Former Langbar CEO made false statements to sell worthless shares, court hears
LONDON (Bloomberg) Geoffrey Pearson, the former chief executive officer of a Bermuda-based investment company at the centre of a fraud scandal, made false statements to induce investors to buy worthless shares, a London jury was told.
Pearson, 63, has pleaded not guilty to 13 counts of making misleading statements to the financial markets between June and October 2005 while he was CEO of Langbar International Ltd.
Langbar was “worthless” and “fraudulent from the start,” prosecutor Jonathan Caplan said today at the beginning of Pearson’s trial. The company was set up in Bermuda in June 2003 and began trading on London’s Alternative Investment Market later that year. Shortly after starting business, Langbar said it had won South American contracts which it sold for a profit of around $350 million. Those contracts were a fiction, as was the money, Caplan told the jury.
Pearson was appointed CEO of the company, formerly known as Crown Corp, in June 2005. By October of that year, trading in the company’s shares was suspended. Lawyers for Pearson will present his defence later in the trial of the case brought by the Serious Fraud Office, the UK agency responsible for prosecuting white-collar crime.
Langbar “represented to the market that it was cash rich to the tune of half-a-billion dollars when it was worthless, with barely a penny”, Caplan said. While Pearson wasn’t at the company for long, he was in charge during a “critical time” for Langbar.
Prosecutors said that, prior to July 2006, shares of the company were sparsely traded. On the day Pearson was appointed CEO, 3.5 million shares changed hands. Then, between July and October, 308 million shares were bought and sold for prices from 40 pence ($0.66) and 88 pence.
“Between July and October many, many, many shares were traded because of announcements that we say were false,” allowing fraudsters to sell their shares at inflated prices, the prosecutor said.
While Pearson isn’t accused of setting up the fraud, he should have found out about it and stopped authorising statements to the market, Caplan said.
“He didn’t appreciate it in June, but there must have come a time when he did appreciate it between June and October,” Caplan said.
Schools ‘at an all-time low’
Pembroke man shot dead outside home
Phillip “Phoopa” Anderson (1960-2018)
Goslings releases ‘father of all rums’
BMA gets go-ahead to increase fees
Work-permit backlog cut down, says Caines
Pensions rise from January
Christmas festival moved to Warwick
Obesity: the hidden costs
Man attacks girlfriend’s mother over parking
Storm force gusts overnight
Concert promoter puts tickets on blockchain
Frederick “Penny” Bean (1936-2018)
Young Achiever: Ethan honours family name
Ten-man X-Roads left fuming
Take Our Poll