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London Capital & Finance Plc (‘LCF’) was a mini-bond issuer that sold £237 million in bonds to around 11,600 retail investors between 2013 and 2018 before falling into administration in January 2019.
LCF’s administrators alleged that LCF’s business was fraudulent and a Ponzi scheme and filed a claim against certain individuals and firms alleged to have unlawfully benefitted from the misappropriation of funds. The high-profile case, one of the The Lawyer’s Top 20 Cases of 2024 , was heard at a 20-week trial in London’s High Court.
An AlixPartners team lead by Partner & Managing Director Dr Chudozie Okongwu was engaged by lawyers for the administrators to opine on i) the economic feasibility of the commission rate charged by one of the Defendants, marketing firm Surge Financial Limited ('Surge'); ii) whether there was a market for the services provided by Surge; and, iii) how Surge’s commission rate compared with rates ordinarily charged in that market. Dr Okongwu submitted expert reports addressing these issues and provided expert witness testimony at the trial.
In a judgment dated 14 November 2024, the Court found that LCF operated as a Ponzi scheme, with the Claimants succeeding in all of their claims, including claims for fraudulent trading, breach of fiduciary duty, dishonest assistance, and knowing receipt. Dr Okongwu’s expert reports and testimony were cited frequently in the judgment, with the Court finding “on the basis of the expert evidence that the commission of 25% was not a credible rate that would have been agreed between arm’s length parties, given LCF’s business model (as represented to investors)…”
"He is a well-qualified and experienced economics consultant. I considered that he gave careful and considered evidence. He listened meticulously to the questions and answered fairly. His reports were fully reasoned and contained numerous citations."
