The former director of Collateral has claimed Prime Minister Rishi Sunak complained to the Financial Conduct Authority requesting compensation for investors if the brothers who led the company are not convicted, a court heard.
More than 340 letters of complaint and 15 MPs representing their constituents have requested the FCA investigate their handling of the case after it took them 22 months to spot that Collateral was not regulated, jurors were told today.
In evidence heard at Southwark Crown Court, Peter Currie admitted that he realised in “hindsight” it was wrong to change the name for a pawnbrokers created for a reality TV show, Regal Pawnbroker Ltd, on the interim permission register to Collateral, which was not authorised.
But he also accused the FCA of being deliberately “frustrating” when it came to the company’s ability to do business, suggesting at the time they did not have a “good understanding” of the relatively new industry of peer to peer lending.
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.
For further information about the case, and to see our reporting of other days please visit our main trial information page.
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Contemporaneous reporting by Joe Morgan who tweets @nottherealjoe
SMALL INVESTORS VS COMPLEX INVESTORS
Andrew Currie’s cross-examination by the FCA prosecutor Stuart Biggs continued today by first examining a letter sent by Peter Currie to an intermediary which copied in his brother, the first time Collateral said they had interim permission from the authority.
It read: “We have put all our knowledge and experience of various businesses into Collateral and have worked on the concept for a number of years. We believe that it is the best business opportunity on the market at the moment and is risk averse. Although much of what we do is unregulated, Collateral is (interim) authorised and regulated by the FCA and have engaged with a consumer credit compliance company to assist with the application for full permissions (expected in the first quarter of 2016).”
Stuart Biggs, prosecuting, said: “You knew that this was a game-changer in terms of the types of investors who might now be interested in investing in Collateral.”
Andrew: “I disagree.”
Biggs: “I think I asked you last week that wasn’t the whole purpose of this website that Collateral had paid for was to attract individual investors in their homes, wasn’t it?”
Andrew: “I disagree with that.”
Biggs: “Who was it to attract?”
Andrew: “Equity partners, complex investors, there are many many opportunities in finance.”
Biggs: “The purpose of a website where you log in with your username and you have your own account and you can match your investments and invest an extra £5 in a Mercedes Benz – that is aimed at small business with the aim of attracting many of these people.”
Andrew: “That side of the business was nothing to do with me.”
Biggs: “Do you agree that the website was aimed at small investors?”
Andrew: “No I disagree.”
The former director claimed that intermediaries and complex investors he spoke to “looked at the assets he was lending against rather than the lending side.”
Biggs: “In this email on 15 December 2015, this point of time it’s a major step as you are stepping into a regulated world.”
Andrew: “Not for me, I disagree.”
Biggs: “I suggest you must have had conversations with your brother about it about that step into the regulated world.”
Andrew: “Peter wants the badge of regulation and transparency – that’s how he operates. For me, it wasn’t necessary for the work I wanted to undertake.”
The defendant was asked how he thought Collateral had “got regulated status overnight”, in which he said, “it’s clear that Peter thought he had the best counsel and advised him on this.”
Andrew: “There may have been a conversation [but] I never had any interest in it.”
Biggs: “Your brother said Collateral is now or is interim authorised, the change of the website wording changed, the conversations you had face to face with people changed, what you’re able to say at shows, and you’re saying the first time you knew about it was this email.”
Andrew: “Not saying it was the first but if Peter said it had permission then I would have 100% believed him.”
RESIGNING AS DIRECTOR
The prosecutor asked about a specific email sent from Collateral’s legal advisor to Peter Currie on 1 July 2016 regarding Andrew’s position as a director.
Jurors were told at an earlier hearing Andrew Currie was banned from standing as a director for a period.
It read: “We have to be a bit careful here as getting this wrong amounts to a criminal offence and not a minor one either.
“Looking harshly at the facts, and this is what they do, the FCA would say that you have simply ignored Andrew’s history because you were worried that if you included it you would not have been successfully in the application.
“The only real way round this is to entirely exclude Andrew from any influence with the business whatsoever and I question if that is actually practical – is it? I think this the key point which needs to be sorted out as quickly as possible.”
Andrew: “He took the legal advice and that’s why I left the business.”
Biggs: “It’s not the factual position, is it? Even though you had resigned, in reality you were both executives at this company.”
Andrew: “I think you can see by all the evidence given that Peter was in control of the company. All the evidence that hasn’t been used, it clearly shows, the 8,000 emails, it’s about bringing business into the company. It’s nothing about the structure or the control of the company.”
