PENSION LIBERATORS IMPRISONED AFTER OPRA INVESTIGATION
27 Feb 2003 06:15 PM
Two men were sentenced to a total of five and half years in prison at
Oxford Crown Court today for offences relating to a pension
liberation scam first uncovered by the Occupational Pensions
Regulatory Authority (Opra).
Steven Clive Russell of Banbury, aged 61, and William James Ferguson
of Leamington Spa, aged 56, ran their pensions liberation operations
over a period of approximately three years. By targeting people under
the age of 50 who are not legally permitted to withdraw cash sums
from their pension pots, the two men effectively removed over £6
million from legitimate company pension schemes.
Using a network of dormant companies, Russell and Ferguson set up
fake company pension schemes under the names Modsmith Ltd Retirement
Benefit Scheme, Spelply Ltd No. 1 Retirement Benefit Scheme, Melplash
Ltd Executive Pension Plan, and Ruswal Ltd Retirement and Death
Benefit Scheme. They then provided false employment details on behalf
of their clients, enabling them to transfer their clients' pension
funds into these bogus schemes. Russell and Ferguson took a large cut
of each transfer as a commission payment. Their clients were then
left with a much smaller cash sum that was also liable for income tax
at a rate of up to 40%.
In July 1999, Opra used its powers under the 1995 Pensions Act to
obtain search warrants and seize documents from the pension
liberation schemes run by Russell and Ferguson. Opra also took
immediate action to freeze bank accounts operated by the two men.
Russell and Ferguson later pleaded guilty to charges brought by Opra
under the Pensions Act 1995 of acting as trustees of occupational
pension schemes whilst disqualified.
Following these substantial investigations, Opra passed over all
relevant information to the Inland Revenue. As a result of Opra's
work, the Inland Revenue was able to successfully prosecute Russell
and Ferguson on charges of Cheating the Public Revenue. Russell and
Ferguson entered guilty pleas at Oxford Crown Court on 14 January
2003 to defrauding the Inland Revenue of over £1million.
His Honour Judge A.W. P. King sentenced Steven Russell to four years
in prison for the Inland Revenue charges against him. For the charges
against him relating to the Pensions Act 1995, including acting as a
trustee whilst disqualified, he was sentenced to a total of 20
months, to run concurrently.
William Ferguson received a prison sentence of 18 months for the
Inland Revenue charges against him. He also received a total of eight
months to run concurrently for the two charges under the Pensions
Act, including acting as trustee whilst disqualified.
The judge viewed the mens' breaches of the Pensions Act as serious
offences, and said that they could not plead ignorance of the law, as
they were experienced financial advisors.
Opra is determined that pension liberation schemes such as these
should not be allowed to flourish and that action will be taken to
protect the pension rights of individuals who may otherwise be taken
in by fraudsters.
ENDS -
NOTES FOR EDITORS:
1. Opra is committed to playing a supportive and educational role to
help increase understanding of - and compliance with - the legal
duties and responsibilities involved in running occupational pension
schemes. Its leaflet 'Don't Risk Losing your Pension Money'
highlights the risks of pension liberation schemes to trustees and
scheme members.
2. The Inland Revenue has published instructions for pension schemes
on how to prevent pension scheme liberation (also known as trust
busting). The Inland Revenue's requirements are contained in the
Inland Revenue Pensions Update 132
(http://www.inlandrevenue.gov.uk/pensionschemes/pso132.pdf). The
Update states that before making a transfer it is the responsibility
of the scheme making the transfer to satisfy itself that the proposed
recipient of the transfer is a tax-advantaged pension scheme or
arrangement.
3. Pension liberation should not be confused with 'pension
unlocking', which the FSA has recently highlighted. This is a
legitimate although potentially risky means for people over the age
of 50 to take early retirement and release their pension benefits
from an occupational or personal pension. For more details on this
visit www.fsa.gov.uk
4. Opra is an independent statutory body established on 1 April 1996
by the Pensions Act 1995. It became operational on 6 April 1997. One
of its aims is to look into breaches of the Pensions Act 1995 and
related legislation.
5. Opra has the power to investigate schemes considered to be at
risk, and aside from bringing proceedings in the courts, can prohibit
or disqualify trustees and impose fines on wrongdoers. In addition,
it has the power to work with other regulators in providing
information where that information would enable the regulator to
carry out its duties.
Occupational Pensions Regulatory Authority
Invicta House
Trafalgar Place
Brighton
BN1 4DW
helpdesk 01273 627600
website www.opra.gov.uk
helpdesk 01273 627600 email helpdesk@opra.gov.uk website
www.opra.gov.uk