Longer prison sentences for carbon fraudsters behind Carbon Positive Trading and Carbon Capital investment scam after they failed to repay stolen funds

Michael Richards, who is serving an 11-year prison sentence has had another 10 years added to his sentence, after failing to pay back £11 million of stolen funds. In 2017, Richards and five others were found guilty of tax fraud in a “green” investment scheme.

In his sentencing remarks in 2017, Judge Andrew Edis commented that,

“This case involves a scheme whose chief characteristics were utter dishonesty, sophisticated planning, and astonishing greed hidden behind a mask of concern for the environment which adds an element of hypocrisy and cynicism to this case which is deeply distasteful.”

Michael Richards, Robert Gold, Rodney Whiston-Dew, Jonthan Anwyl, and Evdoros Demetriou were jailed for between five-and-a-half years and 11 years. Most of them were arrested in July 2007, and charged in March 2010. Robert Gold’s father, Malcom, was also sentenced to 20 months in prison.

Richards was in control of the scam and spent his share of the money on a £2.7 million house in Sussex, and a £32,000 diamond engagement ring for his girlfriend.

In 2019, the fraudsters were ordered to pay back £20.6 million. Richards returned just over £30,000. In July 2021, Demetriou had nine years added onto his six-year prison sentence, after failing to pay back £4.6 million.

Carbon Positive Trading and Carbon Capital

Starting in 2004, the group targeted celebrities and other high net worth investors to put money into reforestation projects in Brazil and China. They hired Mossack Fonseca, the law firm that featured in the Panama Papers leak, to set up a company called Carbon Positive Trading Ltd. The company was registered in the British Virgin Islands.

A company called Carbon Capital Limited was also incorporated in the UK in December 2004. As were Carbon Capital 2004/5 Limited and Carbon Capital 2005/6 Limited, both of which were dissolved in August 2007. Another company, called Carbon Capital Group Limited, was dissolved in September 2009.

Michael Richards was one of the directors of Carbon Capital Limited. That company was dissolved in August 2013.

An archived copy of the company’s website states that Carbon Capital is “a wholly owned subsidiary of Quid Novi Limited.” Quid Novi was incorporated in August 2003. An archived copy of Quid Novi’s website states that,

In September 2004 Quid Novi won an exclusive mandate to market Carbon Positive Trading Limited’s sustainable development and scientific research services. These services include planning and executing reforestation, renewable power and other carbon-emission reducing projects.

Quid Novi was dissolved in August 2013. The Liquidator’s Final Report, dated 29 April 2013, states that,

I have received claims totalling £65,372,01052 from 72 creditors. Approximately £65 million of these claims are subject to litigation and relate to a number of Limited Liability Partnerships (“LLPs”) set up by a wholly owned subsidiary.

Carbon Positive Trading’s website explained that the company “manages sustainable forestry and bio-energy ventures from conception through ongoing operations. We target venture opportunities that have the potential to realise attractive returns and generate carbon credits.”

The website featured “project bulletins” about the reforestation in Brazil, including this June 2006 video:

Carbon Positive Trading put out a newsletter reporting on “The finance, science and politics of climate change”.

Carbon Positive Trading also published reports, such as one titled “Forests Carbon Standards 2008” that compared “four leading forestry project standards from the voluntary carbon market”.

Carbon Positive Trading was owned and controlled by Richards and Gold, with 42.5% each, Whiston-Dew had 5%, and Warwick Smith had 10%. None of these names appeared on the company’s website, however. Instead Jon Anwyl was listed as CEO, with E.C (Demi) Demetriou as Advisory Board Member.

Judge Edis noted that Warwick Smith was “key figure” in controlling the movement of money through Carbon Positive Trading.

£65 million funding. £269.8 million losses

730 people, including comedians, sports stars, and relatives of politicians, invested a total of £65 million.

The investors each became a partner in a Limited Liability Partnership. In total, 38 LLPs were set up with names like Gemini Emissions Reductions LLP, Prometheus Green LLP, and Ursa Major Carbon Dioxide Reduction LLP. The LLPs were managed by Carbon Capital Limited and they were supposed to trade the carbon credits generated by the reforestation operations.

When an LLP had raised £8.5 million, Carbon Capital, on behalf of the LLP, commissioned Carbon Positive Trading Limited to carry out research and development at a cost of £7.1 million per LLP. 20% of the money came from investors and the remaining 80% was borrowed from the Environmental Guarantee Corporation Limited.

That was a company that the fraudsters had registered in the Isle of Man. Money was transferred between Carbon Positive Trading and Environmental Guarantee Corporation. “The same money went round and round in circles, and each time it passed Go it created an apparent expenditure which was the basis of a claim for tax relief by the investors,” Judge Edis commented.

The research was supposed to involve generating carbon credits from the reforestation on land in Brazil on which the LLPs paid for land options. The LLPs “got pieces of paper but no land”, Edis noted.

But the £65 million that the scammers raised from investors was not spent on research and reforestation abroad. Only £16 million was spent on reforestation and other projects. The rest was siphoned off by the scammers via a British Virgin Islands company, trusts in Mauritius, and bank accounts in the Netherlands and Switzerland.

