015 and 1 March 2018, Andrew Currie and Peter Currie dishonestly made a false representation to investors and potential investors that the company Collateral UK Limited was authorised and regulated by the Financial Conduct Authority knowing that this was or might be untrue and each intended thereby to make a gain for himself or another or to cause loss to another or to expose another to a risk of loss.“
Grunwald: “Did you make any false representation to investors or potential investors?“
Andrew: “No.“
Grunwald: “The jury knows that the company held itself out as having interim permission from the FCA and in the process of obtaining full permission.“
Andrew: “Yes, I believed that to be true.“
Grunwald: “Did you have anything directly to do with the Financial Conduct Authority?“
Andrew: “No.“
Grunwald: “The jury may recall as it was only a day or two ago, and it came up during admissions, that a table of emails that BDO [the administrators appointed by the FCA] managed to recover what they could recover and there’s just under 8,000 emails. There’s a very large number sent from your Collateral email address. Did you ever send emails to the FCA?“
Andrew: “No.“
Grunwald: “Did you make any representation on behalf of the company and you did so that might be untrue?“
Andrew: “No.“
Grunwald: “By using any information that was untrue or might be untrue, did you intend to make a gain for yourself or another or to cause loss to another or to expose another to risk of loss?“
Andrew: “No.“
Grunwald: “In your dealings with Collateral UK Limited, did you act dishonestly?“
Andrew: “No.“
He then denied the second count of fraud, which the particulars states the brothers “abused their positions, in which they were expected to safeguard, and not act against, the financial interests of the company by transferring £275,000 from Collateral to Auri Developments Ltd.“
Grunwald: “When that amount was transferred, were you doing anything that you believed was not in the financial interests of the company or the creditors of the company?“
Andrew: “No.“
Grunwald: “When that sum was transferred were you abusing your position within the company?“
Andrew: “No.“
Grunwald: “Were you acting dishonestly?“
Andrew: “No.“
Outlining the third count of converting criminal property, which suggests the Curries converted credits to the total value of £372,299.52 to bank accounts owned by Andrew Currie, knowing or suspecting it to be proceeds of crime, namely fraud by misrepresentation.
Grunwald: “This hearkens back to count one, the fraud by misrepresentation, when those transfers were made did you know or suspect the funds to have been made from proceeds of crime as outlined in count one?“
Andrew: “No.“
PERSONAL/PROFESSIONAL LIFE
Southwark Crown Court heard Andrew Currie, a dad of three, set up a retail shoe company in the 1980s that failed and led to him being disqualified as a director for a period.
One of his sons, Chay Currie, like Peter Currie’s son Matthew, was a full time employee at Collateral.
He then got involved in lending and property, as well as a form of unregulated pawnbroking. One company, Asset Cash Ltd, operated in ‘buybacks’ at gold shops.
“It was a style of unregulated lending. It wasn’t pawnbroking because that is a regulated activity. I would operate buybacks. If you wanted to raise money, I would buy it off you for a period of time, you then repaid and would get the item back.“
In the years leading up to 2014, on property, he said: “I was a property developer. I would broker to short-term lenders breaking loans. I would give advice on how to submit relevant planning along with a very experienced firm of architects. Basically anything around property, property development, I’ve got a fair knowledge of.“
Currie said he met DWF, a firm of solicitors, through a contact when dealing with property dealings in Manchester.
He was then introduced to Gordon Craig, Refresh Recovery’s company, while at a football match in the boardroom at Drury Football Club.
