Creditors’ lawyer tells court: Hudspiths fund was a ‘ponzi scheme’
The directors of a forex firm that owes more than £40m to creditors have been accused of running a “fraudulent ponzi scheme”, a court heard yesterday.
Hudspiths offered investors a five per cent a month return, in addition to a further two per cent to be paid per month to introductory brokers.
Hudspiths fell behind on its payments to clients in 2017 before largely ceasing payments late last year.
The company went into voluntary liquidation earlier this month owing more than £40m.
A group of creditors is attempting to drive the company into compulsory liquidation, arguing that the greater powers available in compulsory liquidations are needed in this case.
Robert Amey, a barrister for a group of creditors, said the case “cries out for a compulsory liquidation”.
Citing a witness statement from a creditor, Amey told the High Court there were “concerns that the company has been operated as a fraudulent ponzi scheme”.
A ponzi scheme is a scam where investors are paid the promised high rates of return with earlier investors’ cash. The schemes usually unravel when there is not enough money from new investors to pay returns to existing investors.
Amey said there was evidence more than £50m had gone out of the company since the winding up petition was first presented.
Hudspiths’ chief executive Karl Lubieniecki told City PM the claims about a ponzi scheme were “not true”.
Lubieniecki and co-director Lance Hudspith began offering the high-return product in 2015.
In June 2018 Lubieniecki became the registered owner of a six bedroom neo-Georgian house with facilities including an indoor swimming pool, spa, snooker room and a gym. According to Land Registry documents the house was bought for £1.8m.
The house has been put on the market in recent weeks with a £2m price tag.
The case was adjourned for further hearings.