Page last updated at 18:18 GMT, Tuesday, 9 March 2010

£34m pyramid scheme boss targeted communities

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A member of Bedwas town band invested his children's savings - and lost them all

A 51-year-old businessman has been found guilty of 14 charges of theft and deception after running a "pyramid" scheme that amassed around £34m. As Wyre Davies reports, Kevin Foster targeted small communities in south Wales.

"If something looks too good to be true, it probably is." That is a saying I've heard many times while investigating this story.

It is not clear why so many people, thousands of otherwise rational men and women, gave large amounts of money to an ex-cabbie simply because he said he could give them five times as much back after two years.

To me Kevin Foster looks, sounds and acts like a stereotypical conman.

Bedwas, Trethomas and Machen Brass Band
Several members of the same band joined the scheme

He is uncouth, wears loud shirts and brags an awful lot about how much money he has.

Yet Foster obviously had enough charisma and confidence to persuade at least 8,000 "investors" to part with an estimated £34m.

As Mark Hutcherson takes a break from playing the euphonium with the Bedwas, Trethomas and Machen Brass Band he tells me how he became entangled in Kevin Foster's elaborate web.

Foster was undoubtedly clever and very convincing. With his "KF Concept" roadshow he deliberately targeted small valleys communities in south Wales, where everyone seems to know everyone else.

It would start with a local sports team, in this case Bedwas Rugby Club, and perhaps an offer to sponsor the shirts of the local team.

Then Foster would organise a roadshow in the clubhouse where locals were asked to "invest" a minimum of £1,000 - with a guarantee that within two years they would get that money back many times over.

Mark Hutcherson
Nobody wanted to be left out and miss the chance to make a tidy profit
Mark Hutcherson

The "hook" that persuaded people to part with their £1,000 cheques was simple but clever.

To prove his bona-fides and just how generous he was, Foster would draw several names from a hat at each roadshow and give the lucky investor their £5,000 immediately.

At bigger roadshows, where several hundred people would attend, the prizes were also bigger - free luxury holidays and even free cars.

They were genuine prizes but ultimately paid for, of course, by the many more ordinary investors who put in at least £1,000 and got nothing at all back.

Mr Hutcherson and other band members heard about the scheme through their friends in the rugby club across the park.

"Of course some of us were sceptical and worried about handing over a cheque for £1,000," he says. "But nobody wanted to be left out and miss the chance to make a tidy profit."

Regrets

Mr Hutcherson and most other members of the band chalk the experience down to one of life's tough lessons.

I couldn't afford to lose this money - which I only found by remortgaging my house and borrowing on credit cards
Victim

As he resumes rehearsals, one lasting regret he has is that he emptied his children's saving accounts to invest with Foster - a tiny part of the £34m the conman from Kent is believed to have amassed.

Other investors took a much, much bigger hit. Another victim from south Wales, who lost almost £180,000 with Kevin Foster, did not want to be named but told the BBC he was up to eyes in debt.

"I couldn't afford to lose this money - which I only found by remortgaging my house and borrowing on credit cards," he said.

"My hope of an early retirement at the age of 55 is simply not going to happen. I never thought that I was stupid, but I was convinced by him, and thousands of other were too."

Marriages have broken up, lifelong friendships have been ruined and a lot of people have lost a lot of money. Kevin Foster has much to answer for.

The Serious Fraud Office (SFO) says he was running nothing more than a classic "Pyramid" scheme.

"It was a scam - getting people to invest their money on the promise of a big return. It was robbing Peter to pay Paul and, like all such schemes, it inevitably collapsed," says Kathleen Harris, Head of Policy & Standards at the SFO.

Kevin Foster lived a lavish lifestyle with all the trappings of luxury - a huge, converted farmhouse near Sittingbourne, Kent, with swimming pool, jacuzzi and even a private zoo.

With expensive sports cars including a Ferrari Spyder, Foster certainly did not hide his wealth - but it was all paid for with other people's money, most of which has never been recovered.



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