Grunwald: “Did he become a friend? Did he become a Facebook friend?“
Andrew: “I accepted it but I was just being polite. I had maybe 50 [Facebook friends]. I don’t really refer to it.“
Grunwald: “Members of the jury may have a Facebook page. The average Facebook holder has around 300 friends. Did you keep in touch with Gordon Craig thereafter?“
Andrew: “No.“
Grunwald: “When it was necessary, and I’m not referring to 2018 but earlier, when it was necessary for the company to have some form of wind down procedure in place, was it you who suggested Refresh Recovery?“
Andrew: “It was. They are business continuity specialists who are very local so it was a suggestion from me.“
Grunwald: “Was the suggestion that your brother Peter go to Refresh Recovery, or to Gordon Craig?“
Andrew: “Go to Refresh Recovery.“
Grunwald: “Had you any contact with Gordon Craig beyond whenever it was in the boardroom of a football match?“
Andrew: “I had one receivership job that I dealt with at Refresh Recovery, but I dealt with a man named Bill Brandon not Gordon Craig.“
FORMATION OF COLLATERAL AND ROLE IN THE BUSINESS
His defence barrister then went into the purpose of Collateral UK Limited and Andrew Currie’s role in the business.
Grunwald: “What did you understand the purpose of setting up Collateral UK Limited?“
Andrew: “It was to be a lending company for bridge lending and asset lending, but the asset lending was on a buyback structure.”
Grunwald: “For whose purpose was the company set up?“
Andrew: “It was for Peter and myself.“
Grunwald: “Was it your intention that this should be long-term for you?“
Andrew: “It’s the field that I work in. Prior to Collateral UK there was a deal I brokered from a company in the Isle of Man, and it was a loan to Bury Football Club. That loan was initially a few hundred thousand and then to around a million pounds. You can calculate how lucrative the short term lending business is.“
Grunwald: “It’s not in dispute the company was set up with you both being directors and you each having one share. Had you had anything to do with Regal Pawnbroker Ltd?“
Andrew: “I used to introduce loans to Regal but I wasn’t involved in the management or day to day of that company.“
Grunwald: “What was your role in Collateral UK Limited?“
Andrew: “My role was always to be introducing business in the company. Peter’s was to manage and to control the business.“
Grunwald: “Who controlled the banking?“
Andrew: “Peter.“
The defence barrister asked if the company had been as successful as the brothers hoped then which brother was going to get the major benefits.
“Peter, it was something he wanted for [his son] Matthew,” Currie said.
“He saw his future in building the business and then having some value in the business. He never looked at it as a short-term business.“
Andrew said he would be in the office one day a week but would mostly be mobile brokering deals and meeting clients. He said: “I never had a key to the office. I never had access.“
Grunwald: “When you set up, did you understand that this was going to be an unregulated business?…We know that an application was sought for regulation to be provided by the FCA. Was that something you wanted to happen?“
Andrew: “No.“
Grunwald: “Was that something Peter wanted to happen?“
Andrew: “Yes.“
Grunwald: “Why?“
Andrew: “Peter wanted absolute transparency and he wanted the deals to be authorised. He likes things exact down to the finer details. I worked and existed for many years dealing unregulated. I didn’t see the need for it but Peter wanted it.“
REMUNERATION
The former director was asked to outline the monies he received from Collateral during his time of working at the company.
An earlier court hearing was told more than £372,000 had entered into Andrew Currie’s accounts via brokerage fees or expenses via Collateral’s accounts between 13 February and 28 February.
These were the dates between the FCA letter warning Collateral of activity in breach of General Prohibition and being placed into administration.
