Creditors claim £159 million as alleged Ponzi scheme case goes to High Court

The extent of the damage caused by the alleged Ponzi scheme set up by Mike Stanley and his Layezy Racing betting syndicate has been laid bare in the High Court, where it emerged £158.7 million is owed to creditors in one of the biggest cases of financial misconduct in British racing.

Stanley had claimed to owe £22m when filing for bankruptcy in February 2019 – which prompted the BHA to ban the registered Layezy Racing Owners Club from having runners in British racing – but the true sum has been revealed to be much more. Creditors have made claims for £53.4m in money paid into the syndicate and £158.7m on profits made from Layezy Racing's winning bets.

Stanley, from Maidstone in Kent, received a severe 14-year bankruptcy restriction order at the High Court, restricting him from running a limited company and meaning he is required to disclose his status to obtain credit of over £500. Kent Police confirmed Stanley was arrested in August in connection with fraud offences but has been rebailed until November with inquiries ongoing.

In January 2010, the Layezy Betting Syndicate was founded as a hobby for Stanley. Original members were made up of family and friends, and the scheme would back selections identified by Stanley on their behalf.

In 2012, the scheme expanded and, up until February 2019, 6,000 members joined, with the syndicate receiving at least £40.3m. But of that money just £1m was used to place bets, while £27.4m was given back to members to appear as if they were making profit from the scheme. This, however, was not winnings but the payments from new members.

Investors were unaware of this deception as they were given false information, despite a portal being run by Stanley which allowed members to track their accounts and deposits.

Stanley also spent £1.6m on 23 horses – which were in training with John Best, Rebecca Menzies, Ivan Furtado and Amy Murphy – while an additional £780,000 was paid to third parties.

The syndicate shut in February 2019 after having just a handful of runners, with Fearless finishing fifth in a Listed bumper at Cheltenham on New Year's Day when trained by Menzies.

Deputy official receiver Barry Gould said: "Throughout the syndicate’s existence, Michael Stanley acted in a duplicitous manner. For nearly a decade, he duped his members into thinking they were making profits on their bets but in reality, the money received was secured from new members joining the syndicate and not on the scheme’s success.

"The court recognised the severity of Michael Stanley’s misconduct and he will now have to comply with 14 more years of bankruptcy restrictions, which will not only severely curtail his activities but also protect members of the public and lenders in the future."

BHA move on syndicate regulation

The BHA began a consultation into syndicates and racing clubs last month in response to problems with the ownership model. Just a few months after Layezy Racing's ban from British racing, the EPDS Racing syndicate collapsed after its managing director encountered financial issues, putting more pressure for stricter regulations of syndicates to be put in place.

A BHA spokesman said on Thursday: "Ensuring the regulation of shared ownership protects the sport’s participants and allows investors coming into racing to have confidence is more important than ever in light of the current challenges we face as an industry.

"To that end, assessing how syndicates and racing clubs are regulated was highlighted as an important part of retaining investors in the sport, one of the nine key goals recently published in British racing’s recovery plan.

"A consultation into the regulation of shared ownership, to identify the current risks and opportunities and how these can be addressed to promote growth and consumer confidence in syndicates and racing clubs, was launched earlier this month and is currently open for anyone to contribute to until 29 October.

"Recommendations from that consultation will then be shared with stakeholders and the aim is to have proposals to put before the BHA board for approval in the early part of 2021.”

'It's been an absolute disaster' says trainer Best

John Best was responsible for nine horses, more than any other trainer, and said the situation has been "awful" for his stable but he expressed his sympathy for the members who had lost money.

John Best: 'All the stories I've heard have been appalling and very sad'

"It's been an absolute disaster for us," said the trainer. "Not only did we think we had an owner who was prepared to buy horses and make a big difference, we've then lost a lot of horses along the way.

"More important than us is all those people who have lost a lot of money. All the stories I've heard have been appalling and very sad. It's been awful, not just for me but the other trainers as well and how much they would've suffered."

Anyone who has invested in Layezy Racing Owners Club can register as a creditor by contacting Layezyinvestors@duffandphelps.com.

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