Langbar International
Share Fraud Scheme
CLASSIFICATION: Financial Crime
LOCATION
London, England
TIME PERIOD
2003-2011
VICTIMS
100 confirmed
In 2003, Langbar International, originally listed as Crown Corporation Limited on the Alternative Investment Market in London, became embroiled in the largest share fraud in AIM history, involving a pump and dump scheme where the company falsely claimed ownership of assets. The fraud came to light after significant financial discrepancies were uncovered, particularly after a fraudulent certificate of deposit from Banco do Brasil was presented as part of a $570 million investment by Lambert Financial Investments. Key figures included Stuart Pearson, who led the company into a merger, and Avi Arad, identified as a central conspirator, who died in 2008 during the investigation. As of now, the Serious Fraud Office has made several arrests related to the case, and civil actions have resulted in settlements, including a £30 million payout to shareholders, while investigations continue into the remaining conspirators.
Investigators and the public believe that Langbar International was involved in a pump and dump scheme, where the company misrepresented its financial status to inflate share prices before selling off shares for profit. Some speculate that key figures within the company were aware of the fraudulent activities and actively participated in misleading investors. There are also theories suggesting that the fraudulent certificate of deposit and other financial misrepresentations were part of a larger conspiracy to defraud investors on a massive scale.
Langbar International: The Greatest Stock Market Heist
In the shadowy world of high finance, few stories are as shocking as the tale of Langbar International, a company whose very name became synonymous with deceit and manipulation. Originally known as Crown Corporation Limited, this Bermuda-based entity found its way onto the Alternative Investment Market (AIM) of the London Stock Exchange in October 2003. Crown Corporation's ambitious facade promised to acquire underperforming companies, invigorate them, and sell them at a profit. However, this promise was nothing but a meticulously crafted illusion.
The Illusory Fortune
The deception began with Lambert Financial Investments' acquisition of 59% of Crown Corporation's shares for an eye-watering $570 million. This sum was to be paid in two parts: $275 million in certificates of deposit from Banco do Brasil and an additional $295 million at a later date. Yet, the certificate was a counterfeit, and the funds never materialized. Despite this glaring discrepancy, Crown Corporation continued to spin tales of prosperity and growth, misleading investors about its financial health. The company made increasingly extravagant claims about its activities, hoping to maintain the illusion of a thriving enterprise.
The Deceptive Merger
In June 2005, a twist in the tale emerged when Stuart Pearson, a British business executive and head of Langbar Capital, entered the scene. Pearson was lured to Brazil, where a grand charade unfolded to convince him of the company's financial legitimacy. Seduced by the elaborate deception, Pearson merged his investment firm with Crown Corporation, which subsequently rebranded as Langbar International.
Buoyed by Pearson's declarations, the company's stock value soared, thanks to his announcements that funds had been released from Brazil. This prompted a flurry of investments, further inflating Langbar's apparent worth. However, the truth could not be hidden forever. In October 2005, trading was abruptly suspended as the company's value came into question, leading to its eventual collapse.
The Fallout and Legal Battles
The collapse of Langbar International left investors reeling, with losses estimated at a staggering £100 million. Many of these investors had bought shares after Pearson's involvement, unaware of the underlying fraud. In the aftermath, Nabarro Wells, a London advisory firm, faced a £250,000 fine in 2007 for its failure to perform due diligence.
In 2008, shareholders pursued legal action against Rybak and his family, culminating in a £30 million settlement after 56 days of evidence presented in court. Meanwhile, the Serious Fraud Office (SFO) launched an aggressive investigation, making seven arrests across Spain and Switzerland. As the inquiries intensified, a significant development occurred: Avi Arad, head of Lambert and deemed the central conspirator, died of a heart attack. Arad's death left a void, and potential defendants were now poised to shift blame onto him.
The Trial of Stuart Pearson
With Arad gone, attention turned to Stuart Pearson. Charged with 13 counts of fraud, Pearson's trial sought to uncover his knowledge of the fraudulent activities and the timeline of his awareness. Evidence revealed that Pearson had ignored warnings, including a critical phone call from a banker at the London branch of Banco do Brasil, alerting him to the non-existence of Lambert's funds. Ultimately, the jury convicted Pearson in 2011 on three counts of making "misleading, false, or deceptive or reckless" statements about the company's finances. He received a one-year jail sentence and was barred from serving as a director for five years. However, asset confiscation was deemed impossible, as Pearson had been acquitted of dishonesty and had personally incurred financial losses.
