A jury at Southwark Crown Court has today found guilty David Ames, 70, one of the key figures behind the extensive £226m Harlequin fraud which conned many pension investors.

The Serious Fraud Office prosecuted Mr Ames for the fraud which involved celebrity-endorsed, luxury resorts in the Caribbean.

Mr Ames and Harlequin duped 8,000 UK investors - many investing their pensions and life savings - into investing in the Harlequin Group, a hotel and resorts development venture.

The victims were convinced they had a secure investment in property but in reality Harlequin Group never operated as promised and many of the properties it promoted were never built. It had many of the hallmarks of a 'Pyramid' scheme.

Mr Ames was found guilty on two counts of fraud by abuse of position. He offered no evidence in his defence and will be sentenced in September.

Complaints about Harlequin and its investments began to emerge nearly a decade ago and in 2013 the FCA issued a warning about the firm's advisers approaching investors who might have received redress from the Financial Services Compensation Scheme (FSCS), to encourage them to invest in Harlequin property.

The FCA warned at the time that as a property firm Harlequin itself was not regulated although it may have dealt with regulated advisers. The FCA said it had seen an increasing number of SIPP investing in overseas property, including through Harlequin.

Harlequin’s business model relied on investors paying a 30% deposit to buy an unbuilt villa or hotel room, half of which went toward fees for Harlequin and salespeople, with Harlequin claiming to put in the remaining 15% toward construction. 

With no additional source of funding, three properties needed to be purchased to finance one luxury accommodation unit, the SFO said. This led to the “exponential expansion” of the scheme, the diversion of investor money between resorts and ultimately a funding shortfall of over £1.2 billion by 2012 - seven years after Mr Ames launched the scheme. 

By this point, an expert accountant told Southwark Crown Court that investors were exposed to a near 100% risk of loss, which Mr Ames did not dispute.

By the time Harlequin went into administration it had sold around 9,000 property units to investors, with fewer than 200 built. Throughout the entire eight year project, only 28 of over 8,000 investors ever completed on a purchase, leaving 99% with no return on their investment. 

The Harlequin Group ultimately lost a total of £398m of investor funds.

The SFO said several thousand victims lost pensions and life savings to the fraud while Mr Ames and his family earned £6.2m. The Harlequin companies were family businesses, employing at times both David Ames’ wife and his son, who was paid £10,000 per month. 

Mr Ames had been temporarily barred from serving as a company director due to a previous bankruptcy and styled himself as the “Chairman of Harlequin.”

The SFO said it found that Mr Ames repeatedly ignored warnings that the business was likely to be insolvent while concealing this fact and continuing to sell more units to investors. Mr Ames sacked associates who raised the alarm, and on one occasion told colleagues that concerned investors needed “to be put in their place” to avoid attracting “bad press.”

Mr Ames made publicity a key priority, promising celebrity-sponsored tennis, golf and football academies with marketing videos in which he sold his vision for the resorts. Predicting major tourism development he managed to secure the endorsement of politicians in the region, including the Prime Ministers of Barbados, St Lucia, and St Vincent and the Grenadines.

Lisa Osofsky, director, Serious Fraud Office, said: “David Ames committed fraud on a huge scale, knowingly exposing thousands of UK investors to losses totalling hundreds of millions of pounds. Diligent SFO investigators reviewed millions of documents, traced over 8,000 investor deposits and called on more than 25 witnesses, to expose the full extent of Ames’ deception.”