In Relation to a Scheme that Cost Bank $315 Million, Ex-HBOS Bankers Convicted

For participating in a scheme that siphoned millions from failing businesses and eventually cost the bank around 250 million pounds ($315 million), two former HBOS Plc bankers were convicted by a London jury.

Found guilty of a string of fraud offenses that allowed the men for whom bribes, luxurious foreign travel and high-class escorts became the norm were Mark Dobson, an HBOS banker and David Mills, a turnaround consultant. Pleading guilty to six counts of fraud and corruption before the trial started last year, was Lynden Scourfield, another HBOS employee, whom prosecutors had put at the center of the crime.

“Scourfield worked in a section of his bank which was supposed to help struggling businesses but instead, motivated by greed, he went about stripping them of their assets,” Stephen Rowland, a lawyer in the Crown Prosecution Service’s fraud division.

HBOS was hurt financially as well as hurt its reputation by the legal fight which came yo an end with the verdict. A state-brokered takeover by Loyds Banking Group Plc in 2009 and a 20.3 billion-pound taxpayer bailout was the result of the most controversial episodes of Britain’s financial crisis perpetrated by the Edinburgh-based HBOS.

Identified as an embarrassment, if not a key factor in the HBOS’ collapse, was the conspiracy, which was run out of the bank’s Reading branch. Mills was able to collect high consulting fees as well as take over the struggling small businesses and load them with excess debt that HBOS was ultimately responsible for and enticed his co-conspirators between 2003 and 2007 with cash payments, holidays and prostitutes, the police said.

While Mills’ wife was also convicted, two businessmen – Michael Bancroft and Tony Cartwright were adjudged guilty of conspiracy to corrupt, fraudulent trading and conspiracy to conceal criminal property.

The investigation into the fraud uncovered luxury properties in multiple countries and even Mills’s five-bedroom, 100-foot yacht called the Powder Monkey and took police six years to bring to court.

Using e-mails to show how much the men relied on each other, the relationship between Scourfield and Mills was central to the fraud, prosecutors said during the trial. Scourfield told Mills “I’ll always stick by you, ” according to a 2006 message shown to the jury.

The bank would only support their companies if they hired Mills, who then added himself, or an associate, as director, Scourfield would tell his troubled customers. With Mills taking large payments and sharing them with Scourfield through gifts, the debt at the ailing companies would skyrocket.

Several months later, Scourfield told Mills “I have been confirmed as grand wizard,” and Mills responded “Great. Marry me!” Scourfield’s e-mail reply said “I thought we were already.”

with 150 officers and staff poring more than 500,000 documents, Thames Valley Police said it was the most complex case it had ever handled.

“I hope that this case offers closure and justice to the victims of this organized crime group,” Detective Superintendent Nick John said in a statement. “These are normal hard-working people who have had their lives and had their livelihoods ruined by this.”

(Adapted from Bloomberg)

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