A trio of north-east businessmen have revealed they are facing huge losses as part of a financial fraud investigation which could amount to as much a £9million.
Last night the men claimed they were part of a group which invested more than £1million into an unregulated deposit scheme offered by an Aberdeen firm of advisers, which is now at the centre of a large-scale police probe.
However, the Press and Journal has learned the total value of funds which may have to be wiped off as a result of the inquiry into Midas Financial Solutions (Scotland) could be at least nine times that amount.
Police have confirmed officers are contacting at least 180 investors who have poured “millions of pounds” into the unregulated fund.
Investigators are advising people to be “realistic” about getting their cash back, with a warning that “their money is not where it should be”.
One investor who handed cash over to an adviser representing Midas Financial Solutions Scotland said he had been told by police “don’t expect anything back”.
The three businessmen who contacted the Press and Journal claim they were never advised at any point that the scheme was unregulated, and therefore not covered by compensation schemes.
The three men, from Aberdeen, including a banker and a small business owner, allege that their financial adviser – Allan Milne – told them that funds handed over to city-based Midas would be safe, even after regulators launched an investigation in August.
They said they called police after Mr Milne later admitted – reportedly in tears – that the scheme was “in trouble”.
One said: “Mr Milne came to see me in my office. He was in tears. He said something had gone wrong with the scheme and he was out of a job.”
The men claim the adviser, a former director and shareholder in Midas, assured them their funds were safe because they were held in an account with the Royal Bank of Scotland and covered by bank deposit protection rules.
“I was assured [by Midas] that it was covered under the deposit protection scheme up to £85,000,” said one of the men.
However, the bank has said it is unable to confirm whether it held any funds now involved in the investigation.
And when contacted by the Press and Journal to discuss the men’s allegations, Mr Milne refused to comment.
The Financial Conduct Authority (FCA) has said that Midas Financial Solutions was not authorised to accept deposits.
All of them men insisted they had undertaken due diligence on the firm before they rolled over quarterly or monthly savings into the scheme, with one having admitted he had been in it for more than two years.
“We did check it out. And it wasn’t a get rich quick scheme. One of the [quarterly] deposits was only offering 0.5% interest,” another recalled.
The consumer finance watchdog is responsible for regulating firms and advisers, but because Midas was considered to be running an unregulated scheme it handed the file to Police Scotland to undertake a criminal investigation.
A number of directors and associated advisers including Mr Milne, as well as Midas directors Alastair Grieg and Ian Towe, were on the FCA’s register as “appointed representatives” of an advisory firm based in England called Sense Network until as late as August this year.
Sense has since distanced itself from Midas, claiming it has no knowledge of the firm’s deposit-taking activities.
In a statement its chairman, Steve Young, said: “Whilst we know very little about the alleged scheme, we can confirm that Sense has never been authorised to conduct deposit-taking. Any adviser undertaking such activities would have been operating illegally and outside of the authorisation provided by Sense.”
A spokeswoman for Police Scotland said: “We have advised investors to be realistic that their money is not where it should be.
“We are carrying out inquiries that will hopefully find something, but we cannot give any guarantees.
“There is an extensive, large-scale inquiry within the region of 180 investors and it will take some time to identify and speak to all the people involved.
“We would encourage anyone with information or anyone who thinks they have been affected to contact us.”
If you have been affected by the investigation into Midas Financial Solutions, please contact erikka.askeland@ajl.co.uk