Kevin Foster (fraudster)
Encyclopedia
Kevin Foster is a British investment fraudster, convicted of 14 counts of deception and theft in relation to his operation of a £34m (approx $51m) Ponzi scheme
, which ran from 2002 to 2004.
By the time Foster was stopped, police discovered his scheme, originally called KF Concept but later renamed to Phase 9, had taken money from 8,500 investors, mainly drawn in through his series of flamboyant roadshows across the UK.
In 2010, Foster was sentenced to 10 years imprisonment, though that was reduced to 9 years on appeal after several convictions were overturned.
Crown Court
in northwest London
, after a seven week trial which began on 18 January 2010.
Foster faced 8 charges under the Financial Services and Markets Act 2000 and 8 offences under the Theft Act 1968. The jury found him guilty on 14 of the charges, but acquitted him of one theft charge in relation to £220,000 of cash found at his home, and failed to reach a verdict on another relating to a Ferrari
Spyder he owned.
On 16 April 2010 Foster was sentenced to 10 years imprisonment. At the sentencing hearing, Judge Nick Madge described the fraud as being "a substantial and deliberate course of conduct that was sophisticated and elaborate".
At appeal, on 31 March 2011, Foster’s theft convictions were ruled unsafe and overturned, and his sentence was reduced to 9 years.
, Wales
and Scotland
.
The roadshows were flamboyant, with Foster appearing on stage backed by music, often Abba
's Money, Money, Money
, presenting himself as a gambling expert who could deliver great profits to his investors from betting on soccer and horse racing
. Foster claimed that for every £1 invested, he was earning £28.50, that he had already recruited 50,000 members, and that the scheme held assets of £203m.
The highlight of Foster's presentations came when previous investors' names were drawn by lottery, with the lucky winners being paid their promised returns early, in front of the crowd. Further prizes included cars, and even the loan of Foster's Ferrari.
This show of money satisfied the doubts of many investors, who weren't aware that, in classic Ponzi style, it was being paid out of new investors' deposits rather than from any profits from the scheme. At least 8,000 people were drawn in, investing a minimum of £1,000, with an estimated average of £4,200 each.
In 2003, Foster dropped the name KF Concept after negative publicity, renaming the scheme Phase 9.
Police, together with the Financial Services Authority
, investigated Foster's investment affairs, and the following month halted his activities, discovering that by that time he had collected a total of £34m from more than 8,500 investors. The money that Foster had claimed his scheme controlled was not there, and he had made no profits from any gambling activities. A freezing order was obtained, and Foster was declared bankrupt, with his investors losing everything.
The case was referred to the Serious Fraud Office, who, after investigations, charged Foster in May 2007, leading to 2010's trial and conviction.
During the course of the investigation, it was found that £12m of the money raised had been channeled into an illegal pyramid investing scheme, Planline, thought to be based in the Cayman Islands
, of which only £1,703 was ever recovered.
It was also discovered that Foster had used large sums from the scheme to fund an extravagant lifestyle, buying a £600,000 farmhouse near Sittingbourne
, Kent, which he stocked with exotic animals and where he installed Koi carp ponds. A further £700,000 was spent on cars, and it was estimated that Foster had withdrawn £3m in cash.
Ponzi scheme
A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organization running the operation...
, which ran from 2002 to 2004.
By the time Foster was stopped, police discovered his scheme, originally called KF Concept but later renamed to Phase 9, had taken money from 8,500 investors, mainly drawn in through his series of flamboyant roadshows across the UK.
In 2010, Foster was sentenced to 10 years imprisonment, though that was reduced to 9 years on appeal after several convictions were overturned.
Trial and conviction
On 9 March 2010, Kevin Foster was convicted, at HarrowLondon Borough of Harrow
The London Borough of Harrow is a London borough of north-west London. It borders Hertfordshire to the north and other London boroughs: Hillingdon to the west, Ealing to the south, Brent to the south-east and Barnet to the east.-History:...
Crown Court
Crown Court
The Crown Court of England and Wales is, together with the High Court of Justice and the Court of Appeal, one of the constituent parts of the Senior Courts of England and Wales...
in northwest London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
, after a seven week trial which began on 18 January 2010.
Foster faced 8 charges under the Financial Services and Markets Act 2000 and 8 offences under the Theft Act 1968. The jury found him guilty on 14 of the charges, but acquitted him of one theft charge in relation to £220,000 of cash found at his home, and failed to reach a verdict on another relating to a Ferrari
Ferrari
Ferrari S.p.A. is an Italian sports car manufacturer based in Maranello, Italy. Founded by Enzo Ferrari in 1929, as Scuderia Ferrari, the company sponsored drivers and manufactured race cars before moving into production of street-legal vehicles as Ferrari S.p.A. in 1947...
Spyder he owned.
On 16 April 2010 Foster was sentenced to 10 years imprisonment. At the sentencing hearing, Judge Nick Madge described the fraud as being "a substantial and deliberate course of conduct that was sophisticated and elaborate".
