Newport gun dealer jailed for £57m fraud that conned 50 investors
9:45am Tuesday 18th September 2012 in News
THE boss of one of the UK’s biggest firearm dealers brokered fraudulent deals worth more than £50 million as he battled to keep the company afloat, a court was told.
After running into financial trouble, Andrew Litt offered interest of up to 40 per cent on loans from wealthy investors – using their money to pay off other debts incurred by Newport-based DJ Litt Firearms.
Litt, who was jailed yesterday for 32 months for fraud, was motivated by “cowardice, not greed” as he didn’t want his cancer-stricken father Donald to know the hugelysuccessful international business he had built was crumbling, the court was told.
The Serious Fraud Office described the con as “a Ponzi style scheme” – where money was being taken from one source in a pyramid to pay another.
At Cardiff Crown Court yesterday, prosecutor Cameron Brown said Litt, 57, of Claremont, Newport, was “robbing Peter to pay Paul” as he brokered 2,000 deals with 50 investors worth £57.5 million and sold 320 guns he looked after for clients, worth around £1.5 million.
The court heard the company was founded in 1976 and had sites at Maesglas Industrial Estate and Treetops in Newport, Berkshire and Bristol and employed 40 people, turning over £12 million when it entered administration in 2008.
Its business involved selling air rifles, shotguns and accessories and running firing ranges from its sites.
But, Mr Brown said the company experienced financial troubles in 2004, needing to raise cash to pay a £400,000 overdraft and £350,000 bank loan . In an attempt to raise cash quickly, Litt offered investors – including American billionaire Arthur Demoulas – up to 40 per cent interest on short-term deals, telling them the money was to buy guns he could make a huge profit on.
Mr Demoulas alone loaned Litt US$1.6 million and was told he would get his money back plus interest totalling US$285,000 within eight weeks. But, Mr Brown said the high rate of interest offered only increased the financial pressure and led to more borrowing, the falsifying of cash books and selling guns belonging to other people.
Litt sold 320 guns worth £1.5 million belonging to clients. By 2007, he had borrowed too much and the company owed £16 million, with the value of its stock worth just £9.5 million. The stock was liquidated by administrators. Mr Brown said that despite the large value of fraudulent activity, the loss was £8.2 million to private investors and guns totalling £1.5 million.
Litt pleaded guilty to two counts of fraudulent trading, between January 2004 and September 2007 and October 2007 and June 2008. He had originally been charged with 17 fraud offences. No evidence was offered by the prosecution on three counts and a further 12 will lie on file.
Judge Patrick Curran said Litt, who was also declared bankrupt himself, was motivated by “cowardice not greed” and was under “huge personal stress” because of family problems. He sentenced him to concurrent terms of 32 months and 16 months in prison.
When problems began
THE family-run business prospered for 16 years, with an indoor range at Maesglas Industrial Estate a central feature.
But difficulties began in 1995, when founder Donald Litt left the business to become full-time carer for his wife, who was suffering from motor neurone disease. This left Andrew Litt working up to 100 hours a week.
Further pressure was put on the business in 1997, when there was a change in gun legislation following the Dunblane massacre.
The indoor range at Maesglas was closed, sales dropped by 33 per cent and Litt’s marriage broke down, leading to him moving into rented accommodation. Litt’s mother also died in 1997 and by 2001 his father’s health began to deteriorate, with him suffering from thyroid cancer and kidney failure before he died in 2010.
Mr Elystan-Rees said: “Andrew Litt was running the business alone and should have realised it was out of control, but found it difficult as it was a family business whose staff were treated like family.
He is devastated his father died with the business ruined and the situation not resolved.”
Litt presented around ten character references, in which people he defrauded described him as a “popular, hard-working likeable man”.
One of these was employing him at a service station despite his deceit.