Long Read: an Asset Finance Ponzi scheme

 Contributing Editor Allan Foad this week turns his attention to the case of Rawdon Asset Finance. It’s a classic, close-to-home example of the old Warren Buffett quote: “You don’t find out who’s been swimming naked until the tide goes out!”

In June last year Liam Wainwright, the chief executive of Rawdon Asset Finance Limited, was sentenced to seven years in prison after he was found guilty of fraud, false accounting, and misuse of investors’ money. Two years earlier he had been banned from being a director or managing a company for eleven years. The account of Wainwright’s downfall has been made public by the government in the name of transparency and, presumably, to deter others from misbehaving.

Wainwright had been operating a Ponzi scheme and spending his investors’ money on horse racing syndicates and failed property developments in Lincolnshire and Yorkshire. On the surface he was a successful businessman and enjoyed the good life but underneath the façade he was a desperate failure.

Wainwright formed Rawdon Asset Finance in Leeds in 2009 as a financial leasing company to support small and medium sized companies unable to obtain funding elsewhere. He was operating at the high risk end of the market where returns could be expected to be high in the good times. He raised the money to fund his business on the understanding that every deal was secured, either by the asset being financed or with separate collateral. Looking at the list of creditors in the liquidator’s report he relied exclusively on funding from private sources because no banks are named.

There is no evidence of malpractice before 2016 but from then until the business went into liquidation in 2019 he ventured into unsecured lending without telling his backers, falsified lease agreements, and continued to show defunct transactions as live commitments. He produced fake documents, forged signatures, and raised the final £100,000 investment in the full knowledge that his investor would never see his money back.

On the face of it he was managing a £20 million book of secured assets but in reality it was only worth £7.2 million according to the liquidator’s estimate. Against this £18.7 million was owed to the investors which reduced to £16.9 million in the liquidator’s final report, presumably because some funds have been recovered.

Looking at the makeup of Rawdon Asset Finance there were 200 shares in issue and these were equally distributed between Wainwright and his wife Janet, who acted as company secretary, and Anne-Marie and Terrence Beddis. The latter couple also owned five A shares each, which presumably gave them special rights, but I do not know what they were. All were directors of the company when it went into liquidation and none are shown on the list of creditors. Wainwright and his wife were clearly executive directors and worked in the business but I do not know if the same applied to the Beddises.

There was also a fifth director, Richard Dobbins, who was not a shareholder but he was the second biggest creditor. I imagine he was a non-executive director but I doubt that he exercised much oversight.

According to the government report Wainwright’s fraudulent activity only ran for three years, from 2016 to 2019, and it relied on attracting more and more investors to finance the returns owed to existing investors and to repay those wanting to redeem their investments. New investment was also needed to fund Wainwright’s lifestyle. There is no mention in the government’s or liquidator’s reports of what checks and balances were in place within the business but I am guessing precious few. Nor is there any mention of the parts played by either the auditor or the regulator (assuming that Rawdon Asset Finance was a regulated entity). The business came down because it ran out of money, not because of any policing measures.

This has not been a good story to tell about our industry, but hopefully it is a one-off. 

- This is a shortened and edited version of the original article first published in issue 197 of Leasing World magazine.

Comment on this article