Norton Motorcycles’ former owner has been given an eight month suspended jail sentence for taking almost £11m from pension scheme members to invest in his failing business.
The Pensions Regulator (TPR) has published a report into the case of Stuart James Garner, 54, the former owner of Norton Motorcycles, who persuaded 255 members to transfer from other pension arrangements into three pension schemes that invested in Norton.
Garner was the sole trustee of three pension schemes (Donington MC Pension Scheme, Dominator 2012 Pension Scheme and Commando 2012 Pension Scheme), which invested in Norton Motorcycle Holdings Ltd (Norton Motorcycles). The investments were made in return for preference shares issued by Norton Motorcycles, for which Mr Garner was both the director and majority shareholder. He was also the owner and director of the scheme’s principal employer, Manorcrest Limited. This was seen by the court as significant, as it meant Norton Motorcycles was “connected and associated” with the employer.
The pension schemes were marketed to members as an investment in the Norton Motorcycles business. They were restricted from withdrawing any funds for a period of 24 months from the date they transferred, and charges were levied if they withdrew funds within the first five years.
Garner breached employer related investment (ERI) restrictions, by transferring nearly £11m of the £11.5m of member funds from the three schemes into Norton Motorcycles.
Dalriada has been appointed as independent trustee.
The Fraud Compensation Fund, which is managed by the Pension Protection Fund, has decided in principle that it considers there are reasonable grounds for believing that there has been dishonesty, as required by legislation for compensation to be payable. This is a key milestone in the FCF process and Dalriada has informed members of this update.
During sentencing, Her Honour Judge Nirmal Shant, said Garner had been reckless and caused profound harm to his victims, both financially and to their mental wellbeing.
Nicola Parish, TPR’s Executive Director of Frontline Regulation said: “Our intervention report details how we and other agencies acted against Stuart Garner, including a successful prosecution for offences relating to serious breaches of pension investment duties.
“By taking money from schemes in his care to invest in his failing business, contrary to his duties as a trustee, Garner showed a lack of integrity, competence and capability. It is right he has now been banned from ever acting as a trustee again.
“Our focus remains on supporting the independent trustee in pursuing compensation for scheme members through the Fraud Compensation Fund.”
Garner was also disqualified from acting as a company director for three years, which also prevented him acting as a trustee during the period of disqualification and ordered to pay TPR’s costs of £20,716.