RETURNING AS DIRECTOR
The prosecutor then took Currie through the letter sent by the FCA on 12 February 2018 which was when they discovered that Collateral did not hold, and had never held, authorisation or interim permission from the FAC to conduct regulated activities.
Two days later, Andrew Currie returned as a director and he said part of his role was to get a second opinion on legal advice.
Biggs: “When did you first speak to an administrator about this?”
Andrew: “I think possibly around this time.”
Biggs: “Around the 12th February?”
Andrew: “I would have addressed Refresh Recovery around this time at what would have looked at winding down the loan book.”
Biggs: “I’m not talking about the loan book. I’m talking about putting the company into administration. You’re saying your conversations with Gordon Craig about putting the company went back to the 12 February before you were a director?”
Andrew: “Winding down the loan book and protecting the assets. It was not with the aim to liquidate the company, but to wind down the loan book.”
Biggs: “Administration is a legal state. It’s a bit different from just calling back the loans. You’re putting an administrator in charge.”
Andrew: “The idea was to protect the company for a period of time where Peter could have clarity on legal advice…effectively [the legal advice he was given] was correct.”
The defendant was also asked about what happened to the invoices that he says he was owned for brokering deals for the company.
Between joining as a director and the company going into administration two weeks later, Currie was paid £372,299.52 in ‘broker fees’, jurors were told.
“I don’t work on electronic, I work on paper,” he said.
“I’m not going to be able to recreate what was invoiced and what was not invoiced. All the hard copies I had I took in a very large suitcase, I gave [the administrators BDO] a hard copy of everything. They’ve seemed to have lost all those hard copies.”
Biggs: “Why was it paid into two different accounts?”
Andrew: “I think I had three different bank accounts at the time. Peter had the details – one was for my expenses and the other one generally was for on account monies but I don’t know why it was sent to two different accounts.”
Biggs: “This isn’t expenses, is it?”
Andrew: “No this is broker fees.”
The prosecutor asked if Gordon Craig, the administrator appointed by Collateral before they replaced by the FCA’s choice of BDO, knew that he had been paid these broker fees.
Currie: “He would have seen from the accounts, yes.”
Andrew: “A broker is someone who is usually between two parties, it’s an introducer or an intermediary.”
Andrew: “Yes.”
Biggs: “But you weren’t a broker were you? You were a part of Collateral.”
Andrew: “You’re wrong in what you’re saying. You’re completely wrong.”
He then asked about Andrew Currie having his accounts frozen due to not paying tax that year.
Biggs: “Were these numbers supposed to be difficult to be traced to you? That’s why they are labelled a ‘broker fees’ with a reference to what it was.“
Andrew: “No.”
Biggs: “You say you knew these were the payments you say you earned on the basis of bringing loans and assets, bringing in investment largely by individuals into this platform, yes?”
Andrew: “Yes. More than £20 million paid in full loans, over a £1 million in interest with no defaults. I did my job.”
Biggs: “Sold on the basis that it was a regulated company.”
Andrew: “…that was not my side of the business.”
Biggs: “And this is the profits from that fraud, isn’t it?”
Andrew: “No, you’re lying.”
‘PET ADMINISTRATOR’
Mr Biggs outlined how on 27 February 2018, £88,000 was paid to Collateral’s choice of administrator, Refresh Recovery, and the same day a £20,000 consultancy fee was paid to Andrew Currie. The next day, £8,000 was paid to Andrew Currie in consultancy fees, and on 1 March, Andrew Currie paid £20,000 to Gordon Craig, who ran Refresh Recovery. Then £40,000 was sent from Refresh Recovery to Andrew Currie and the next day Andrew paid his brother £20,000.
In his evidence, he claimed that the £40,000 was intended to keep the staff working for six months to wind the loan book down.
Biggs: “Rather than putting the £40,000 back into the company, why did they decide to give it to one of the directors?”
Andrew: “I was following instructions by Refresh Recovery.”
Biggs: “How well did you know Mr Craig?”
Andrew: “Not very well at all. I met him briefly at a boardroom [of a football match].”
Biggs: “On that brief meeting, on that basis he was happy to just give £40,000 to you?”
Andrew: “I just followed whatever the administrator had instructed.”
Biggs: “Was he your pet administrator? Was he your friend?”
Andrew: “A bit like the BDO is with the FCA? Is that a similar situation?”
Judge Martin Griffith then reminded Andrew Currie to not ask questions to counsel.
Biggs: “What I am asking is why did Mr Craig pay you in your personal account, a director of a company in administration, £40,000 that you then immediately split with your brother?”