A Legacy of Reform
The Langbar International saga did not end with the conviction of those involved. The exposure of this fraud led to significant changes in the regulatory framework governing companies listed on the AIM, ensuring stricter requirements and oversight to prevent future deceptions of such grand scale.
The Langbar International scandal stands as a cautionary tale in the annals of financial history, a stark reminder of the dangers of unchecked ambition and the devastating impact of corporate deceit.
Sources
- Serious Fraud Office Press Releases 29 November 2005. Sfo.gov.uk. Archived from the original on 29 September 2011. Retrieved 1 January 2012.
- Simon Bowers (26 November 2005). "Fraud inquiry starts into shell firm's missing millions". The Guardian. UK. Retrieved 1 January 2012.
- Blackwell, David (26 November 2005). "Langbar face SFO probe over possible missing cash". Financial Times. Retrieved 1 January 2012.
- Robert Miller (26 November 2005). "SFO inquiry on way into fall of Langbar". The Daily Telegraph. UK. Retrieved 1 January 2012.
- Simon Bowers (30 November 2005). "Fraud office launches inquiry into Langbar". The Guardian. UK. Retrieved 1 January 2012.
- Eric Barkas (29 November 2005). "Langbar: The SFO are called in". The Yorkshire Post. Retrieved 1 January 2012.
- "Accountancy Investigation & Disciplinary Board Press Release 23 June 2006". Frc.org.uk. 23 June 2006. Archived from the original on 4 January 2012. Retrieved 1 January 2012.
- "Langbar sues over missing £365m". BBC News. 13 March 2006. Retrieved 1 January 2012.
- Simon Bowers (14 March 2006). "Langbar accuses two ex-directors of 'conspiracy to defraud'". The Guardian. Retrieved 1 January 2012.
- James Bagnall (14 March 2006). "Langbar launches $477m". The Ottawa Citizen. Archived from the original on 10 November 2012. Retrieved 1 January 2012.
- Nicholas Neveling (14 March 2006). "Langbar launches action against former directors". Accountancy Age. Retrieved 1 January 2012.
- "Langbar launches legal challenges". Investors Chronicle 17 March 2006. Archived 25 July 2011 at the Wayback Machine.
- Tait, Nikki (22 December 2006). "Holders launch Langbar claim". Financial Times. Retrieved 1 January 2012.
- Greg Hurst; Caroline Merrell (1 December 2005). "Langbar chief in investor talks over 'missing £365m'". The Times. UK. Archived from the original on 12 June 2011. Retrieved 1 January 2012.
- Greg Hurst; Paul Durman and Louise Armistead (4 December 2005). "A Crown farce: how Langbar mislaid £365m". The Sunday Times. Archived from the original on 12 June 2011. Retrieved 1 January 2012.
- Jivkov, Michael (26 November 2005). "AIM becomes victim of £365m fraud". The Independent. UK. Archived from the original on 27 April 2006. Retrieved 1 January 2012.
- Rowena Mason (21 June 2011). "Langbar chief Stuart Pearson jailed over 'grand scale' AIM fraud". The Daily Telegraph. UK. Retrieved 1 January 2012.
- "Admitted Formal Complaint". Financial Reporting Council. 26 December 2011. Retrieved 8 February 2014.
- "Langbar chief executive jailed for misleading the market". Serious Fraud Office. 20 June 2011. Archived from the original on 22 February 2014. Retrieved 8 February 2014.
- Bower, Simon (24 June 2011). "Langbar International: the greatest stock market heist of all?" The Guardian. Retrieved 8 February 2014.
- Kollewe, Julia (20 June 2011). "Former Langbar chief jailed over fraud". The Guardian. Retrieved 8 February 2011.
- Lumley, James (10 May 2011). "Former Langbar CEO made false statements to sell worthless shares, court hears". The Royal Gazette. Retrieved 1 January 2012.
For more details, visit the original Wikipedia article on Langbar International.
No Recent News
No recent news articles found for this case. Check back later for updates.
No Evidence Submitted
No evidence found for this case. Be the first to submit evidence in the comments below.
Join the discussion
Loading comments...
Company Listed
Crown Corporation Limited is listed on the AIM in London.
Name Change
Crown Corporation Limited changes its name to Langbar International Limited.
SFO Investigation Begins
The Serious Fraud Office launches an investigation into Langbar International.
Legal Actions Initiated
Langbar International sues former directors over missing funds.
Shareholder Settlement
Shareholders receive a £30 million settlement after suing Rybak and his family.
Pearson Convicted
Stuart Pearson is found guilty on three counts of fraud and sentenced to one year in jail.