Grunwald: “We have heard the word ‘broker’ a number of times. What remuneration did you get for introducing [business]?“
Andrew: “The agreement with Peter was 2% on the gross loan amount and then we agreed a further 1% if that loan was renewed. If that loan came to the end of its term, six months, and the customer renewed, such as the Chelsea property that renewed and renewed, it would be a further 1% for the renewal transaction.“
Grunwald: “Did you get any broker fees during the years in which the company was operating?“
Andrew: “I only got part payments.“
Grunwald: “It is accepted that you were getting £500 and expenses. But what happened with the broker fees?“
Andrew: “I didn’t get paid any of those as Peter wanted to build the business – that was the whole idea. Peter would hold onto as much as he could for the company. I was constantly asking for my fees, constantly, and eventually got part paid on some of them.“
Grunwald: “During the years, 2016 and 2017, you hadn’t been paid in full of any of those broker fees? And you had submitted invoices?“
Andrew: “Yes.“
Grunwald: “Were you content with the broker fees not being paid during those years?“
Andrew: “Not content, but I was comfortable in that my brother is honest and that when the time came to remunerate me he would.“
Grunwald: “Financially, did it impact your life and lifestyle given you’d not received these brokerage fees?“
Andrew: “Yes. I did mind it but he’s my brother. I could see the business he was developing and I felt secure.“
Grunwald: “Did you know what happened to the invoices you told us you submitted?“
Andrew: “It was uploaded into Collateral’s system. The invoices were handed into Peter at the office. [I’m not technically adept so] it was actual paper.“
Grunwald: “Do you know what happened to them? They have not been found.“
Andrew: “I believe they were in the office Peter couldn’t get access to after administration. I believe the documents were there. I work with paper and I just keep a note of what I’m owed. I kept a record of all the loans that were there that hadn’t been paid. All the loans that had been kept by the company – it was all in the system.“
He also was asked about the percentage for loans, 2%, of which he said “was on the low side”.
NAME CHANGE
Mr Grunwald OBE also asked about one of the triggers of the case, when someone with Andrew’s brother Peter Currie’s login – either him or someone at the company, changed the company’s name on the FCA’s register.
This was changed from one entity which had interim approval, Regal Pawnbroker Ltd, to Collateral (UK) ltd, which did not, the court heard.
Grunwald: “Did you have anything at all to do with the name change?“
Andrew: “No.”
Grunwald: “What was your understanding of the situation?“
Andrew: “My understanding was that interim permission had been granted and the FCA had issued an interim permission number and that the platform was working towards full authority.“
Grunwald: “On occasion, during meetings with lenders and borrowers, did you pass that information onto others?“
Andrew: “Yes.“
Grunwald: “When you did that, did you believe it to be true?“
Andrew: “Yes.“
Grunwald: “From whom had you got that information?“
Andrew: “It was known in general. It was what was understood between everybody in Collateral.“
Grunwald: “As far as you were concerned, was there anything wrong with it? Dishonest with it? Dodgy with it?“
Andrew: “No.“
PROBLEMS WITH THE FCA
The court heard that Currie left as a director in February 2016, as it “crystallised” his role within the business, but continued to do exactly the same work as he usually did within Collateral and his pay structure did not change.
He said on the witness stand that, in February 2018, in an unusual turn as most directors typically jump ship under threat of administration, he returned as co-director.
In January 2018, he said it became clear he should return due to Peter Currie’s mental health.
Andrew: “I was made aware via forwarded emails [there was a problem with the FCA] but also family had told me Peter was under quite a bit of duress and may be in need of some assistance.“
Grunwald: “What did you yourself see?“
Andrew: “I could see he was unwell. I could see he wasn’t sleeping. I was informed that he’d been to get antidepressants etc at that time. I don’t know the full extent of his health. But I do know it would sometimes be brought up in nervous rashes – that was just visually. I couldn’t help him out legally as he had legal advice but I did try to get alternative legal introductions for him to try and give him comfort that everything he was doing was correct.“
Grunwald: “How was he coping with running the business?“
Andrew: “I think generally with the business because it was such a well constructed system it was running well, that was OK. I think it was the internal conflicting regulatory position that had him where he didn’t know whether he was coming or going. The FCA was as clear as mud. There was nothing of clarity that was saying ‘this is what you’re going wrong, this is what you’re doing right, this is the outcome for you’.“
Grunwald: “The jury knows you came back as a director in February 2018. How did that come about?“
Andrew: “It was with Peter’s stress he was under. Normally if a company is in trouble directors sign off normally. I didn’t believe this company was in trouble. I had seen a letter from the FCA at the end of January that the company was no longer regulated and it was no longer regulated by the FCA. When I signed back on I was signing back onto an unregulated company at that point.“
Grunwald: “That’s what you wanted to be in the position of in the first place?“
Andrew: “Yes.“
Currie said in evidence his initial purpose was to seek alternative legal advice in case his brother had recourse against his current advisors.
