Ex-JC Flowers U.K. CEO Fined, Banned For Fraud

Jan 31 2012 | 3:15pm ET

JC Flowers & Co.'s former top executive in Britain  has been barred from the securities industry after he admitted defrauding one of the private equity firm's portfolio companies of £1.367 million pounds.

Ravi Shankar Sinha used fake invoices to secure the payments from the company, money which he used to prop up his own failing finances. He also lied to the unidentified company's CEO, telling him that the payments had been authorized by JC Flowers.

"I very much regret misleading JC Flowers over this issue and continue to offer my sincerest apologies," Sinha, who served as U.K. CEO from May 2005 until November 2009, told Bloomberg News. "It was a foolish action which I completely regret, particularly in terms of the effect that it has had on my family. I will bear the consequences of my own actions long into the future."

The Financial Services Authority fined Sinha £2.87 million, the third-largest levy against an individual in its history. He was also banned from the finance industry in the U.K. The City of London Police chose not to prosecute Sinha criminally.

Sinha cooked up the scam after he borrowed £9 million to co-invest with JC Flowers. But when those investments didn't pay off, he started faking invoices to cover his debts. The private equity firm discovered Sinha's invoices in 2009 and reported them to the FSA, firing him in November of that year.

"Sinha exploited his position of trust as CEO to fraudulently obtain significant sums for his personal benefit," the FSA's Tracey McDermott said. "He engaged in a dishonest, deliberate and sustained course of misconduct which lasted for several months. Such behavior has no place in the financial services industry."

According to JC Flowers, the FSA "has made it clear that it makes no criticism of JC Flowers' systems and controls."

"Neither the company that paid the invoices nor investors in the funds advised by JC Flowers have suffered any loss as a result of Mr. Sinha's actions."


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