Crown FAIL!

Peter Benstead, 68, and Edward James, 70, of Cornwall and Glastonbury, were held at separate police stations for questioning in connection with the collapse of the company at the beginning of October. The Daily Telegraph understands that both men had their passports confiscated.

Detective Inspector Bean from Devon and Cornwall Police Serious and Organised Crime Branch said: "It is expected that this will be a protracted inquiry that may take many months. It is anticipated that there are approximately 13,000 victims."

According to the administrator's report, Crown Currency collapsed owing £16m with little more than £3m in the bank. The business model it operated involved holding money for clients before changing it into foreign currency at attractive rates. Although the company had no debt it had huge liabilities to customers by the time administrators were called in.

Crown Currency was set up in 2004 by local businessman Mr Benstead and Mr James, a local politician and until recently chairman of Mendip District Council. They also set up rival foreign exchange company TorFX, which is still trading from its base in Cornwall.

Despite handling millions of pounds of customer money Crown Currency was not authorised by the Financial Services Authority (FSA). Instead it operated as an FSA Registered company, effectively avoiding regulation. Its status also means creditors of Crown Currency, some of whom stand to lose up to £440,000, are not covered by any kind of Government guarantee.

Since Crown Currency filed for administration another of Mr Benstead's companies, the gold trading firm Mayfair & Grant, has also stopped trading.

The police said they were in contact with the administrators for Crown Currency, MCR, and The Crown Currency Action Group, the body leading calls for compensation.

They asked creditors not to contact them directly but to go through either the administrators or the action group

...MORE HERE...

...UPDATE!...
Criminal Past Catches up with Benstead and Schmidt...

Mr Benstead's criminal history is likely to raise questions about the role of the Financial Services Authority in the failure of Crown Currency Exchange.

Although the company was not FSA regulated, it was registered at the FSA through its holding company, Crown Holdings, something that was displayed prominently on its website.

According to administrators MCR, the FSA is maintaining it did not have to regulate Crown Currency as it operated as a Small Payment Institution.

However, one of the conditions for operating an SPI is that no individuals managing the company have been convicted of offences relating to money laundering, terrorist financing or other financial crimes.

Both Mr Benstead and, more recently, his son-in-law and former Crown Currency employee, Roderick Schmidt, have both been convicted of financial crimes.

Mr Schmidt was sentenced to 21 months in prison in May for stealing £55,000 from a charity for whom he worked. It is not clear whether he was working for Crown Currency at the same time.

Mr Benstead's offence dates back to 1980 when he was a director of a company called Max Glen. He and his business partner were charged with theft for "procuring the execution of a valuable security by deception".

The security was a £90,000 letter of credit to be used to supply 10,000 cartons of Johnnie Walker Black Label whisky. Mr Benstead's appeal failed.

...MORE HERE...

...and Schmidt's Wife...