£17.5 million fraud judgment made against insolvent investment firm and former director

The High Court of England and Wales has granted summary judgment against Coleman Capital LLP, its former director Matthew McClean and a related Gibraltar company in favour of an investor whose £17.5 million was diverted from purported investment funds and fixed-interest deposits. The Court found that the defendants had fraudulently misrepresented how the investor's money would be managed, rejecting arguments that the losses resulted from failed investments, third-party defaults and liquidity pressures.

HHJ Paul Matthews, sitting as a Judge of the High Court, ruled that Christopher Shaw, a chartered surveyor and businessman, was entitled to recover £17,484,668.06 following a series of investments made between September 2020 and April 2024. Mr Shaw had placed approximately £3.7 million into purported Coleman investment funds, transferred a further £814,872 in investment assets and deposited £13 million into what he was told would be segregated LIBOR-linked money market investments. The funds were transferred through Jones & Partners Ltd to Linear Investments Ltd, an FCA-regulated prime broker. Mr McClean represented that the investments would be independently administered, held in segregated accounts and subject to professional oversight, including by BDO and Goldman Sachs. Monthly statements purported to show positive returns and accrued interest. However, when Mr Shaw sought repayment in March 2025, none of his remaining investments was returned.

Evidence from Linear showed that the money had instead been transferred to Coleman Asset Management Group, another entity controlled by Mr McClean, where it was used for proprietary trading, investor redemptions and reducing negative account balances. By the end of 2023, the group's running balance with Linear had deteriorated to more than US$18 million in the red. Mr McClean acknowledged that the accounts had not been segregated as originally described but denied fraud, attributing the losses to the default of Omnia Group Holdings AG on a US$100 million note, Linear's conduct as custodian and wider market conditions.

The Court rejected those explanations, finding that Mr McClean had failed to provide documentary evidence supporting his account of the investments or explain what had happened to Mr Shaw's money. HHJ Matthews observed that while investment managers can suffer substantial losses, honest managers do not ordinarily lose everything without explanation. The judge also drew an adverse inference from Mr McClean's decision to relocate to Dubai after proceedings commenced, concluding that the defendants had no realistic prospect of successfully defending the fraud claims.

The insolvency proceedings were central to the Court's decision to permit summary judgment rather than default judgment. Under section 281(3) of the Insolvency Act 1986, discharge from bankruptcy does not release a bankrupt from debts incurred through fraud or fraudulent breach of trust. The Court accepted that a reasoned judgment establishing fraud would assist Mr Shaw in enforcing the debt against Mr McClean after discharge, as well as against defendants based outside England. It also lifted the automatic stay imposed by section 130(2) of the Act against Coleman Capital, finding that allowing the proceedings to continue would facilitate the liquidation by establishing the debt and avoiding inconsistent determinations.

The Court noted that the liquidator of Coleman Capital, who also served as Mr McClean's trustee in bankruptcy, had neither supported nor opposed the application. The liquidator appeared unwilling to admit Mr Shaw's proof of debt without a judgment. HHJ Matthews concluded that determining the claim through summary judgment would be more efficient than requiring Mr Shaw to establish his entitlement through the liquidation process.

The Court also rejected Mr McClean's reliance on a contractual liability cap limiting recovery to 120% of the aggregate loans advanced. Because the underlying loan agreement was rescinded for fraud, the limitation provision could not apply. Arguments that the dispute should have been resolved through mediation or arbitration were similarly dismissed, with the Court finding that the defendants had submitted to the English court's jurisdiction through their conduct and failure to seek a stay.

The judgment holds Coleman Capital and Mr McClean liable for the full £17,484,668.06, comprising £3,669,796.42 in Coleman fund investments, £814,871.64 in transferred securities and £13 million in purported LIBOR deposits. Coleman (Europe Holdings) Limited, the Gibraltar entity, was held liable only for the £3.67 million Coleman funds component. Any recovery from Linear, which previously settled its involvement in the proceedings, must be credited against Mr Shaw's entitlement to prevent double recovery.

The Court stayed Mr Shaw's remaining claims, including proprietary recovery claims, with permission to restore them if further evidence becomes available concerning the whereabouts of the missing funds.

Read the decision here.

Anna Lintner of Maitland Chambers, instructed by PCB Byrne, acted for Mr Shaw.