He said that “time was of the essence” to keep a dialogue with investors.
Andrew: “A part of the confidence of any business is that you have your relationships with borrowers and your relationship with lenders and you make sure any problems are addressed there and then. It was the lack of clarity with the position to give the investors the satisfaction that there was restructuring going on and in a matter of time everything would be resolved.“
Grunwald: “Were you involved in those exchanges with the FCA?“
Andrew: “No.“
Grunwald: “You mentioned ‘restructuring’ – can you please tell the jury what you meant by this?“
Andrew: “If the company I was with was no longer authorised by the FCA then it would have been a case for me to wind down the existing loan book. It would have to be wound down in an orderly manner where everyone would be repaid and the company could go again. It might need a different style of investor…to get the funding into the company. That is the route [I saw] because that is all outside of regulation.“
The Currie brother said he saw administration as a “temporary measure, not a liquidation” in order to get clarity and reboot the business.
He said in evidence that he felt if the company pivoted to property development, these assets and equity would be more safe.
His defence barrister said in the period of him re-joining as a director and the administration, “considerable sums of money was transferred to that bank account“.
Grunwald: “Who made that decision that you should be paid?“
Andrew: “Peter’s….Several conversations were had. Every creditor at the company was paid: stationary, accountant, legals, rent, HMRC, PAYE, everybody was paid – the only creditor not paid was myself.“
Grunwald: “Who’s idea was it to pay the creditors?“
Andrew: “Peter always paid everyone promptly, except for myself.“
Grunwald: “Why was it important for these people to be paid then?“
Andrew: “They were paid because the money was due. It’s just good business practice to pay people promptly. Everything had been paid on the 1st of the month. That’s how I understood it.“
The defence barrister outlined how various monies were claimed to be owed to Currie from deals he brought into the business.
He also outlined the £88,000 that was paid to Refresh Recovery Ltd before the company went into administration.
Currie claimed this was the amount that was quoted in order to do an orderly wind-down of the loan book. He said the £40,000 paid to him was intended for staff wages who were staying on a six-month period to carry this out.
He also asked for £30,000, and was paid £28,000, in order to manage this by the administration. The FCA would later appoint a different administrator to manage the end of Collateral.
Currie also said he paid £20,000 to Gordon Craig, of Refresh Recovery, for a five guinea gold coin as an investment piece. He said he sold it to a coin dealer in London for £25,000 approximately a week later.
Both Curries deny two charges under the Fraud Act 2006 and one charge under the Proceeds of Crime Act 2002
The first count of fraud alleges they dishonestly made a false representation to investors and potential investors that the company Collateral UK Limited was authorised and regulated by the Financial Conduct Authority.
The second count of fraud claims the Curries abused their positions, in which they were expected to safeguard, and not act against, the financial interests of the company by transferring £275,000 from Collateral to Auri Developments Ltd.
The third charge relates to converting criminal property, suggesting the Curries converted credits to the total value of £372,299.52 to bank accounts owned by Andrew Currie, knowing or suspecting it to be proceeds of crime, namely fraud by misrepresentation.
The trial continues tomorrow where Andrew Currie will continue to give evidence.
Case details:
Court 12 Southwark Crown Court
Before His Honour Judge Griffith
4th May 2023 Afternoon session
Case number: T20220056
CURRIE Andrew
CURRIE Peter
The Financial Conduct Authority are represented by barrister Stuart Biggs, assisted by Thomas Coke-Smyth.
Peter Currie is represented by barrister Colin Aylott KC, assisted by Ashley Hendron.
Andrew Currie is represented by barrister Henry Grunwald OBE KC, assisted by Oliver Renton.
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