Ponzi scheme: Freddy David told customers that their money would be locked up in a high-interest bank account for years
A Tory donor has been jailed for conning victims out of £14.5million in a Ponzi scheme to fund his gambling habit and pay for school fees.
Former banker Freddy David, who ran wealth manager HBFS Financial Services, told customers their money would be locked up in a high-interest bank account for years.
But instead the 49-year-old – whose wife is the former Tory leader of their local council – was spending the cash on betting, holidays and paying his three children’s school fees.
There were no high-interest accounts and when he had to pay ‘interest’ out to victims, he used other customers’ money to do it.
David persuaded victims, including friends, to hand over between £20,000 and £750,000 each for his fraudulent scheme.
He even gave them forged bank documents wrongly claiming that investments made on their behalf were generating interest.
One investor told police they contemplated suicide after realising what had happened.
The businessman, who lives in a £1million detached house in Elstree, Hertfordshire, was yesterday jailed for six years at Southwark Crown Court and banned from being a company director for a decade.
Katie Watkins of City of London Police said: ‘This fraud has caused significant emotional distress and financial harm to the victims involved, many of whom invested their life savings in HBFS.
‘David was a well-respected member of his community who exploited his position as a managing director of a recommended financial advisory firm to gain trust from unsuspecting investors.
‘Some victims are retired and are not in a position to recover the money lost.’
Father-of-three David worked as a corporate manager at the Knightsbridge branch of Barclays before joining HBFS in 2000.
Funded party as wife stood to be an MP
David’s wife Hannah pictured with former Tory prime minister David Cameron
Fraudster Freddy David donated thousands of pounds to the Tories while running his Ponzi scheme.
David gave £2,000 to the Harrow West Conservative Party in 2013.
Between 2013 and 2015, his business HBFS Financial Services handed over £9,685 in cash to the party.
HBFS also provided staffing support valued at £2,000, and administration services worth £4,000. There is no suggestion the donations to the party were linked to illegal activity. David’s wife Hannah was a Conservative councillor in Hertsmere and stood down from the council to run as the Conservatives’ Parliamentary candidate for Harrow West in 2015 and 2017.
She is currently listed as a director of the Conservative Party Policy Exchange – which claims to have ‘a direct line to the Prime Minister’s policy unit’.
He became managing director in 2005, and ran the Ponzi scheme from then until last year alongside legitimate business carried out by HBFS. It advertised itself as being ‘boringly serious about your money’ and stressed: ‘We don’t go for the quick buck.’
During that time he and HBFS donated almost £18,000 to the Harrow West Conservative Party.
David’s wife Hannah, 48, owned a 25 per cent stake in the company and was a Hertsmere borough councillor for nine years – including a stint as its leader.
Hannah David has never been investigated for any wrongdoing and there is no suggestion she knew about David’s actions.
But the Ponzi scheme helped to fund an online gambling habit which saw him blow £15.6m on betting websites between January 2005 and November 2017 – including £240,000 in a single day.
The first £50,000 of clients’ cash is protected under the Financial Services Compensation Scheme, and any money left in HBFS will also have been distributed to clients as the firm was wound up.
David was declared bankrupt last month and many of his victims are thought to have been saddled with vast losses that they can never recover. The police investigation began after the Financial Conduct Authority noticed suspicious activity in David’s bank accounts.
FCA enforcement director Mark Steward said they would ‘be carrying out its own enforcement action against David on the back of the criminal conviction to prevent him working in financial services again’.