Andrew: “Mr Craig did what he did. He saw that the company was in a strong financial position – it wasn’t a company in trouble.”
Biggs: “But then the £40,000 should have gone back into the company, shouldn’t it?”
Andrew: “You should ask him. I don’t know why you didn’t call him as a witness.”
Mr Biggs, the prosecutor, said Currie received £20,000 Mr Craig as consutancy fees which he then paid back to the administrator the next day for a gold coin.
In an earlier hearing, Currie claimed he got £25,000 from Dolphin Coins for it.
Biggs: “Where is the money for the coin in your accounts?”
Andrew: “I dealt jewellery for it. It wasn’t a cash transaction. I took jewellery for it…some of it I still have.”
Biggs: “This is absolute nonsense, isn’t it? You just paid Mr Craig into his personal account just as he paid into your personal account [to hide it away].”
Andrew: “That’s the truth.”
LETTERS OF COMPLAINT INTO THE FCA
The prosecutor read our Refresh Recovery’s report into the administration that did not outline why Andrew Currie left as a director but said he “resigned to pursue other endeavours”.
Biggs: “Someone reading this report would assume from that point on you had nothing to do with the business, but that’s not true, is it?”
Andrew: “If you read the 8,000 emails, you’ll see I was bringing in business but… I was not involved in the business.”
The prosecutor then read out another paragraph from the report, saying: “Despite Mr [Peter] Currie’s best efforts and continued cooperation with the FCA, including multiple conference calls and meetings, the FCA contacted Mr Currie on 29 January 2018 and advised that the FCA deemed them not to be regulated and that all reference to the FCA had to be removed from the website.”
Biggs: “On the face of this it looks as if the FCA just decided to take away the authorisation. What picture is this painting to someone reading this report?”
Andrew: “The issue surrounding this is there are 340 letters of complaint to the FCA about the handling of Collateral and 15 MPs, including Rishi Sunak, from people all of those are looking for compensation here if a criminal case is not found. That is the picture.”
AURI DEVELOPMENTS
Auri Developments, the company under the directorship of Andrew Currie’s on-off girlfriend Sarah Louise Gayton optioned on three properties in Blackburn, Fleetwood and Colne.
The prosecutor outlined on emails with solicitors on these properties, her partner was always copied in and most emails said ‘Dear Sarah and Andrew’.
In his evidence, Currie claimed Collateral would lend the money to Auri which would then make money out of the property development.
Biggs: “Was Auri Developments really you, Mr Currie?”
Andrew: “That is a ridiculous statement. It’s a third party. Why am I even being asked about a third party?”
Biggs: “Were you setting this up in order to lend to yourself?”
Andrew: “No.”
The prosecutor then outlined an email from a solicitor working for both Collateral and Stewart Day, of Mederco, and former Bury FC chairman, in which he shows interest in a property that Auri Developments has already optioned.
Biggs: “How does Stewart Day know about this property if Ms Gayton has already secured it as an option as Auri Developments?”
Andrew: “It’s a small world in property. People would be aware of how lucrative it was…it would have been an attractive one for Stewart Day.”
Biggs: “How did he come to learn about it?”
Andrew: “I don’t recall.”
He said on 16 February, it was “up in the air” whether Stewart Day would purchase the property but then he sends an email to his solicitor: “No not proceeding now on this one something Andy is going to do I think on his own.”
Biggs: “This is his comment to a solicitor. Is this true?”
Andrew: “It’s not true, no.”
Biggs: “On 16 February, you weren’t going to do this one on your own?”
Andrew: “No, it’s not true.”
The prosecutor said on 12 February 2018, £275,000 was paid from Collateral to Auri Developments as the first tranche for a half a million pound site, and that before that Auri “didn’t really have any money in its bank accounts”.
Andrew: “Yes”.
Biggs: “Certainly we don’t see here a payment for an option. How did Sarah Gayton pay for an option?”
Andrew: “That is a third party. You should have called them as a witness.”
The prosecutor suggested to Currie that he was sitting on “both sides of the transaction” for £275,000, to which he said he had “introduced it but I was not on both sides”.
Andrew: “The contract between Collateral and Auri Development was for £500,000, and £275,000 was paid over and when administrators were in place Collateral breached contract so in effect Auri could put it on red or black at the casino if they wanted.”
Biggs: “The £275,000…was paid before Auri owned anything, is that correct?”
Andrew: “Auri owned the option, I believe.”
Biggs: “So Collateral’s position was exposed at the start?”
Andrew: “Collateral was in administration. This is post Collateral so it is not for me to comment. It’s third party.”
