The former boss of Norton Motorcycles who illegally used around £11 million to plug the gaps of the failing business has avoided a prison sentence. Stuart Garner was the company's owner and sole trustee of the pension scheme, which other people invested into, Derby Crown Court heard.
However Derbyshire Live reports that he used his position to use cash from it to plough into the then Donington Park-based business, which he owned between 2008 and 2020. Handing him an eight-month jail sentence, suspended for two years, Judge Nirmal Shant QC, Honorary Recorder of Derby, said: "You controlled the Norton Motorcycle business and in 2012 the business needed funds and you raised around £11m by establishing three funds which were under your control.
"You did not know you were breaking the law, however, it is plain, in setting up a pension fund worth £11m, that you should have known your basic responsibilities as a trustee. You were obligated to act in a prudent manner according to law. You are an experienced businessman and you must have known there was a conflict of interest.
"Many speak of broken relationships and ill health. The harm this caused cannot be understated. It is quite plain the reason was that the banks were not prepared to lend you the money. The fact that banks were not prepared to lend you the money should have set alarm bells ringing to an experienced businessman.
"By 2020 £1.5m was paid out to members (but) there's a shortfall of £10m. This is not just financial harm, I have read statement after statement from ordinary people who invested." William Hays, prosecuting, said the offences were in relation to three defined contribution schemes: Dominator 2012, Commando 2012 and Donington MC which had a total of 227 scheme members.
The investments, which were made in return for preference shares, were made between 2012 and 2013. He said: "It is accepted he was receiving advice for a scheme to raise funds for the business, banks were not prepared to lend and that led to unlawful means of investment. The schemes in this case were used to inject capital into the Norton business at the time for investment and Norton was suffering production and liquidity problems.
"Members asked to withdraw the money, as they are entitled to do but Mr Garner explained the business was suffering cash-flow problems. It is accepted Mr Garner did correct the illegality. "It was reckless and negligent but it is not suggested Mr Garner knew of the offence. However he is an experienced businessman and this was a carefully constructed scheme."
He said a number of victim-impact statements had been obtained by the Pensions Regulator, who brought the prosecution. The prosecutor said: "In the statement, many speak of how they feel their confidence in the pensions system has been severely undermined.
"There have been marital problems and one victim refers to himself as 'an utter mug'." At an earlier hearing on Monday, February 7, the 53-year-old, of Park Lane, Castle Donington, pleaded guilty to three charges of breaching employer-related investment (ERI) rules.
Peter Caldwell, mitigating, said his client's actions had led to "a tragic fall from grace". He said: "He has experienced personal anguish and rather serious mental health crises both last year and at the beginning of this year.
"He was negligent in getting proper advice but there was no siphoning off of cash. He did not know he was breaking the law when, in fact, he was. "It was not a cynical enterprise. The objective was not personal gain."
As well as the suspended jail term, Judge Shant disqualified Garner from being a company director for three years. He has also been ordered to pay £20,716.69 costs, despite him being bankrupt.
