Trader in fraud inquiry disappears

A foreign exchange and property trader who was allowed to walk out of a police station after discussing an alleged fraud that investors say lost them tens of millions of pounds has disappeared.

Investors in JL Trading, owned by Joe Lewis, 59, received emails this month stating that the company based in Istanbul “is ceasing to carry on business” and had stopped trading foreign exchange in 2009 after incurring substantial losses.

“Contrary to the impression that I have hitherto given, the business has lost almost all of its assets and there appears no prospect of those assets being recouped,” said the email in Mr Lewis’s name, a copy of which has been seen by the Financial Times.

Some investors said they had lost more than £500,000 with JL while others had sent funds to the company as recently as April. Investors said they continued to receive detailed monthly trading statements until September and JL Trading had claimed to have $200m of client funds in November.

Humberside police said it was working on the case with the City of London police Serious Fraud Office, which denied it was investigating.

Investors received an email from Mr Lewis, from east Yorkshire, on November 17 saying that JL Trading was “going through a stressful time” because it was owed $260m by a US broker at the same time it owed its own clients $197m in 893 accounts worldwide.

On December 3, investors received another email in which Mr Lewis said JL was ceasing trading and two days came another email in which Mr Lewis said he was “not running away from things”.

“While I regret some of the things I have done, I will do my best to remedy this situation,” he wrote. “Please note I have covered up my mistakes from everyone including my staff, no one else knew what was happening.”

One day later, the FT has learnt, Mr Lewis went to a Humberside police station to discuss the alleged fraud. Humberside police said: “On Saturday 6 December 2014, a 59-year-old east Yorkshire man voluntarily assisted the police with an investigation into a fraud investigation [sic].

“When he left the police station the case was still being assessed for suitability of arrest. Humberside Police are currently working with City of London Police Serious Fraud Office in connection with the alleged offences.

“No one has been arrested or charged in connection with the investigation.”

Investors have said Mr Lewis accepted their money until April this year on the basis that he would trade foreign exchange and that he sent them monthly statements until September, purporting to show the results of his trades on their behalf.

An investment broker who said he had worked with Mr Lewis for more than six years believes the trader came clean after the broker told him he was going to send a representative to the US to make inquiries with a broker who was supposed to be holding JL’s funds.

“When he realised we were close to the proper truth, he came forward,” he said. 
“He probably preferred to admit it rather than be found out.”

JL’s website has been taken down, with a message on the homepage advising people to contact customer services. No one responded to emails sent to the company and the listed phone number rang unanswered. Mr Lewis’s whereabouts is unknown.

The broker said JL did pay out to some investors, including him, a few years ago, which added to the company’s perceived credibility. He believes the total losses are “probably around £30m, not the £130m that’s being talked about”.

By: John Aglionby.

Dec 22, 2014, 10:58 PM
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