John Dance accused of overseeing 'one of the largest frauds perpetrated by an FCA regulated individual'

The Financial Conduct Authority (FCA) has alleged that well-known racehorse owner John Dance oversaw “one of the largest frauds perpetrated by an FCA regulated individual at an authorised firm” after successfully arguing in court for civil proceedings to be paused to prioritise a criminal investigation.

In April last year, Dance’s firm WealthTek LLP, which also traded as Vertem Asset Management and Malloch Melville, was shut down by the City regulator after the discovery of “serious regulatory and operational issues”. 

Dance’s assets were subjected to a £40 million worldwide freezing order with special administrators appointed by the High Court subsequently revealing there was an £80.4m shortfall in client funds.

In November last year, the freezing order against Dance was upgraded to a restraint order under the Proceeds of Crime Act. In January, the FCA applied for the civil investigation into potential regulatory breaches relating to client funds and custody assets be delayed to allow its investigation into the potential criminal offences of fraud and money laundering to be prioritised.

On Friday, Judge Baumgartner found in favour of the FCA, stating “the criminal investigation being pursued by the FCA should take priority over the High Court proceedings with a view to the FCA making a charging decision within the 12-month stay”.

As part of the written decision, the judge published a summary of the evidence provided by the FCA, including witness statements provided by FCA manager Anthony Williams.

Bravemansgame (far) was among the horses to have raced in John Dance's coloursCredit: John Grossick

Williams said the FCA’s investigation had found that alongside the shortfall in client funds, there had been “an increase of about £25.6m in the sums flowing from WealthTek to Mr Dance, taking the total to about £49m” and the discovery of alleged “earlier misconduct” with “suspicious flows of client money and assets of about £21 million from WealthTek to Mr Dance in the period between 2014 and 2020”. 

As a result of its investigation, Williams said the FCA considered Dance’s actions as potentially “one of the largest frauds perpetrated by an FCA regulated individual at an authorised firm”.

The FCA also told the judge it had “reasonable grounds” to suspect Dance had misrepresented how client money was held, what permissions he had to invest client capital, and that he had transferred significant sums of money to his personal bank accounts “and to companies and other entities with which he is closely associated”.

Dance has not spoken publicly since WealthTek was closed in April. In the judge’s decision, the FCA said Dance had not given any indication of what his defence might be to the allegations of "receiving and diverting tens of millions of pounds of client money to his personal bank accounts and the apparent forgery of a letter setting out his FCA permissions”. 

In a statement released on Friday, the FCA said: "The investigation into suspected criminal offences in respect of WealthTek LLP and Mr Dance continues. Progress in that investigation has led us to focus our resources on the suspected criminal offences. The option to restart our civil case remains open to the FCA.

"The restraint order for Mr Dance remains in place. The purpose of the order is to preserve assets and make them available for a future confiscation order, which can only be made following a criminal conviction. The special administration ordered by the High Court also remains.

"The BHA remains responsible for matters relating to Mr Dance’s participation in horseracing activities."

Before the FCA's intervention, Dance was a significant owner, breeder and sponsor in racing. Among the horses to carry his colours were six-time Group 1 winner Laurens and Bravemansgame, who won the 2022 King George VI Chase and finished second in last year's Cheltenham Gold Cup.

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