Any FCA case worker who “knew their onions” should have spotted Collateral’s name change on the interim permission register, jurors were told.
The 12 men and women deciding the fate of the former Collateral brothers were told their excuses were “nonsense” and “invented”, according to the prosecution.
While the two defendants’ representatives tried to convince the jury at Southwark Crown Court they had made a “mistake” and were under the belief they had not defrauded anyone.
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
PROSECUTION CONTINUES CLOSING SPEECH
Stuart Biggs, prosecuting for the FCA, continued his closing speech by outlining the start of the business and why they set out to allegedly commit fraud.
“The next question is what was the purpose of Collateral? Its purpose was clear. It was to use the internet to access a new type of funding. from thousands of investors with an easy to use friendly website and also coming via intermediaries as well.
“Whatever the truth of the development finance that Andrew Currie said he could raise and had raised in the past, when it came to financing a loan book of this particular type of financing work, you might think they had to try something new. With Adimus, as we saw, they tried something new, and that only generated them £45,000, but was a problem in the industry they were in. [With Collateral], this was a way to raise a lot more money on a different scale.”
The prosecutor said the Currie brothers after speaking to wealthy individuals “we’re going to have to say we are authorised and regulated or we’re shutting ourselves off from this huge market of finance.”
Mr Biggs pointed to the jury where at the start of Collateral, the brothers boasted about already having £1.5 million in loans.
“That’s quite interesting isn’t it? Andrew Currie when he was asked by me about this said that this wasn’t Collateral UK at all, it wasn’t an existing loan book, it was something to do with the Isle of Man, and it was just an example of something they’d done elsewhere. Peter Currie said effectively it was a lie and the real figure was £150,000 and not £1.5 million, a tenth of that, effectively it was a lie… to improve the face of Collateral to raise more money.
“What the prosecution suggests is that those are both lies to some extent and the true position is that it was a moving of an existing loan book before there is any money in the Collateral account to lend.“
He pointed to the loan book in December 2016 and the prosecutor said whether it was Andrew Currie’s girlfriend, pawnbrokers, car dealers or property developers, all of them had a connection with Andrew so it “benefited them both to…change the name on the register”.
The prosecutor showed that Peter Currie was aware of the difference between changing a trading name of the company, as he had previously done that with Regal Pawnbroking Ltd to Fitzwilliam Black for the benefit of the potential new owners.
In emails to the FCA in 2015, he claimed that Regal had “restructured” to become Collateral, while his legal advisor told the FCA later that Peter Currie changed the name on the register due to the “misunderstanding of the concept of separate legal identity for bodies corporate in the UK”.
The prosecutor said: “We shouldn’t gloss over what a game changer that this was for Collateral and therefore the Curries. He’d been on the register before to make other changes, the address for example, and you ought to think about the moment on some random day when he realised he could do this.
“It’s not like he did it and didn’t give it any further thought. Think about what it meant to be for him to realise this, after that you can change your documentation and on your website, to say that you’re authorised and regulated with all the advantages that brings it and you can make a full application based on the interim permission.
“It’s not something you do in a moment and forget about – it’s consequential. It doesn’t make any sense that that just happened that he did it once and forgot about it. It doesn’t make any sense that the two directors wouldn’t discuss it, even if they weren’t brothers.”
He continued: “Andrew Currie was keen to repeat to you that he has no interest in the regulated side, but the reality is that he had an interest in raising money whether it was regulated or not – that was the whole point of Collateral. You heard from investors from one extreme, that it was a factor and they would carry out their own investigations, to the other end of the extreme, to whom it’s a complete dealbreaker: if it’s not regulated I’ll go with someone who is…
“Can you imagine just thinking about the practical common sense of the conversations that would flow? Did Andrew Currie really think, did this happen overnight? That’s some luck! We can get up to a million a month now. If you think you have a two director firm, where they’re brothers.
“Why is his brother distancing himself and the only answer is that as ridiculous as it is they don’t have a better one because of course they discussed it and of course they wanted to fund [Collateral].
“Even though they didn’t write down what they said to each other you can use your common sense of what happened in this case.
“There’s no sensible alternative that both Andrew Currie and Peter Currie would make a decision that they would present to the investors that FCA had authorised and regulated them even though Regal was not authorised for this type of work and Collateral was not authorised at all.”
Mr Biggs said an important part of the case is Collateral’s professional advisors were left in the dark about the Curries changing the name on the interim permission register.
And on the form for applying for full permissions, the jury were told that the first question asked Peter Currie how many previous firm names the applicant had traded under – which he put zero.
