Former Fox Hayes partner found not guilty in biggest ever boiler room fraud

A YORKSHIRE lawyer has been cleared of corruption in what is believed to be the biggest ever boiler room fraud to come to court.

John Robert Manning, a former senior partner at Fox Hayes Solicitors, the Leeds-based firm which went into administration in 2009, was being tried at Southwark Crown Court in relation to a single allegation of corruption contrary to section 1(1) of the Prevention of Corruption Act 1906.

A boiler room fraud involves a business, often from overseas, persistently pushing the urgent sale of over-valued or even worthless shares in a company.

Mr Manning stood trial along with Jeffrey Revell-Reade and Anthony May.

Mr Revell-Reade, an Australian national, was convicted of one count of conspiracy to defraud in relation to an investigation that was launched by the Serious Fraud Office in 2007. From 2003-2007, a total of around £70m was obtained fraudulently from UK investors under the boiler room fraud scheme he masterminded.

The court heard that Mr Revell-Reade set up the scheme, under which sales entities operating from Madrid sold shares in US-listed companies on a fraudulent basis.

Investors in the companies bought shares that had restrictions on their resale for a 12 month period. When the investors came to sell the shares after the expiry of this period, they often found that they were unable to do so as they were worthless, and that the shares were in shell companies or companies that were not operating at all.

Mr May, who lived in Switzerland and then moved to Spain, was also found guilty of one count of conspiracy to defraud. Mr May administered the processing of shares distributed to investors and managed the finances of the conspiracy, using and managing off-shore bank accounts to distribute the funds obtained.

The SFO alleged that Mr Manning received US $869,407 for arranging for and continuing to allow Fox Hayes Solicitors to promote the work of the Spanish sales entities and to receive investor funds from the sales.

Mr Revell-Reade and Mr Manning were found not guilty of one charge of corruption arising from the conduct of the fraud.

Revell-Reade and May’s convictions bring to nine the number of people convicted in relation to this conspiracy. The convictions and sentences of the other seven last year, in linked cases, can only now be reported fully due to a blanket reporting ban being lifted following the outcome of yesterday’s trials.

The investigation lasted seven years and was codenamed Operation Steamroller.

SFO director David Green said: “Over 1,000 UK investors were defrauded by these criminals, who caused substantial financial damage and hardship. The victims were deliberately charmed, lied to and bullied, whatever it took to make them send their money to these criminals. The profits from this fraudulent scheme were used to fund lavish lifestyles featuring numerous overseas properties, wine collections, luxury yachts and private jet hire.

“The convictions mark the culmination of seven years hard work by a dedicated team of investigators, lawyers and accountants at the SFO, and close work with other agencies. This case illustrates that key attributes required in an SFO investigation are determination and persistence, qualities necessary to follow the complex money flows and elaborate company structures in numerous jurisdictions.

“I would like to thank the City of London Police, overseas law enforcement partners and regulators for their assistance with this wide ranging and successful investigation.”