Press release

Pyramid scheme consigned to history as bankrupt gets 12-year restriction

Graham Bradbury of Sheffield, South Yorkshire, has given a twelve year bankruptcy restrictions undertaking for running a pyramid scheme which left investors over half a million pounds out of pocket.

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Mr Bradbury’s ban follows an investigation by the Insolvency Service.

As a result of the undertaking to the Secretary of State for Business, Innovation and Skills, Mr Bradbury (67) is bound by restrictions set out in insolvency law that a bankrupt is subject to until they are discharged from bankruptcy – normally 12 months – until 2024.

The restrictions include a ban from acting as a director of a company without the permission of the court. He must also disclose his bankruptcy restrictions when applying for credit of more than £500, and the name by which he was made bankrupt when seeking to do any business in a different name.

Commenting on the case, Ken Beasley of the Insolvency Service’s Public Interest Unit said:

The Insolvency Service always looks very closely at individuals who act irresponsibly with other people’s hard-earned savings and takes action where wrongdoing is uncovered.

I am grateful for the assistance of the Financial Conduct Authority in completing our investigations.

Investigations uncovered that Mr Bradbury carried out unauthorised regulated activities as defined by Section 19 and 21 of the Financial Services and Markets Act 2000 in that he was not authorised or exempt and was therefore prohibited from carrying on such activities.

Mr Bradbury operated Cherries Private Members Club (“the Club”). The object of the Club was to “Carry the business of a Private Members’ Club and to provide facilities and run such schemes for the financial benefit of the members…”

The investigation found:the Club offered its members four schemes namely, Cherries Networking, Cherries Laying Service, Diamond Betting Service and Football Betting Service, Managed Accounts for the Cherries Laying Service, Diamond Betting Service and Football Betting Service and The Income Scheme.

The Club had three websites:

  • www.cherriesnetwork.com
  • www.cherriesnetwork.co.uk
  • www.cherriestrading.com

The cherriesnetwork.com website claimed:

Average returns of between 3% and 10% per month tax-free across our range of services…

Simple alternative investment vehicle almost anyone can make money from…PLUS you can make a residual income via a highly profitable turnkey business model. Members could invest a minimum of £300 up to a maximum of £30,000 in each of the betting services.

An investigation by the FCA found the club claimed:

Our funds are held in the segregated Cherries Client Account at HSBC Bank; High Street; Sheffield S1 4HH. Monies held in this account remain at all times the property of our clients and save in accordance with your written instructions will neither be used in any other way by Cherries, nor form any part of the assets of Cherries Promotions.

The FCA investigations found no such account.

The Insolvency Service investigation also found that Mr. Bradbury failed to safeguard investors’ deposits of at least £521,562.

Had the Undertaking not been given, Mr Bradbury would have been discharged from bankruptcy on 17 September 2014.

Notes to Editors

Mr Bradbury is of Sheffield and his date of birth is 21 April 1947. He was declared bankrupt on a creditor’s petition on 17 September 2013.

If the Official Receiver considers that the conduct of a bankrupt has been dishonest or blameworthy in some other way, he (or she) will report the facts to court and ask for a Bankruptcy Restrictions Order (BRO) to be made. The court will consider this report and any other evidence put before it, and will decide whether it should make a BRO. If it does, the bankrupt will be subject to certain restrictions for the period stated in the order. This can be from 2 to 15 years.

The bankrupt may instead agree to a Bankruptcy Restrictions Undertaking (BRU) which has the same effect as an order, but will mean that the matter does not go to court.

These are restrictions set out in insolvency law that the bankrupt is subject to until they are discharged from bankruptcy – normally 12 months - and include that bankrupts

  • must disclose their status to a credit provider if they wish to get credit of more than £500
  • who carry on business in a different name from the name in which they were made bankrupt, they must disclose to those they wish to do business with the name (or trading style) under which they were made bankrupt
  • may not act as the director of a company nor take part in its promotion, formation or management unless they have a court’s permission to do so
  • may not act as an insolvency practitioner, or as the receiver or manager of the property of a company on behalf of debenture holders
  • may not be a Member of Parliament in England or Wales.

The Insolvency Service administers the insolvency regime, investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. It may also use powers under the Companies Act 1985 to conduct confidential fact-finding investigations into the activities of live limited companies in the UK. In addition, the agency authorises and regulates the insolvency profession, deals with disqualification of directors in corporate failures, assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees, provides banking and investment services for bankruptcy and liquidation estate funds and advises ministers and other government departments on insolvency law and practice. Further information about the work of the Insolvency Service, and how to complain about financial misconduct, is available.

All public enquiries concerning bankruptcies in the Public Interest Unit should be directed to the Official Receiver’s Office, Public Interest Unit : 0161 234 8531 or PIU.North@insolvency.gsi.gov.uk.

Published 14 November 2014