The creator of a £1.3m Ponzi scheme has been sentenced to seven and a half years in prison, following a prosecution by the Financial Conduct Authority (FCA).

Daniel Pugh, 35, was found guilty at Southwark Crown Court of one count of conspiracy to defraud in August, after setting up the scheme with another individual that netted over £1m.

At the start of the trial, he also pleaded guilty to carrying out unauthorised regulated activity.

Pugh ran the fraudulent Imperial Investment Fund (IIF) from his home in Devon and took money from 238 investors, who were targeted primarily through Facebook adverts.

Investors were offered what the regulator described as "impossibly high returns" of 1.4% a day, 7% a week or 350% a year.

Pugh received £96,000 from the scheme, using the money to support his lifestyle and withdrawing £18,000 in cash.

The returns that investors were promised did not materialise, and at the point when he knew the scheme was collapsing, Pugh continued to attract more investors into the scheme.

In sentencing, Judge Weekes said there were "persistent and knowing breaches of the regulatory framework" by Pugh and that any remorse for his actions came "woefully late".

Executive director of enforcement and market oversight at the FCA, Steve Smart, commented: "Pugh made outlandish claims to hook in victims but in reality this was nothing more than a massive fraud. Fighting financial crime is a priority for the FCA. We will take action to ensure criminals face repercussions for their actions, including being denied access to any ill-gotten gains.

"People’s online personas are often at odds with reality, as was the case with Pugh. Claims that sound too good to be true, are usually just that."

The FCA is pursuing confiscation proceedings to deprive Pugh of the proceeds of his crimes and compensate the victims. He has also been disqualified from being a director of a company for eight years following his release from custody.

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