Biggs: “The sales agreement happened two days before you became director. It just isn’t true, is it Mr Currie? You were taking money out without a loan agreement so you could do a property venture yourself.”
Andrew: “I never took any money out of Collateral.”
Biggs: “This is within the context of the court order [in March 2018]. This is the undertakings you made at court, you with your barristers at court, and you made undertakings so the matter could be adjouned. That included undertakings about unpicking the £88,000. So £48,000 could be held by Gordon Craig and you would transfer the £40,000, of course you gave half of it to your brother, and you would give money to your solicitors to hold in escrow. You knew that the company was in a position where assets were being pulled back, recovered, and potentially frozen?
“That is the context of which you did the deal with Auri and ND Holdings.”
Andrew: “No, that’s incorrect.”
Biggs: “The order was made on 16 March and then the Spanish property is bought after that.”
Andrew: “You’re talking third party it’s not for me to comment.”
Biggs: “The Spanish property was a venture for both you and Sarah Gayton.”
Andrew: “No that’s incorrect.”
Biggs: “When did you say your relationship finished?”
Andrew: “It’s been on and off, so…”
Biggs: “Was it on when the house was purchased?”
Andrew: “Yes.”
Biggs: “Have you been to the property?”
Andrew: “I have visited, yes. I’ve never stayed there.”
INTERVIEW AT POLICE STATION
The prosecutor said that at the time of the interview, Currie gave a prepared statement and exercised his right to not answer questions, but was warned that if he relied on evidence in court the jury could invited to infer why the evidence was not initially brought up with FCA investigators.
Andrew: “I was advised to go no comment so I followed legal advice.”
Biggs: “You were asked abut broker fees in the interview and Auri and those payments and you were asked about Gordon Craig and his appointment and you answered no comment to those questions.
“That’s because your explanation about coins and your explanation about option agreements and your explaination about being broker fees and invoices being developed have been made up since, haven’t they? Because you don’t want to answer about your involvement with Collateral.”
Andrew: “I’ll reiterate if you look at the 8,000 emails and you will see in all of those how I acted in that company. You’ll see the truth.”
RE-EXAMINATION
Henry Grunwald OBE KC, representing Andrew Currie, recalled earlier evidence in which the former director claimed that any monies paid to him was what he was owed in bringing in busienss to Collateral.
He asked: “Why did you agree to come back to the business?”
Andrew: “To assist my brother. When I was a fireman, the first responsibility is preservation of life and the second is preservation of property. Peter was very unwell. I didn’t take the responsibility lightly.”
Grunwald: “As far as you understood it, you were stepping into an unregulated business as far as you were aware.”
Andrew: “Yes, I understood I wasn’t stepping into a regulated entity.”
Grunwald: “What was your belief about the future of the business?”
Andrew: “It just needed guiding once the cloud of regulatory advice cleared. In the weeks after I did engage Ernst and Young and it was…clear Peter had taken good guidance…. I think he had good guidance but he didn’t know or couldn’t see that so I thought let’s have another set of professional eyes on it.”
Grunwald: “If matters had been handled differently, what do you think would have happened to Collateral?”
Andrew: “I think it would have been a market leader.”
This concluded Andrew Currie’s evidence.
PETER CURRIE
Peter Currie took to the witness stand where he was asked to give his evidence in chief by his representative Colin Aylott KC.
He explained he was born in Scotland, he’s 59, and moved to Lancashire aged three where he married in 1987 and has two children age 30 and 27.
He said he started work as a civil servant in premium bonds, worked in IT security, and then from 2009 to 2013 became a director for a company providing insurance on property loans.
Currie said Regal Pawnbroker Ltd came about because he was introduced to a man who wanted to create a company that would be the basis for the reality television show Pawn Stars UK.
He said his brother, Andrew Currie, was involved in the television side and the buybacks but he was involved in the admin and running of the company.
He said he sought investment from a company called Adimus which was intended to bring in capital for the lending side of the business, but there were issues in raising funds.
Peter: “They attended all the premieres, they loved the show, they were really invested in it but there was issues of raising funds with the name pawnbroker in the company name so that’s why we said let’s go with Asset Finance.
“Adimus felt there was a stigma attached to pawnbroking so I said, fine, let’s change the name.”
He said Regal was offered a “classic pawnbroking license” at the time but ultimately it failed as a business despite a large amount of publicity.
Peter: “I think most people from the TV show didn’t want to borrow against items, they wanted to sell them. It was just the pawnbroking aspect of it that people were interested in.”
