More than 3,000 people invested their savings in Bournemouth-based Ethical Forestry Limited between January 2008 and December 2015, but prosecutors say the company’s former directors diverted millions of pounds into luxury lifestyles.
Matthew Pickard, Stephen Greenaway and Paul Laver are being sentenced at Southwark Crown Court after admitting fraudulent trading linked to the £70 million investment scheme.
The company promoted forestry investments in Costa Rica, persuading members of the public to move money from pension schemes into plantations which were supposed to generate returns when the trees were harvested.
But the court heard that although some trees were planted, no adequate provision was made for their maintenance or for the infrastructure needed to harvest and sell them.
Prosecutor Kevin Dent KC said the three directors ultimately extracted about £14 million from the business through a tax avoidance arrangement, using the proceeds to fund expensive cars, property, holidays, watches and jewellery.
Greenaway, from Parkstone in Poole, bought 26 performance cars worth up to £1.3 million, the court was told. The collection included Maseratis and McLarens.
The vehicles were allegedly moved between the directors’ homes and a nearby public car park when investors visited the company’s offices in Bournemouth, in an attempt to conceal the scale of their wealth.
Pickard, from Lytchett Matravers in Dorset, spent £47,000 on a seven-night stay in a Swiss chalet in 2013, the court heard.
Mr Dent said the company operated from a call centre employing hundreds of sales staff, who cold-called potential investors and offered pension reviews before recommending the forestry scheme.
Early payments described as coming from a “thinning-out harvest” were in fact funded by money from later investors, prosecutors said.
By 2013, the directors were aware of growing concern about the type of unregulated investments they were selling, the court heard, but continued to increase the sums they took from the business.
Laver, from West Parley, was alleged to have told his wife in a text message: “Dividends are always going to be high. We come first.”
His co-defendants’ lawyers have sought to mitigate their clients’ responsibility. Pickard’s barrister described him as “a decent man”, adding: “Greedy and stupid he may have been, but he was not wicked.”
The Serious Fraud Office said it would seek to recover assets from the former directors and is asking affected investors to provide information for a possible compensation order. It has warned that any payments are unlikely to cover the full amount lost and could be made gradually as assets are recovered.
The two-day sentencing hearing is continuing.
