Mark Steward, executive director of enforcement and market oversight at the FCA, said: “In this case, McKendrick misled investors and then, in contempt of court, failed to comply with court orders requiring him to properly account for the losses.

“The FCA will ensure that defendants who mislead investors are held to account to the fullest extent possible.”

The FCA launched legal action in July 2013 in respect of four unauthorised collective investment schemes promoted mainly by Capital Alternatives:

• African Land (also known as Agri Capital) offered investments in rice farm harvests in Sierra Leone; and
• Reforestation Projects (also known as Capital Carbon Credits) offered three investments in carbon credits intended to be generated from land in Sierra Leone, Brazil and Australia.

McKendrick was the main director and sole shareholder of African Land. The scheme was unlawfully promoted and operated without authorisation from the FCA. The Court found that McKendrick made misleading statements to investors and was knowingly concerned in misleading statements made by others. McKendrick was also knowingly concerned in the Capital Carbon Credits scheme in Sierra Leone, which was also operated and promoted unlawfully.

The losses across the schemes in which McKendrick was involved exceed £15m. In March 2018, the Court gave Judgment in the FCA’s claim and ordered McKendrick to pay the losses to the FCA so they can be paid back to investors.

McKendrick has since been declared bankrupt.

When the FCA took action in 2013, it obtained a freezing order against McKendrick. Upon Judgment in March 2018, the Court made a further freezing order requiring McKendrick to disclose all his assets and preventing him from disposing of them.

In breach of the freezing orders, McKendrick appointed his wife to manage his portfolio of buy-to-let properties at a commission rate significantly higher than he had paid to his previous letting agents. He then diverted the rental income from these properties to his wife. He did not disclose these arrangements.

As a result, the FCA brought an application to Court with the primary aim of discovering what had happened to the money so it could recover it for investors. In response, McKendrick admitted his breaches of the freezing orders and finally provided an account of where the money went. The FCA will ensure that as much of it as possible is recovered for investors.

On 1 March 2019 the Court sentenced McKendrick to prison for being in contempt of court by breaching the freezing injunctions obtained by the FCA.

In sentencing McKendrick, Mr Justice Marcus Smith noted that McKendrick had admitted, and apologised for the breaches but they were many, varied and deliberate, and intended to thwart orders of the court. Monies were paid away and used by McKendrick for his own benefit.

The Court indicated that McKendrick would have received a 12 month sentence but for his admissions and his genuine attempt to remedy his failures to provide full and accurate information.

The FCA is currently seeking to enforce its Judgment obtained against McKendrick and others, prior to distributing the proceeds to investors.