Case file 001 · Fake business contract fraud

Preliminary Investigation Into Alleged Fraud Involving a Fake Lesotho Mounted Police Service Contract

01Purpose

This publication provides a preliminary summary of information gathered during an ongoing investigation concerning an investment and lending transaction involving approximately USD $180,000. With penalties, the amount owed has accrued to over USD $200,000, with additional legal fees incurred on top — the total cost of the transaction continues to rise.

Its purpose is to document the current factual position, identify matters under investigation, and encourage any individuals with relevant information to seek independent legal advice or contact the investigators. It reflects information presently available and will be updated as further evidence is obtained. Both criminal and civil proceedings are under review.

02Executive summary

An investigation is presently being conducted into transactions involving a UK company (name redacted in this publication), a Lesotho entity and a United States entity operated under the same name and by the same director (names redacted in this publication), and individuals associated with those entities (names redacted in this publication).

The investigation concerns representations allegedly made in relation to a purported government contract within the Kingdom of Lesotho, said to be with the Lesotho Mounted Police Service, upon which approximately USD $180,000 was advanced. With penalties, that sum has since accrued to over USD $200,000, with additional legal fees on top. The funds advanced belonged to the UK company, which was itself deceived: they were reserved for dividend distributions to shareholders and for tax payments to HMRC, and the other directors and shareholders were led to believe the funds would be returned within two weeks of receiving the greenlight to begin the development process.

Following repeated failures to repay the funds as represented, documentation purporting to evidence an incoming international SWIFT transfer was supplied to explain continuing repayment delays. Independent enquiries subsequently raised concerns regarding the authenticity of that documentation, and the bank has since confirmed in writing that the receipt was fraudulent and was not issued by the bank, and that the purported sender held no balance in the account.

First National Bank Lesotho has confirmed in writing that the SWIFT receipt provided during the transaction was fraudulent and was not issued by the bank, and that the purported sender held no balance in the account.

Formal written confirmation from the bank has been received. Based on the evidence presently available, investigators are examining whether:

• representations concerning the underlying government contract were materially inaccurate or misleading;
• banking documentation supplied during repayment discussions may have been fabricated, altered or otherwise inauthentic;
• such documentation was used to delay repayment or induce continued reliance by the lenders; and
• similar representations may have been made to other parties.

03Background

The transaction originated following representations that funds were required in connection with a government contract in the Kingdom of Lesotho, purportedly with the Lesotho Mounted Police Service. It is alleged that those representations formed a material basis upon which the funds were advanced.

The funds advanced were reserved by the UK company for dividend distributions to shareholders and for tax payments to HMRC. The other directors and shareholders were led to believe that the funds would be returned within two weeks of receiving the greenlight to begin the development process.

The understanding between the parties was that repayment would occur from proceeds generated by the government contract once funds became available. Repayment did not occur within the agreed timeframes. Over an extended period, multiple explanations were allegedly provided for the continuing delays, including assertions that payments under the contract had been delayed by a government reshuffle and that international banking transfers had already been initiated.

Upon contacting the Lesotho Mounted Police Service directly, investigators were informed that the service had no knowledge of any such contract.

04Timeline

1. Step 01

   Representations made concerning a government contract in Lesotho.

2. Step 02

   Funds advanced in reliance upon those representations.

3. Step 03

   Funds reserved for dividend distributions to shareholders and tax payments to HMRC.

4. Step 04

   Directors and shareholders led to believe the funds would be returned within two weeks.

5. Step 05

   Agreed repayment dates passed without repayment.

6. Step 06

   Multiple requests for repayment.

7. Step 07

   Delays in contract payments attributed to a purported government reshuffle.

8. Step 08

   Various explanations provided regarding banking delays.

9. Step 09

   Documents purporting to evidence international SWIFT transfers supplied.

10. Step 10

    Independent verification of those documents undertaken.

11. Step 11

    First National Bank Lesotho confirmed the SWIFT receipt appeared fraudulent and the purported sender held no balance.

12. Step 12

    The Lesotho Mounted Police Service was contacted directly; the service indicated no knowledge of the contract.

13. Step 13

    Formal written confirmation received from First National Bank Lesotho confirming the SWIFT receipt was fraudulent and not issued by the bank.

14. Step 14

    Investigation expanded.

15. Step 15

    Additional evidence received, including signed contracts with government officials, and examination commenced.

16. Step 16

    A legal notice to the Lesotho Mounted Police Service prepared, requesting written confirmation that no such contract was issued to any of the entities involved.

17. Step 17

    A separate line of investigation commenced into the UK director, including whether he was complicit in the alleged fraudulent activity.

18. Step 18

    Preparation of evidence for legal proceedings commenced.

This chronology will be expanded as additional evidence is obtained.

05Evidence under review

06Matters under investigation

• Whether the government contract, said to be with the Lesotho Mounted Police Service, existed in the form represented — in light of the service's reported lack of knowledge of it.
• Whether material representations made during negotiations were accurate.
• Whether banking documents supplied during repayment discussions were authentic.
• Whether any false or misleading documents were used to obtain additional time or induce continued reliance.
• Whether any director of the UK company was complicit in the alleged fraudulent activity.
• Whether similar representations have been made to other investors or counterparties.

No final conclusions have been reached.

07Bank verification

First National Bank Lesotho was requested to verify the authenticity of banking documentation supplied during the course of the transaction. The bank confirmed that the SWIFT receipt presented during the transaction was fraudulent and was not issued by the bank, and that the purported sender did not hold any balance in the account concerned. Formal written confirmation of the bank's position has been received.

Additional evidence has also been received, including signed contracts bearing the signatures of government officials, and is currently being examined. Separately, a legal notice to the Lesotho Mounted Police Service is being prepared to request written confirmation that no such contract was issued to any of the entities involved.

08Invitation for information

Any person who believes they may possess information relevant to this investigation, or who believes they have had similar dealings with the individuals or entities identified in this publication, is encouraged to obtain independent legal advice before making contact. Relevant information may assist investigators in establishing the full factual circumstances.

09Publication status

This publication reflects the evidence presently available as of the date of publication. The investigation remains ongoing. Additional evidence may confirm, clarify or alter the matters discussed above, and this publication may be updated accordingly.

Nothing contained in this publication should be interpreted as a finding of liability by any court or tribunal. All persons and entities referred to remain entitled to respond to the matters outlined, and any legal proceedings will ultimately determine the facts.