Regulatory Changes
The fraud leads to a rewriting of company requirements on the AIM.
In 2003, Langbar International, originally listed as Crown Corporation Limited on the Alternative Investment Market in London, became embroiled in the largest share fraud in AIM history, involving a pump and dump scheme where the company falsely claimed ownership of assets. The fraud came to light after significant financial discrepancies were uncovered, particularly after a fraudulent certificate of deposit from Banco do Brasil was presented as part of a $570 million investment by Lambert Financial Investments. Key figures included Stuart Pearson, who led the company into a merger, and Avi Arad, identified as a central conspirator, who died in 2008 during the investigation. As of now, the Serious Fraud Office has made several arrests related to the case, and civil actions have resulted in settlements, including a £30 million payout to shareholders, while investigations continue into the remaining conspirators.
Investigators and the public believe that Langbar International was involved in a pump and dump scheme, where the company misrepresented its financial status to inflate share prices before selling off shares for profit. Some speculate that key figures within the company were aware of the fraudulent activities and actively participated in misleading investors. There are also theories suggesting that the fraudulent certificate of deposit and other financial misrepresentations were part of a larger conspiracy to defraud investors on a massive scale.
Langbar International: The Greatest Stock Market Heist
In the shadowy world of high finance, few stories are as shocking as the tale of Langbar International, a company whose very name became synonymous with deceit and manipulation. Originally known as Crown Corporation Limited, this Bermuda-based entity found its way onto the Alternative Investment Market (AIM) of the London Stock Exchange in October 2003. Crown Corporation's ambitious facade promised to acquire underperforming companies, invigorate them, and sell them at a profit. However, this promise was nothing but a meticulously crafted illusion.
The Illusory Fortune
The deception began with Lambert Financial Investments' acquisition of 59% of Crown Corporation's shares for an eye-watering $570 million. This sum was to be paid in two parts: $275 million in certificates of deposit from Banco do Brasil and an additional $295 million at a later date. Yet, the certificate was a counterfeit, and the funds never materialized. Despite this glaring discrepancy, Crown Corporation continued to spin tales of prosperity and growth, misleading investors about its financial health. The company made increasingly extravagant claims about its activities, hoping to maintain the illusion of a thriving enterprise.
The Deceptive Merger
In June 2005, a twist in the tale emerged when Stuart Pearson, a British business executive and head of Langbar Capital, entered the scene. Pearson was lured to Brazil, where a grand charade unfolded to convince him of the company's financial legitimacy. Seduced by the elaborate deception, Pearson merged his investment firm with Crown Corporation, which subsequently rebranded as Langbar International.
Buoyed by Pearson's declarations, the company's stock value soared, thanks to his announcements that funds had been released from Brazil. This prompted a flurry of investments, further inflating Langbar's apparent worth. However, the truth could not be hidden forever. In October 2005, trading was abruptly suspended as the company's value came into question, leading to its eventual collapse.
The Fallout and Legal Battles
The collapse of Langbar International left investors reeling, with losses estimated at a staggering £100 million. Many of these investors had bought shares after Pearson's involvement, unaware of the underlying fraud. In the aftermath, Nabarro Wells, a London advisory firm, faced a £250,000 fine in 2007 for its failure to perform due diligence.
In 2008, shareholders pursued legal action against Rybak and his family, culminating in a £30 million settlement after 56 days of evidence presented in court. Meanwhile, the Serious Fraud Office (SFO) launched an aggressive investigation, making seven arrests across Spain and Switzerland. As the inquiries intensified, a significant development occurred: Avi Arad, head of Lambert and deemed the central conspirator, died of a heart attack. Arad's death left a void, and potential defendants were now poised to shift blame onto him.
The Trial of Stuart Pearson
With Arad gone, attention turned to Stuart Pearson. Charged with 13 counts of fraud, Pearson's trial sought to uncover his knowledge of the fraudulent activities and the timeline of his awareness. Evidence revealed that Pearson had ignored warnings, including a critical phone call from a banker at the London branch of Banco do Brasil, alerting him to the non-existence of Lambert's funds. Ultimately, the jury convicted Pearson in 2011 on three counts of making "misleading, false, or deceptive or reckless" statements about the company's finances. He received a one-year jail sentence and was barred from serving as a director for five years. However, asset confiscation was deemed impossible, as Pearson had been acquitted of dishonesty and had personally incurred financial losses.
A Legacy of Reform
The Langbar International saga did not end with the conviction of those involved. The exposure of this fraud led to significant changes in the regulatory framework governing companies listed on the AIM, ensuring stricter requirements and oversight to prevent future deceptions of such grand scale.