He said: “Peter Currie thought he’d be able to transfer the license to another business. It seems a ridiculous idea.
“He suggested that once you’ve got interim permission and you’re making your application you could put down any kind of regulated activity of the form, and you’d be able to do it.
“If that’s true, a successful application for interim permission, he thought it was license to do whatever you want. It only takes a moment’s thought that you’re a pawnbroker, you write down a wishlist, and you’re suddenly a financial advisor. It’s a nonsense that they didn’t know that a pawnbroker’s license was irrelevant.”
Mr Biggs, prosecuting for the FCA, then admitted the authority could be criticised for how it handled the case.
“Ultimately the defendants did what they did and they knew the full truth to the changes of the register and what they were doing. You might think they rode their luck. Yes, [the FCA] left the window to the car open and someone was able to reach in.
“That’s really what is being said isn’t it? Retrospectively, both Curries could take comfort from the fact that no one had spotted what they’d done.”
In March 2018, when Andrew Currie had stepped away, Mr Biggs said the application was “complex” and Collateral had changed its own position “four or five times”.
“If [the company] was going to succeed, every day of waiting for the application to progress was another day without money coming in,” the prosecutor said. “For all the complaints they had about the FCA, saying case handlers had changed, but that’s alright as these things take a long time, but for every day that went on the company wasn’t making the money they knew it could make.
“They changed the register to say they were authorised and regulated so people who [would only ever invest with regulated companies] would put their money in.
“That is what count one is about. They had to pretend to be authorised, there is a risk of being shut down and then even if would have otherwise all worked out in the end there is a risk of loss if the music stops.
“Of course there is a risk anyway whenever you invest but you are entitled to know the truth about the regulatory position before you take the plunge, aren’t you? It’s all about risk in terms of loss but it’s also in terms of gain. The count only requires one or the other, but you’ve got both.”
On count two, Mr Biggs said it refers to a “watershed moment” when the FCA discovered the change in the register and there being a threat of action, threat of injunctions, and the threat of investors wanting their money back.
“In fact, Peter Currie plays for time. Do you think they genuinely couldn’t find a way to get the names and addresses of investors to the FCA? That they genuinely thought there was no need to tell the FCA about the appointment of Gordon Craig and later, that they genuinely didn’t see any problem with making undertakings to the Court and returning the £40,000 whilst failing to mention the other money that had exited the client account?
“Why did the FCA have to find out by chance by seeing it on a forum somewhere?”
On the ‘broker fees’ Andrew Currie was paid, the prosecutor said he accepts that the defendant expected to get something out of the business.
“But why must they have been presented as broker fees towards the end and not to pay tax on it, and not for these payments to appear in the report of the administrator, and not to tell the FCA about it and not to mention it when you’re making undertakings.
“It’s because he knows that he’s receiving money that goes back to fraud.”
He added: “By the letter on the 12 February 2018 (from the FCA), the day before he took money out on the 13th as he knew the roof was falling in. He was told the FCA knew there had been a false representation about authorisation.
“Even if you’re not convinced he knew of the fraud in count one (that he believed his brother Collateral was authorised and regulated), he knew by count two. He knew…it was the proceeds of fraud.
“The way it was dealt with, the way it was hidden, this is money that he knew that came from fraud and he shouldn’t have it.”
The prosecutor said making any payments to Auri Developments as the “roof had fallen in…seems like a crazy thing to do in itself”.
“He quite clearly knew the size of the problem. If you put yourselves in the shoes of these two men at that point in time when you’re on verge of administration and you’re not confident what the shortfall would be you would not make that same transfer without a scrap of paper that you can enforce against it. It’s not a loan agreement, not a completed sale – how could you possibly know you could make a second payment? – it was just a gift. It wasn’t a loan or a sale, it was a gift.
“It’s exactly what it seems like, a smash and grab on the client account exacerbated by the fact that it was later spent on a holiday home in Spain. It’s clearly an abuse of position.”
CLOSING ARGUMENT DEFENDING ANDREW CURRIE
Barrister Henry Grunwald OBE KC, representing Andrew Currie began his closing speech by telling the jury that “It’s accepted Andrew Currie made a representation to investors [Collateral] was authorised by the FCA. It’s accepted that the representation was made on emails, documentation, you’ve seen so many instances of it that’s not in dispute.
“The representation was made so far as Andrew Currie was concerned in order to make a gain for himself or another, make the business successful… It was said in the belief in his mind that it was true, after all that’s what he was told by his brother.
“Now, one of the questions that came from one of your number was, ‘is he blaming his brother?’
