Crown Office prosecutors DROP case of £400m collapsed hedge fund boss Gregory King ... The lawyer and three other men were reported to prosecutors after a fraud probe into Heather Capital ... But £28.4m claim against suspended sheriff Peter Watson and some past and present Levy & McRae partners continues

CROWN prosecutors will take no action against four men following a fraud probe into a collapsed £400 million finance firm.

Lawyer Gregory King, 49, and three others were reported to the Crown by detectives who investigated his hedge fund Heather Capital which was based in the Isle of Man.

Heather, launched by King in 2005, attracted investors from around the world and loaned money to fund property deals.

Following its 2010 collapse, Heather’s liquidator Paul Duffy claimed that around £90million was unaccounted for and a police fraud probe resulted in the four men being reported to the Crown Office in April 2013.

An Isle of Man court judgement likened Heather to a ‘Ponzi’ scheme, made famous by US financier Bernie Madoff who was jailed for 150 years in 2009.

The other three reported by police were lawyer Andrew Sobolewski, of Bridge of Weir, Renfrewshire, Andrew Millar, of Cambuslang, near Glasgow, and Scott Carmichael, of Thorntonhall, near Glasgow.

Last year there was criticism of the Crown for taking so long to consider the case but after almost five years it has now dropped the case.

A Crown Office spokesman said: “Following full and careful consideration of the facts and circumstances of the case, including the currently available admissible evidence, Crown Counsel instructed that there should be no proceedings at this time.

“The Crown reserves the right to raise proceedings should further evidence become available.”

In another development, liquidator Duffy of Ernst & Young has dropped a £7.3million claim against a blue chip law firm linked to Heather.

On Wednesday [February 14] at the Court of Session, a ruling by Lord Bannatyne confirmed the action against the law firm had ended.

A Burness Paull spokesperson said: “From the outset, we considered that the allegations behind these proceedings were entirely without merit and were prepared to defend the action robustly to its conclusion.

“The proceedings attracted much media attention about the background circumstances. We are pleased that these proceedings have now been dropped.”

A separate £28.4million action by Duffy against law firm Levy & McRae and some of its former and current partners continues and is due to be heard at the court in May.

The claims relates to payments in 2007 of £19million and £9.4million which Heather made to the Glasgow firm’s client account and were then transferred offshore.

It also questions ‘an unexplained payment of £200,000’ made to former Levy & McRae partner Peter Watson, who has been suspended as a part-time sheriff for the past three years.

Levy & McRae and King, whose dad is bookmaker Hugh King, deny any wrongdoing.

A Judicial Office for Scotland spokesman said: “Sheriff Watson remains suspended and proceedings are still ongoing.”

A version of this story first appeared in The Herald and The Times newspapers on February 16, 2018:

https://www.thetimes.co.uk/article/inquiry-into-demise-of-400m-finance-firm-dropped-x2vq3prc5

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