FCA Secures 7½-Year Prison Sentence for Devon Man Behind £1.3 Million Ponzi Scheme

The Financial Conduct Authority (FCA) has secured the conviction of Daniel Pugh, 35, who has been sentenced to seven years and six months in prison for orchestrating a £1.3 million Ponzi scheme. The fraudulent investment operation, which he ran from his bedroom in Devon, defrauded 238 investors through false promises of exceptional returns.

Pugh, along with another individual, created the so-called Imperial Investment Fund (IIF), enticing investors primarily through Facebook adverts that offered implausible profits of 1.4% per day, 7% per week or 350% per year. In reality, the scheme was a classic Ponzi operation, with early investors being paid from funds provided by new victims rather than genuine investment gains.

Pugh personally received £96,000 from the scheme, using the funds to finance a lavish lifestyle including designer clothing, fine dining and cash withdrawals totalling £18,000. As the scheme began to collapse, he continued to mislead investors, falsely claiming their money was being traded successfully and was secure.

Steve Smart, executive director of enforcement and market oversight at the FCA, commented:

Pugh made outlandish claims to hook in victims but in reality this was nothing more than a massive fraud. Fighting financial crime is a priority for the FCA. We will take action to ensure criminals face repercussions for their actions, including being denied access to any ill-gotten gains. People’s online personas are often at odds with reality, as was the case with Pugh. Claims that sound too good to be true usually are. Check the FCA Firm Checker before you invest.

In sentencing, His Honour Judge Weekes described Pugh’s conduct as involving “persistent and knowing breaches of the regulatory framework”, noting that any remorse came “woefully late”. The judge also highlighted the emotional and financial impact on victims, stating that “apart from financial loss they feel embarrassment.”

Pugh has been disqualified from serving as a company director for eight years, effective upon his release from prison. The FCA is also pursuing confiscation proceedings to recover illicit gains and compensate victims. A second individual remains wanted in connection with the same offences.

The sentence comprises:

• Seven years and six months for conspiracy to defraud.

• Twenty-four months, concurrent, for carrying on regulated activities without FCA authorisation or exemption.

• Twelve months, concurrent, for communicating investment invitations or inducements without approval from an authorised person.

This conviction adds to a series of recent FCA enforcement successes, with six individuals convicted over the past six months for offences including fraud, money laundering and insider dealing.

Unauthorised investment schemes remain a major threat to consumers, often providing no regulatory protection and causing devastating losses. The FCA urges the public to verify any investment opportunity through its Firm Checker and visit its ScamSmart website for guidance on identifying and avoiding scams.

Read the press release here.