At appeal, on 31 March 2011, Foster’s theft convictions were ruled unsafe and overturned, and his sentence was reduced to 9 years.
History
Foster's investing career started in 2001 with a football betting scheme, taking stakes from his work colleagues, promising them a fivefold return on their money, and encouraging participants to roll over their winnings and invest further in his next scheme. From there, he expanded his scheme, named it KF Concept in 2002, and launched a series of roadshows in EnglandEngland
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
, Wales
Wales
Wales is a country that is part of the United Kingdom and the island of Great Britain, bordered by England to its east and the Atlantic Ocean and Irish Sea to its west. It has a population of three million, and a total area of 20,779 km²...
and Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...
.
The roadshows were flamboyant, with Foster appearing on stage backed by music, often Abba
Abba
ABBA is the name of a former Swedish pop music group.Abba may also refer to:* ABBA , a self-titled album by the Swedish pop music group ABBA* "Abba ", a song by Christian pop and rock artist, Rebecca St...
's Money, Money, Money
Money, Money, Money
"Money, Money, Money", originally "Gypsy Girl", is a song recorded by Swedish pop group ABBA. The song, like most ABBA songs, was written by Benny Andersson and Björn Ulvaeus. It was released as a single on November 1, 1976, as the follow-up single to "Dancing Queen, both from the album Arrival...
, presenting himself as a gambling expert who could deliver great profits to his investors from betting on soccer and horse racing
Horse racing
Horse racing is an equestrian sport that has a long history. Archaeological records indicate that horse racing occurred in ancient Babylon, Syria, and Egypt. Both chariot and mounted horse racing were events in the ancient Greek Olympics by 648 BC...
. Foster claimed that for every £1 invested, he was earning £28.50, that he had already recruited 50,000 members, and that the scheme held assets of £203m.
The highlight of Foster's presentations came when previous investors' names were drawn by lottery, with the lucky winners being paid their promised returns early, in front of the crowd. Further prizes included cars, and even the loan of Foster's Ferrari.
This show of money satisfied the doubts of many investors, who weren't aware that, in classic Ponzi style, it was being paid out of new investors' deposits rather than from any profits from the scheme. At least 8,000 people were drawn in, investing a minimum of £1,000, with an estimated average of £4,200 each.
In 2003, Foster dropped the name KF Concept after negative publicity, renaming the scheme Phase 9.
Investigation
In January 2004, the KentKent
Kent is a county in southeast England, and is one of the home counties. It borders East Sussex, Surrey and Greater London and has a defined boundary with Essex in the middle of the Thames Estuary. The ceremonial county boundaries of Kent include the shire county of Kent and the unitary borough of...
Police, together with the Financial Services Authority
Financial Services Authority
The Financial Services Authority is a quasi-judicial body responsible for the regulation of the financial services industry in the United Kingdom. Its board is appointed by the Treasury and the organisation is structured as a company limited by guarantee and owned by the UK government. Its main...
, investigated Foster's investment affairs, and the following month halted his activities, discovering that by that time he had collected a total of £34m from more than 8,500 investors. The money that Foster had claimed his scheme controlled was not there, and he had made no profits from any gambling activities. A freezing order was obtained, and Foster was declared bankrupt, with his investors losing everything.
The case was referred to the Serious Fraud Office, who, after investigations, charged Foster in May 2007, leading to 2010's trial and conviction.
During the course of the investigation, it was found that £12m of the money raised had been channeled into an illegal pyramid investing scheme, Planline, thought to be based in the Cayman Islands
Cayman Islands
The Cayman Islands is a British Overseas Territory and overseas territory of the European Union located in the western Caribbean Sea. The territory comprises the three islands of Grand Cayman, Cayman Brac, and Little Cayman, located south of Cuba and northwest of Jamaica...
, of which only £1,703 was ever recovered.
It was also discovered that Foster had used large sums from the scheme to fund an extravagant lifestyle, buying a £600,000 farmhouse near Sittingbourne
Sittingbourne
Sittingbourne is an industrial town about eight miles east of Gillingham in England, beside the Roman Watling Street off a creek in the Swale, a channel separating the Isle of Sheppey from mainland Kent...
, Kent, which he stocked with exotic animals and where he installed Koi carp ponds. A further £700,000 was spent on cars, and it was estimated that Foster had withdrawn £3m in cash.
Victims
Foster mainly targeted low-income people in small, close-knit, communities, many of which were in the valleys of South Wales. Most investors lost relatively small sums, but some lost considerable amounts, including one investor (who chose not to be identified) who lost £180,000, which he had raised by mortgaging his house and borrowing on his credit cards.See also
- Pyramid schemePyramid schemeA pyramid scheme is a non-sustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public...
- Affinity fraudAffinity fraudAffinity fraud includes investment frauds that prey upon members of identifiable groups, such as religious or ethnic communities, language minorities, the elderly, or professional groups. The fraudsters who promote affinity scams frequently are – or pretend to be – members of the group...
- List of real-life con artists
- List of people from Kent