He said initial investments into the company were made by him who paid in monies he won from a professional negligence case.
The defendant was also asked about how Regal Pawnbroker Ltd changed its name to Fitzwilliam Black, which was prompted by a man named Matthew Bonthrone who wanted to buy the company.
He said the sale however “fizzled out”.
Collateral, which was incorporated as a “platform to bring borrowers and lenders together”, Peter Currie told jurors.
Aylott said: “In setting up the platform who were you looking at aiming at? What was the profile of a potential customer?”
Peter: “Anybody. You can’t tell an investor what to put in, anything from a pound to endless amounts depending on how much was available to lend against.”
Aylott: “When you were setting this up, were you targeting mainly amongst others the retail investors?”
Peter: “They were potential clients.”
Aylott: “And what about institutional investors. I’m not talking about the big players in the City but other large-scale financial investors.”
Peter: “[The company] was always going to be need institutional investors. A lot of platforms started with retail investors and closed down to retail investors when they could just have institutional ones. At that stage, we were open to whichever offers were coming our way.”
Initial investment came from Adimus, who brought in £44,000, and from his own professional negligence claim, as well as a couple of brokers.
CHANGING THE NAME ON THE INTERIM PERMISSION REGISTER
Jurors were also taken to a brochure created in August 2015 which explicity stated that Collateral was not FCA regulated.
Currie: “I think it was me that wanted to go down the route. Other platforms were going for full permissions and I thought that’s what we should go for also.”
He added: “Even if we wanted to do one pawnbroking loan, that would be a regulated activity. If we wanted to do pledge loans, that would be a regulated activity. If we hadn’t put an application in we wouldn’t be able to do any of it.”
Aylott: “Why did you not just do this through Regal Pawnbrokers as that had a license already?”
Peter: “Because of the stigma that was attached to Regal Pawnbroker. Back then that was the issue that we had.”
Aylott: “We know that it’s not necessarily a difficult thing to change the name of a company officially. We know that due to the change to Fitzwilliam Black at one point. Why was this an impediment?”
Peter: “I could have, in hindsight, I should have done it that way.”
He was asked about changing the name from Regal Pawnbroker Ltd, which had interim permission, to Collateral, which did not.
Aylott: “Looking back now, were you right to have done what you did?”
Peter: “No.”
Aylott: “Was it deliberate? Was it dishonest?”
Peter: “Not at all. On the FCA’s site, it states that read only fields cannot be changed and to please contact the office to change any details. For any website, there are greyed out fields that can’t be changed. When we had the Collateral platform, because we had issues with money laundering, when you wanted to change the bank details to where the income would you, you couldn’t just change the bank details yourself. They would have to upload the bank details to a secure area for us to change it for them.”
Aylott: “Did anyone contact you about this change before January 2018?”
Peter: “No, never.”
The former Collateral director said the feedback from investors was “fantastic”, and that he hoped to become the first in the industry to create an app which had entered beta testing.
He said if it had not been forcibly closed down, “it would have continued to rise” and make millions.
He was also asked about Andrew’s role in the business, especially after he received legal advice that he should step down to previously being banned as standing as a director in the 1980s.
Mr Aylott wrote a reply to his legal advisor, saying: “I am happy to exclude Andrew from any controlling function and influence in the business. Happy to take advice from you as to what role he can play (if any) as an external consultant or business development role as an employee.”
He added: “Does that reflect your evidence you’re giving now? Or was he a director in everything but name?”
Peter: “He was never, well, all of us worked five days in the office, he’d be in and out. He was never involved in the fine details of the business.”
The defendant’s represenative then asked about how he felt the FCA handled the application first set out in April 2016 for “authorisation to operate an electronic system in relation to lending which is commonly referred to as a peer to peer business”.
Peter: “Frustrating to be honest. Because I don’t think it was just ourselves, it was other platforms in the industry, some are still going through interim permissions. It was frustrating because we were moving from one case handler to another.
“I didn’t know if we were moving from different departments. They would keep asking the same questions the previous [case handler] had asked. If not, they didn’t look through any of the notes to see what had been dealt with previously.
“That is why we wanted a face-to-face meeting in November 2017. It was table tennis back and forth to resolve any issues.”
He said that Mr Tall, his legal advisor, had told him the FCA “don’t own peer to peer lending”.
Peter: “The FCA was new to this industry and they didn’t have a good understanding. Every platform is different. No two is the same. Everyone’s doing something differently.”
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.
Case details:
Courtroom 12 Southwark Crown Court
Before His Honour Judge Griffith
10th May 2023
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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