Fraudster who owes taxpayer £82m facing prison over Covid loan scam

A notorious fraudster who flew round the world and splashed out on fine dining in the West End while owing taxpayers tens of millions of pounds in an unpaid court order is facing prison after being convicted of a Covid loan scam.

Gerald Smith, who has already served two prison sentences for fraud, was found guilty at Southwark crown court of cheating the public by taking out a £50,000 “bounce-back” loan during the pandemic to pay the legal fees of one of his closest associates.

He had denied the charge but was told by the judge after the jury convicted him that he could expect a jail term because of his previous offending when he is sentenced in September.

Smith’s potential incarceration follows years in which he has managed to avoid a return to jail despite failing to pay a confiscation order that now totals £82 million including interest.

It was imposed in 2007 following his conviction the previous year for a £34 million dotcom fraud.

He was given an eight-year jail term for that crime but has since managed to avoid going back to prison to serve a default sentence for non-payment of his debt.

Smith also dodged prison when he was handed an eight-month suspended sentence following his conviction two years ago for breaching a court order that prevented him from spending or accessing his assets, except in limited circumstances. .

The High Court heard then how Smith, now 69, had flouted the order by opening undeclared bank accounts and using the money to pay for “extravagant” parties and meals in the West End, as well as flights.

His dining included meals at Scott’s in Mayfair, nearby Zoilo, and Pollen Street Social in Soho. One meal is understood to have cost £1,000 and another £700.

He also went drinking at Claridge’s, took out hundreds of pounds in cash, and paid for flights in what a court heard were “disproportionately lavish lifestyle payments”.

Earlier court hearings in the protracted pursuit of Smith by the Serious Fraud Office have also been told how he flew round the world, taking flights to destinations ranging from Dubai and Hong Kong to Buenos Aires and the Maldives, and stayed at luxury hotels while claiming to be unable to pay his confiscation order.

Smith claimed throughout that his money was tied up in complex High Court civil litigation relating to his former business assets, including hotels, that finally ended in 2021.

Those proceedings heard further evidence of his extravagant lifestyle including splashing out on fine art with attempts to buy works by Renoir, Matisse and Rodin, and a successful purchase of a glass sculpture by the American artist Dale Chihuly.

The judge in the case said Smith, although “notionally asset-less”, had “been able to live ‘high on the hog’ (in his own phrase)” and detailed further spending ranging from £367,000 spent on wine and the acquisition of a Porsche, a Bentley Continental, an Aston Martin, two Range Rovers, four Mercedes and four BMWs.

His new conviction came after prosecutors told Southwark crown court how Smith had obtained a £50,000 Covid bounce-back loan by making a fraudulent application in which he claimed to need the money to help his business.

The court heard that he used the money instead for his personal use, including thousands of pounds in legal costs incurred by his long-time associate Sinead Irving during the complicated litigation over his assets.

Welcoming Smith’s conviction, Kevin Hansford of the Crown Prosecution Service said: “Gerald Smith took advantage of a Government system designed to protect and support businesses through the Covid pandemic. Rather than using the funds for legitimate business purposes, Smith diverted them for his own personal use and to fund a court costs order.”

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