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UK enforcement: FCA bans husband and wife for hiding offshore cash

A husband and wife lied to authorities to conceal assets from a bankruptcy trustee after their financial advisory firm went bust and caused nearly £4 million ($5.25 million) in losses to customers.

The Financial Conduct Authority banned John Chiesa, 63, and Colette Chiesa, 53, and from working in the financial services industry for “integrity failings.”

Colette Chiesa was also fined £50,000 ($65,000) for lying to the FCA during an interview.

The couple were the founding partners of Westwood Independent Financial Planners.

The firm was authorized by the FCA to provide personal investment advice.

But in 2011 the FCA sanctioned Westwood for “mis-selling” products that weren’t suitable for some investors.

Westwood then became insolvent and went into “sequestration,” the term used in Scotland to describe bankruptcy.

Westwood and the Chiesas had “significant liabilities arising from numerous valid claims” filed by former customers, the FCA said.

In late 2011, a trustee was appointed to establish the value of the Chiesas’ assets and liabilities so an assessment in favor of creditors could be made.

During Westwood’s bankruptcy, the husband and wife each paid £200 ($262) per month towards their creditors.

But the couple had failed to disclose their interest in another company that was capable of paying over £1 million ($1.3 million) per year into an offshore trust for their benefit, the FCA said.

The offshore trust paid the Chiesas a total of £2.6 million ($3.4 million) between April 2012 and December 2014, at an average rate of £84,000 ($110,000) per month.

“The payments were in the form of loans which . . . were never intended to be repaid,” the FCA said.

The other company also paid personal and living expenses on their behalf, including rent on a London address of around £5,000 ($6,500) per month.

“Between October 2011 and July 2013 Mrs. Chiesa spent on average £6,000 ($7,900) per month on clothing, jewellery, interior design, cosmetic dental treatment, travel and her Porsche car,” the FCA said.

Her husband spent £12,000 ($15,700) per month for four years on flying lessons, tennis tickets, football tickets, and club memberships.

The FCA said the Chiesas “made inadequate, incomplete and misleading disclosures to their Trustee about their financial situation during their sequestration, in order to avoid the Trustee inquiring into, and potentially recovering, assets for the benefit of their creditors.” 

Customers of Westwood who lost money received compensation from the Financial Services Compensation Scheme (FSCS), a government fund to help victims of FCA-regulated firms that go bust.

By late 2016 the FSCS had paid out over £3.8 million ($5 million).

The Chiesas agreed to settle the FCA enforcement action on September 15.

The FCA’s Final Notice against John Chiesa is here (pdf) and Colette Chiesa here (pdf).

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Richard L. Cassin is the publisher and editor of the FCPA Blog. 

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