The UK’s The Pension Regulator (TPR) has banned three people from acting as trustees of pension plans for allegedly using the plans they oversaw to scam investors out of millions of pounds.

Timothy Walker, Desmond Cheyne, and Lindsay Macalister have all been banned for life by TPR from acting as a trustee because of their links to the Milton and Carrick Harbour occupational pension plans. The three have been added to TPR’s register of prohibited trustees.

TPR said members of other plans were encouraged to transfer their pensions into the Milton and Carrick Harbour pension. It said it believes the trustees then invested funds held by the pension plans in high-risk, unregulated investments that were acquired at “grossly over-inflated prices” without the members’ knowledge.

“The trustees showed a disregard for their obligations resulting in scheme assets being gambled on high-risk investments that are now worth a tiny fraction of what was put into them,” said Mike Birch, TPR’s director of case management. “This has jeopardized the financial futures of the scheme members they were supposed to be supporting.”

TPR’s Determinations Panel said that Lindsay showed “reckless disregard for his obligations,” and ruled that he and Walker should be banned for their lack of “integrity, competence and capability,” and are “not fit and proper people to act as trustees.” The panel ruled Cheyne should be prohibited on the grounds of his lack of competence and capability.

The panel found that it was “more likely than not Walker was complicit” in the pension scam activities, and that “Cheyne’s actions, or lack of them … demonstrated a lack of competence and capability” for him to be a trustee.

It said Lindsay’s conduct was “so reckless as to demonstrate that he lacked the integrity appropriate to acting as a trustee, particularly given his admission that he was fully aware” that the pension funds were going into inappropriate investments, and was paying substantial fees to do so as well.

The TPR was alerted to the activities by independent pension professionals who were concerned about the actions of the trustees, including reports of suspicious transfers, and conflicts of interest. Dalriada Trustees, an independent trustee services provider, was appointed by TPR as an independent trustee to the plans and is working to recover as much of the invested money as possible for the members. The TPR estimated that £9 million ($12.2 million) was transferred from the pensions into investments between November 2012 and May 2013.

“Savers have the right to expect trustees to manage their pension schemes effectively,” said Birch. “Where trustees cannot or do not do this, we will take action to protect members’ benefits by replacing them and then, where appropriate, ensuring that they can no longer act as trustees.”

Tags: Milton and Carrick Harbour, Pension, The Pensions Regulator, UK