The scheme was sold to investors “before any of its key elements had actually been agreed”, Judge Edis said. “It was a very effective fraud based on a very bad reforestation project.”

A US-based company called Growth Fund Partnership Inc was supposed to own the land that investors were putting their money into. Edis described the company as “an entirely fraudulent entity” consisting of “little more than a set of dishonest accounts which showed an asset value of $11bn”.

Because the LLPs traded very few carbon credits, but appeared to have invested a great deal of money, they were making a very large loss (just over 80%). As a result investors could claim tax relief on their investments. The scammers reported total losses of £269.8 million, which they claimed had been spent on research and development. The UK tax office was at risk of losing £107 in taxes as a result of the scam.

Stanley Johnson, Advisory Panel Member, Carbon Positive Trading

From November 2005 until at least October 2006 Stanley Johnson was listed as an “Advisory Panel Member” of Carbon Positive Trading. Stanley Johnson is the father of Boris, the UK’s prime minister, and has had a series of environmental posts at the European Commission. In 1984, he was awarded the Greenpeace Prize for Outstanding Services to the Environment.

Johnson’s website lists his position on the Advisory Board of Carbon Positive under the headline “Stanley’s Interests”.

By February 2007, Johnson’s name had gone. His name was replaced by that of Hans Verweij, director of the FACE Foundation. Verweij was listed on the website as “Senior Forester”.

In 2006, I co-wrote a report for the World Rainforest Movement about the impact of the FACE Foundation’s carbon tree planting project in Mount Elgon National Park in Uganda. Villagers were violently evicted from the national park to make way for the FACE Foundation’s plantations. Villagers reported that rangers working for the Uganda Wildlife Authority had hit them, tortured them, humiliated them, shot at them, threatened them, and uprooted their crops.

There is no suggestion that Johnson, Verweij, or any of the others involved in running Carbon Positive Trading were involved in the investment scam. Their involvement illustrates just how good Richards and his group of Oxbridge educated scammers were at fooling people into believing that they were running a genuine operation.

Sun Biofuels and New Forests Company

Judge Edis stated that Michael Richard used some of the money obtained from the fraud to invest in Sun Biofuels and New Forests Company. The two companies were listed on Carbon Positive Trading’s website as being “involved”:

Sun Biofuels was a London-based company that set up jatropha plantations in Tanzania and Mozambique. In Tanzania, Sun Biofuels aimed to grow jatropha on more than 8,000 hectares of land. The company planned to invest US$20 million.

Planting started in 2009 and about 2,000 hectares of mainly forested land was cleared and partly planted with jatropha. Two years later Sun Biofuels went bankrupt.

It was a land grab. Villagers lost their farmland, supply of fresh water, and access to resources. One villager told the Oakland Institute during research carried out in 2012 that,

“After the investors came here, it takes much more time to go to the forest and collect the firewood. Before the investments it was only five minutes away from home, now I spend about 2 hours per day.”

Carbon Positive Trading also set up a pilot cook stove project in Ethiopia. In a 2011 report on carbon trading in Africa, Negusu Aklilu, director of Forum for Environment, an Ethiopian NGO, writes that,

The region chosen was linked to the location of the partner company Sun Biofuels, as this would give CPT access to existing local contacts, and reduce logistical and management costs.

Carbon Positive Trading was reportedly “helping Sun Biofuels to register its projects under the CDM”. Carbon Positive Trading wound up its pilot project in 2006 after distributing about 500 energy-efficient stoves. In February 2007, Carbon Positive Trading’s local partner, Megen Power, produced a final report on the project, but the report was confidential and even an edited “light” version of the report was never released.

In talking to villagers who received the cookstoves, Aklilu found that some of the stoves needed a large amount of wood to heat up. The stoves started crumbling after a short time. The flues were too short and smoke was released inside houses. One of the stoves distributed was very unpopular and 50% of the villagers that received that type went back to using their traditional stoves.

The German aid agency GTZ and the UN refugee agency UNHCR had been distributing cookstoves for several years in Ethiopia. Carbon Positive’s cookstoves were more expensive, and of poorer quality.

Robert Gold, one of Michael Richard’s co-fraudsters, was a director of Sun Biofuels from October 2005 to September 2007.

Julian Ozanne was a director of both Sun Biofuels and New Forests Company. Born in Kenya, Ozanne has worked as a journalist, film maker, adviser to investment banks, and with the World Economic Forum and the investment bank S.G. Warburg Group. From 2004 to 2007, Ozanne was married to the X-Files star, Gillian Anderson.

New Forests Company is notorious for the evictions of more than 22,000 people in Uganda. The violent evictions took place to make way for the company’s industrial tree plantations.

Warwick Smith, the key figure behind moving the money at Carbon Positive Trading, was a director of New Forests Company Tanzania UK Limited, New Forests Company Uganda UK Limited, New Forests Company Holdings Limited, and New Forests Company Mozambique UK Limited. Michael Richards and Robert Gold were also directors of these companies. The Tanzania and Mozambique companies were dissolved in October 2014, and the Holdings company was dissolved in March 2018.

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