Des Jeffrey said he reluctantly took on a director’s role at Lumiere Wealth in June 2016 after the Jersey Financial Services Commission took over the company’s administration. The regulator moved at a ‘frantic’ pace, he said, after it emerged the company was heavily exposed to Providence Investment Funds, which was shut down by the US securities commission for fraud and unregistered securities offerings.
Mr Jeffrey said that he personally had not sold the Providence financial products and had only become aware of how heavily exposed Lumiere was as it was collapsing.
He was giving evidence in the trial of Chris Byrne, the former Jersey managing director of Lumiere, who is accused of giving false and misleading information to 12 clients, resulting in them losing a total of more than £2.7 million.
Mr Byrne denies 21 counts of fraudulent inducement to invest money and failing to comply with a forthwith notice.
Providence was a high-risk fund involved in debt factoring in Brazil, and the prosecution allege that Mr Byrne’s clients believed they were making low-risk investments.
Mr Jeffrey told the court that while he had not had the confidence in Providence to sell its products, he had not been overly concerned with their business model, as he understood it. He said he returned from a holiday to find the company was in serious trouble. ‘It was all over the internet about Providence,’ he said, adding that the JFSC had moved swiftly.
He was then asked to be a director.
‘It was not my choice,’ he said. ‘I felt we were given very little choice. There were 14 staff members and I was told if I did not step up the regulator would close us down immediately and everyone would lose their jobs.’
Once he began meeting the clients who had been affected, he realised most were not seasoned investors.
Among those who lost substantial sums, the court was told, were a 79-year-old partially sighted woman and a father of four who was a first-time investor.
‘Once I had actually met them I could see quite a few were not what I would call sophisticated investors,’ Mr Jeffrey said. ‘From a professional perspective, it was a high percentage of a person’s wealth that would have gone to Providence.’
Defending Mr Byrne, Advocate Olaf Blakely asked Mr Jeffrey whether the financial records at Lumiere were available weekly to all staff. He said they may have been.
The trial is being heard by Commissioner Sir John Saunders with Jurats Charles Blampied and Robert Christensen.
