Wednesday, July 24, 2024


Former Norton Motorcycles owner Stuart Garner has avoided jail time for bilking £11m from members of pension funds of which he was sole trustee — dramatically countering a widely accepted view that ignorance of the law is no excuse. Appearing before Derby Magistrates Court on 31 March, Garner received an eight-month jail term, suspended for two years, instead.

According to the Derby Telegraph report of this hearing, Judge Nirmal Shant QC, Honorary Recorder of Derby, told the defendant: “You controlled the Norton motorcycle business and in 2012 the business needed funds and you raised around £11m by establishing three funds which were under your control.

“You did not know you were breaking the law. However it is plain, in setting up a pension fund worth £11m, that you should have known your basic responsibilities as a trustee.

“You were obligated to act in a prudent manner according to law. You are an experienced businessman and you must have known there was a conflict of interest. It is quite plain the reason was that the banks were not prepared to lend you the money. The fact that banks were not prepared to lend you the money should have set alarm bells ringing to an experienced businessman.

“By 2020, £1.5m was paid out to members but there’s a shortfall of £10m. This is not just financial harm, I have read statement after statement from ordinary people who invested. Many speak of broken relationships and ill health. The harm this caused cannot be understated.”

Prosecutor William Hays said that the offences were in relation to three defined contribution schemes — Dominator 2012, Commando 2012 and Donington MC which had a total of 227 scheme members. The investments, which were made in return for preference shares, were made between 2012 and 2013.

Addressing the court, Hays conceded: “It is accepted he was receiving advice for a scheme to raise funds for the business, banks were not prepared to lend and that led to unlawful means of investment. The schemes in this case were used to inject capital into the Norton business at the time for investment and Norton was suffering production and liquidity problems.

“Members asked to withdraw the money, as they are entitled to do, but Mr Garner explained the business was suffering cash-flow problems. It is accepted Mr Garner did correct the illegality. It was reckless and negligent but it is not suggested Mr Garner knew of the offence. However he is an experienced businessman and this was a carefully constructed scheme.”

Hays pointed out that a number of victim-impact statements had been obtained by the Pensions Regulator, who brought the prosecution. “In these statements, many speak of how they feel their confidence in the pensions system has been severely undermined. There have been marital problems and one victim refers to himself as an utter mug.”

At an earlier hearing on 7 February, 53-year-old Garner of Park Lane, Castle Donington, had pleaded guilty to three charges of breaching employer-related investment (ERI) rules.

In mitigation, defence lawyer Peter Caldwell had told the court his client’s actions led to a tragic fall from grace. “He has experienced personal anguish and rather serious mental health crises both last year and at the beginning of this year.”


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