“It’s not a question of blame. But in terms of who did what, yes, it is our case, Andrew Currie’s case, it was his brother that changed the entry on the register. If that’s blaming him, so be it, but it’s not a blame game between the two of them. Peter Currie has told you what was in his mind.
“It’s our case that he had no reason at all to doubt what his brother said to him.”
He added: “You can be satisfied that many many many documents that the FCA came into possession of, there’s nowhere in the papers before you that suggests Andrew Currie played any part at all in that name change on the register.”
Mr Grunwald continued: “The key word in this count is dishonesty. When Andrew Currie either in sending an email or a brochure from the company made the representation that there was interim permission he did so with the belief it was true.
“Before you can convict of him you must be satisfied so you would be sure that he did so dishonestly that he knew the representation was false and he used [that information] dishonestly because those are the requirements of that count.”
Referencing the second count of fraud, the transfer of £275,000 from Collateral to Auri Developments, Mr Grunwald said how the prosecution described it may have left a “nasty smell” in the jurors’ noses.
He reiterated it was an agreed fact that Sarah Gayton, Andrew Currie’s former partner, that she had never been arrested or charged.
“It’s just one of these unfortunate things that happen in the business world,” he said.
“The balance of £225,000 was not paid to Auri…the second tranche was not paid. Andrew Currie told you that he asked administrators to pay it and they didn’t and that’s why that sale never went through.
He added: “If the second tranche was paid there would have been a valuable asset on the books of the company. It didn’t happen and we submit to you that is the way to look at that count.”
On the third count of converting criminal property, Mr Grunwald asked jurors that if Andrew Currie “is not guilty of count one then we say he cannot and should not be convicted of this count”.
“Andrew Currie was not questioned when he gave evidence to you at the time these transfers were made of whether he then knew that these credits were the proceeds of crime. That was not put to him when he gave evidence. You can imagine what his answers would have been.”
The barrister also questioned that Andrew Currie was “distancing himself” when he returned as a director to help his brother after the FCA letter.
“Here you have him turning around and supposedly leaping back into the building where the roof had collapsed,” he said.
Going back to when Collateral was incorporated, Mr Grunwald said: “They may be brothers but they are different.
“Peter wanted the badge of regulation. I don’t think there’s any dispute about that, that’s what he told you.
“Maybe the one criticism of the FCA, and I’ll leave the rest of this argument to Mr Aylott, but you can understand when Peter Curie tells you, ‘look I looked at the register and I didn’t realise I was doing anything wrong, there was nothing there to prevent me from doing it.”
He added: “I hope members of the jury, I hope you will see that there is a clear picture on the evidence of what this man’s role actually was within the running of this company as opposed to the one the Crown would have you believe, suspect, find that it was, the reality is not that it was his business, the reality is not that he ran the business, the reality is he brought the loans in because that was his experience and that was his role.”
Mr Grunwald continued: “We’ve heard mention several times there are 8000 emails, a very large number, in which Andrew Currie is addressed. Do they help you find deciding whether his role was that of business development or whether he was actually running the company along with his brother?
“If there had been replies in which shows he was running the business, in which is the position the Crown relies on, you would have heard about them.”
His defence barrister said one point that proves Currie’s innocence is that he kept the same phone number from the one he had in the days of Collateral.
“If you are knowingly involved in a fraudulent enterprise and people want to contact you have your phone number, what would you do if everything blew up and your fraud came to light. Andrew Currie kept the same phone number throughout this and even still has the same number to this day – is that someone trying to distance himself? I suggest to you that’s a strong indicator that he was not seeking to distance himself from anything dishonest because he had not been involved in anything dishonest or illegal.”
Referring to the ‘broker’ fees he was paid, Mr Grunwald said: “It may not have been an ideal way in which they were paid to him and what happened to the monies that were transferred to him but consider the pressures and whatever they did we submit was not done dishonestly and was not done to make use of criminal property.
“He did not know at any stage it was criminal property, even after he became aware of the FCA [letter saying they were not authorised], that does not mean that it makes it criminal property.”
Mr Grunwald concluded his speech by discussing the Auri Development deal.
“Business can be a hard knock. It’s a great shame that the Auri deal was not completed as had been intended. The fact it had not been completed is not to place any criminal blame on Andrew Currie. He wanted the second tranche to be paid. He told the administrators to pay but for any reason it was not. That does not make him guilty of abusing his role as a director.”
CLOSING ARGUMENT DEFENDING PETER CURRIE
Colin Aylott KC, defending Peter Currie, started his closing speech by going over the prosecution’s central theory.
