Extensive damage
A UK High Court case has revealed the damage caused by an alleged UK-based Ponzi scheme operated by Mike Stanley through his Layezy Racing betting syndicate. Creditors are reportedly owed about £158.7m ($124.7m); if accurate, this would place it among the biggest financial misconduct cases ever seen in British racing.
among the biggest financial misconduct cases ever seen
Creditors claim they are entitled to £53.4m ($42m) for the money paid into the syndicate, as well as to £158.7m ($124.7m) in profit made from winning bets. Owner Stanley received a 14-year bankruptcy restriction order by Insolvency and Companies Court Judge Sebastian Prentis. This means he cannot operate a limited company during this period and must disclose his status when trying to obtain credit worth more than £500 ($636).
Stanley filed for bankruptcy in February 2019, claiming at the time that he owed £22m ($28m) to his creditors. The British Horseracing Authority (BHA) proceeded to ban the Layezy Racing Owners Club from having any of its horses participate in British horse races.
The 64-year-old man was arrested in August by Kent Police relating to fraud offenses but has been rebailed until November amid ongoing inquiries.
Deceptive practices
The Layezy Racing Betting Syndicate was started in January 2010 by former police officer Stanley as a hobby. His family and friends made up the initial members, with Stanley placing bets on their behalf.
only £1m ($1.27m) was used for placing wagers
Expansion of the scheme began in 2012, with 6,000 members joining between then and its February 2019 shutdown. This saw the syndicate get at least £40.3m ($51.2m) from these members. However, only £1m ($1.27m) was used for placing wagers, with £27.4m ($34.8m) going back to the members to give the illusion that they were profiting. The money did not come from winning bets but from new sign-ups.
Stanley spent £1.6m ($2m) on 23 horses, paying £780,000 ($992,000) to third parties. The scheme was exposed following a Sportsmail investigation, with the report published in the Daily Mail.
Regulating syndicates
The BHA recently began a racing club and syndicate consultation in an attempt to deal with issues relating to ownership models. Shortly after Layezy Racing’s BHA ban, the EPDS Racing syndicate collapsed because of financial issues. This led to a push for tougher syndicate regulations.
The consultation will be looking at shared ownership regulation. According to a BHA spokesman, it will assess the current opportunities and risks and consider rule changes to “promote growth and consumer confidence in syndicates and racing clubs.” Members of the public can send their comments to the consultation by October 29.
The authority will subsequently share its recommendations from the consultation exercise with stakeholders. It aims to have proposals considered for approval by the BHA board in early 2021.