Harlequin boss found guilty in £226m property investment fraud case

The boss of the defunct Caribbean property group Harlequin was found guilty by a jury at Southwark Crown Court of two counts of fraud by abuse of position on August 3, 2022.

It comes after a Serious Fraud Office (SFO) investigation found David Ames was behind a £226m ($274m, €270m) property investment fraud ) involving celebrity-endorsed luxury resorts in the Caribbean.

The SFO investigation revealed how Ames tricked more than 8,000 UK savers into investing in the Harlequin Group, a hotel and resort development company. Victims were led to believe they had a safe real estate investment when in reality Harlequin Group never performed as promised.

Over seven years, investor losses totaled around £398 million. The indictment period from 2010 to 2013 saw investors lose £226m.

Ames has presented no evidence in his defense and will be sentenced in September 2022 – ending the case more than five years after Ames was charged by the SFO.

Details

Harlequin’s business model was based on investors paying a 30% deposit for the purchase of an unbuilt villa or hotel room, half of which was for Harlequin’s expense and sellers concerned, while the group devoted the remaining 15% to construction.

The investors were “fraudulently informed that the construction of the properties would be additionally financed by external financial support”, the SFO said.

Without an additional source of funding, three properties had to be purchased to fund just one of the luxury accommodation units. The SFO said this led to “the exponential expansion of the scheme, the diversion of investors’ money between stations and ultimately a funding shortfall of over £1.2bn by 2012” – seven years after Ames launched the program.

At this stage, an expert accountant told Southwark Crown Court that investors were exposed to almost 100% risk of loss, which Ames did not dispute.

The SFO investigation found that by the time he took office in 2013, Harlequin had sold around 9,000 real estate units to investors, with less than 200 under construction.

Throughout the eight-year project, only 28 out of more than 8,000 investors completed a purchase, leaving well over 99% with no return on investment. The Harlequin Group ultimately lost a total of £398 million in investor funds.

Several thousand victims have lost their pensions and savings to the fraud.

Lisa Osofsky, Director of the SFO, said: “David Ames has committed large-scale fraud, knowingly exposing thousands of UK investors to losses totaling hundreds of millions of pounds. Diligent SFO investigators reviewed millions of documents, traced more than 8,000 investor filings, and called more than 25 witnesses, to expose the full extent of Ames’ deception.