“You may think D-Day was 1 April 2014. April Fools Day was when the handover from the [Office of Fair Trading] to the Financial Conduct Authority took place. A momentous event whether that’s still celebrated in the FCA one doubts it, but it is a momentous event that would have passed by all of you in 2014 but now after hearing this case will be forever seared in your memory.
“On that date on April Fools Day, Peter Currie owned or controlled two different companies with interim permission. Regal Pawnbroking and Cash4Assets. You also know just a few months later in November of that year Collateral the company that we’re here working through and about was incorporated, no doubt about the time when Peter Currie and Andrew Currie started to move forward with their idea of a web-based platform.
“It was 13 months after that the date of the incorporation the change of the register was made by Peter Currie.
“The prosecution delivered a theory that he did that so he could launch, run and develop the platform that was a 21st take on the ages-old practice of pawnbroking and bridging loans.
“What is that central theory? You may think comes in two parts, firstly he couldn’t use Regal because it was a company that owed a number of individuals a great deal of money who invested money at the start and the second part of that theory in Autumn 2015 Regal had been sold, it was no longer available to him.”
Mr Aylott said it would have been “straightforward” to change the name of Cash4Assets to Collateral as that would have been “no bar moving forward”.
“These problems they say led him to act dishonestly in taking the huge risk in amending the register with all the problems that it brought and the ever lurking fear the company would be closed down when the FCA realised what had happened. It’s almost as if the Crown’s theory is that he wanted to make his life as difficult for him as much as possible. He wanted to live dangerously despite having a pain-free alternative.”
Mr Aylott said while Regal owed money, the £40,000 paled in comparison to the money he was spending on developing the platform, compliance and staff.
On the change in the name of Regal Pawnbroker Ltd to Collateral on the interim permission register, he said the issue was less “clear cut” than it was when Peter Currie made the change.
“There is no dispute that Peter Currie should have not moved interim permission from one corporate entity to another,” the barrister said.
“Does Peter Currie strike you as a reckless man or a gambler, someone who would roll the dice and get away with it? To seek to play the system and fraudulently amend the register he must have known this would fail.
“The first point we make is that people make mistakes. We accept on his behalf as he did in this court that he made a mistake. Can you discount absolutely the straightforward vanilla possibility that this is what it was, a mistake with catastrophobic and life-changing consequences for his family?”
He added: “We accept he has been… the author of his own misfortune. He said he made mistakes when he gave his evidence before you. There was also the failure to raise it with [legal advisor] Richard Tall, plainly the information he gave to SimplyBiz was inadequate. Plainly, he failed to raise the change of the register with Richard Tall and that was a mistake.
“Why it’s mitigated to the extent that Richard Tall was not on board for another six months, and no issue had been raised about the change. Peter Currie accepts that he should have raised it than for no better reason to protect himself and to protect Collateral. He is now living with the profound consequences of it. It would be harsh in the extreme to find it was dishonest on his part when it was an error.”
Mr Aylott said the second point was that as Currie gave in evidence that the system allowed him to make changes so he thought it would be permissable.
His third is that he could not have known internally what FCA would be seeing and he had relied on the competance of the authority.
“There’s an irony here – the reliance on the heavyweight reputation of the FCA he would have assumed as night follows day those changes would be checked. If there was a problem, [surely] they would have come knocking? It appears at the time there was no checking in place.”
The barrister said even at the time of the FCA letter there was an “internal debate” that delayed intervention by seven weeks.
He said he sought to criticise the conduct of the FCA from the transfer through to the application that was being made and their actions led “to chaos” two years later.
“There is a duty to the firms who are under their regulation or in the process of making an application as in this case, there is supposedly…high levels of expertise.
“We submit Peter Currie and Collateral were entitled to a degree of protection and assurance they had a safety net themselves if things went wrong. Giving the FCA’s case the benefit of the doubt, why was this not picked up and acted on a number of occasions?”
The barrister said: “Going back to that April Fools Day, any competent member of the FCA we submit would have known the date of incorporation [of Collateral] falls seven months of the date of transfer of interim permission from the OFT to the FCA, so any case worker doing their job looking at this second page of the credit regime would know. The significance is obvious. It’s so obvious that what Peter did was a mistake rather than a deliberate decision to the FCA… we submit any case worker who knew their onions that Collateral could not have interim permission because [at that point] it did not exist.”
The trial continues tomorrow.
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.
Case details:
Courtroom 12 Southwark Crown Court
Before His Honour Judge Griffith
16th 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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