The Langbar International scandal stands as a cautionary tale in the annals of financial history, a stark reminder of the dangers of unchecked ambition and the devastating impact of corporate deceit.
Sources
- Serious Fraud Office Press Releases 29 November 2005. Sfo.gov.uk. Archived from the original on 29 September 2011. Retrieved 1 January 2012.
- Simon Bowers (26 November 2005). "Fraud inquiry starts into shell firm's missing millions". The Guardian. UK. Retrieved 1 January 2012.
- Blackwell, David (26 November 2005). "Langbar face SFO probe over possible missing cash". Financial Times. Retrieved 1 January 2012.
- Robert Miller (26 November 2005). "SFO inquiry on way into fall of Langbar". The Daily Telegraph. UK. Retrieved 1 January 2012.
- Simon Bowers (30 November 2005). "Fraud office launches inquiry into Langbar". The Guardian. UK. Retrieved 1 January 2012.
- Eric Barkas (29 November 2005). "Langbar: The SFO are called in". The Yorkshire Post. Retrieved 1 January 2012.
- "Accountancy Investigation & Disciplinary Board Press Release 23 June 2006". Frc.org.uk. 23 June 2006. Archived from the original on 4 January 2012. Retrieved 1 January 2012.
- "Langbar sues over missing £365m". BBC News. 13 March 2006. Retrieved 1 January 2012.
- Simon Bowers (14 March 2006). "Langbar accuses two ex-directors of 'conspiracy to defraud'". The Guardian. Retrieved 1 January 2012.
- James Bagnall (14 March 2006). "Langbar launches $477m". The Ottawa Citizen. Archived from the original on 10 November 2012. Retrieved 1 January 2012.
- Nicholas Neveling (14 March 2006). "Langbar launches action against former directors". Accountancy Age. Retrieved 1 January 2012.
- "Langbar launches legal challenges". Investors Chronicle 17 March 2006. Archived 25 July 2011 at the Wayback Machine.
- Tait, Nikki (22 December 2006). "Holders launch Langbar claim". Financial Times. Retrieved 1 January 2012.
- Greg Hurst; Caroline Merrell (1 December 2005). "Langbar chief in investor talks over 'missing £365m'". The Times. UK. Archived from the original on 12 June 2011. Retrieved 1 January 2012.
- Greg Hurst; Paul Durman and Louise Armistead (4 December 2005). "A Crown farce: how Langbar mislaid £365m". The Sunday Times. Archived from the original on 12 June 2011. Retrieved 1 January 2012.
- Jivkov, Michael (26 November 2005). "AIM becomes victim of £365m fraud". The Independent. UK. Archived from the original on 27 April 2006. Retrieved 1 January 2012.
- Rowena Mason (21 June 2011). "Langbar chief Stuart Pearson jailed over 'grand scale' AIM fraud". The Daily Telegraph. UK. Retrieved 1 January 2012.
- "Admitted Formal Complaint". Financial Reporting Council. 26 December 2011. Retrieved 8 February 2014.
- "Langbar chief executive jailed for misleading the market". Serious Fraud Office. 20 June 2011. Archived from the original on 22 February 2014. Retrieved 8 February 2014.
- Bower, Simon (24 June 2011). "Langbar International: the greatest stock market heist of all?" The Guardian. Retrieved 8 February 2014.
- Kollewe, Julia (20 June 2011). "Former Langbar chief jailed over fraud". The Guardian. Retrieved 8 February 2011.
- Lumley, James (10 May 2011). "Former Langbar CEO made false statements to sell worthless shares, court hears". The Royal Gazette. Retrieved 1 January 2012.
For more details, visit the original Wikipedia article on Langbar International.
No Recent News
No recent news articles found for this case. Check back later for updates.
No Evidence Submitted
No evidence found for this case. Be the first to submit evidence in the comments below.
Join the discussion
Loading comments...
Company Listed
Crown Corporation Limited is listed on the AIM in London.
Name Change
Crown Corporation Limited changes its name to Langbar International Limited.
SFO Investigation Begins
The Serious Fraud Office launches an investigation into Langbar International.
Legal Actions Initiated
Langbar International sues former directors over missing funds.
Shareholder Settlement
Shareholders receive a £30 million settlement after suing Rybak and his family.
Pearson Convicted
Stuart Pearson is found guilty on three counts of fraud and sentenced to one year in jail.
Regulatory Changes
The fraud leads to a rewriting of company requirements on the AIM.