A North East wealth manager is being investigated by the financial watchdog which told a court it considers his suspected misconduct to be potentially 鈥渙ne of the largest frauds perpetrated by an FCA regulated individual at an authorised firm鈥.
According to High Court documents, the Financial Conduct Authority alleges that WealthTek founder John Dance received and diverted tens of millions of pounds of client money to his own personal bank account and that he 鈥渄ishonestly concealed鈥 that his firm had been holding client money when it was not authorised to do so.
The papers also show the watchdog alleges Mr Dance, who was at the helm of the firm which also traded as Vertem Asset Management and Malloch Melville, had failed to declare his bankruptcy six years ago.
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The claims come as a High Court judge recently granted the FCA a pause in civil action against WealthTek and Mr Dance in order to focus on suspected criminal offences.
The Tyneside firm was closed down last April and placed in a special administration amid regulatory breaches and concerns about fraud and money laundering. A shortfall of 拢80m in client money and assets was then discovered. Now, witness statements from an FCA manager include allegations that the scale and extent of Mr Dance鈥檚 suspected misconduct had become more serious as the regulator鈥檚 investigation progressed since last April.
Statements from the FCA鈥檚 Anthony Williams say Mr Dance is alleged to have funnelled about 拢49m of client money to his personal bank account and other companies with which he is associated. Mr Williams鈥 statement also included reference to 鈥渢he discovery of earlier misconduct, with suspicious flows of client money and assets of about 拢21m from WealthTek to Mr Dance in the period between 2014 and 2020鈥.
A statement submitted by Christopher Hollyoak, also of the FCA, alleges Mr Dance used apparently forged documents to dupe CACEIS Bank into thinking WealthTek had permissions to hold client money, when it did not. He also said Mr Dance had 鈥渄eliberately misrepresented to clients and prospective clients鈥 that their money was being held by that same bank on their behalf - in line with FCA rules.
In November last year a criminal restraint order (CRO) was obtained against Mr Dance under the Proceeds of Crime Act. That measure toughened up a freezing of 拢40m of assets owned by Mr Dance but allowing him to claim reasonable living expenses, and amongst other things, cover about 拢500,000 of High Court costs.
The year-long pause granted to the FCA is intended to give it time to further investigate potential criminal offences. The watchdog has said that during this time it expects to be able to decide whether or not to bring criminal charges.
Meanwhile, out-of-pocket former WealthTek customers have been told by the Financial Services Compensation Scheme that they could receive payouts up to the value of 拢85,000.
Mr Dance opposed the FCA鈥檚 application on the grounds that 鈥渢here would be considerable prejudice to Mr Dance because he would be unable to address properly the FCA鈥檚 allegations, which are of the utmost seriousness and concern Mr Dance鈥檚 honesty and alleged conduct鈥, the documents show.
The issues surrounding WealthTek first came to light when a racehorse co-owned by Mr Dance was withdrawn from a race following contact between the FCA and the British Horseracing Authority. A few weeks later, a city centre nightclub Mr Dance part-owned in Newcastle went into administration.
