Jack Bennett was found guilty and sentenced today to 4 years imprisonment at Leicester Crown Court for his part in a conspiracy to defraud members of the public in relation to investing in an ostrich breeding enterprise. He was disqualified from acting as a company director for 10 years.
Bennett (64), was a director of The Ostrich Farming Corporation Ltd ("OFC"), a business operating from premises in New Ollerton, Nottinghamshire (and later moved to Ransom Wood near Mansfield). Its two founding directors were Brian Ketchell and Allan Walker who were sentenced in June to 3 ½ years and 2 years 10 months respectively for their part in the conspiracy. They too were disqualified from acting as company directors for 10 years.
Background
In late 1994/ early 1995 OFC started selling ostriches as an investment opportunity. Members of the public were induced, through advertising, to purchase birds at prices ranging from £1,400 for a chick to £14,000 for a mature breeding adult bird. The sales literature promised significant rates of return on breeding birds, as much as a twenty-fold growth in investment capital over ten years. Sales representatives were employed, a promotional video was produced and some clients were taken to Belgium to see the breeding farm where birds were reared.
The business eventually attracted over 2,800 customers and within 15 months had attained a turnover of £21 million. A contributing factor in this success was that the company played on public concern at that time about other types of meat from livestock affected by BSE, claiming that ostrich meat would become a safe and popular item on supermarket shelves - low in fat and cholesterol free. Ostrich meat was likened in taste and texture to that of fillet of beef and was quoted to sell at £20 per pound.
OFC projected that to replace 10% of the domestic market for beef with ostrich meat, 1,000 breeding birds would be needed to produce the required number of offspring. Comparisons were made with the growth of the salmon farming industry; attention was drawn to a growth in salmon production of 7,500% over a thirteen-year period. Virtually no part of the ostrich was left out of the sales pitch - hides for the leather industry, anti-static feathers as dusters for the electrical industry, oils for medical products and even infertile eggs as decorative products. The commercial breeding life of an ostrich was given as 25-plus years whilst a return on expenditure of 51.6% plus per annum was guaranteed by OFC. Buyers were told that birds would have a microchip implanted under the skin to verify the identity of each individual bird. Buyers were guaranteed a chick allocation that increased with the breeding maturity of the bird. OFC guaranteed to buy back all allocated chicks for £500 each at twelve months old. The guarantee liability on what was sold to the public amounted to a minimum of £49 million within five years. If all customers had sought to maximise their income from the scheme the guarantee liability could have been as much as £137 million. Hundreds of thousands of ostriches would have been needed as well.
Buyers, individual and corporate, were invited to join the "Ostrich Owners' Club". To emphasise the image of an expanding company it boasted of having additional offices throughout much of Western Europe and the Middle East.
Initially, OFC in Nottinghamshire dealt directly with the Belgium-based breeding farm but from July 1995 an offshore company in Delaware USA called Wallstreet Corporation was interposed between OFC and the Belgian farming operation. The real purpose for using the offshore company was to facilitate the laundering of money. Wallstreet had bank accounts in the Isle of Man and the Cayman Islands. The defendants were taking large sums of money out of the offshore company. Instead of using the company's capital, based on payments from customers, to run the enterprise in a legitimate and business-like fashion, the defendants were lining their own pockets at the expense of the bird owners. None of the defendants themselves purchased ostriches as a personal investment, but between them they received more than £5.5 million.
Ultimately, OFC did not have the ostriches it claimed it had. They continued to take orders from clients but in many cases, only the microchips were tangible. Of the 3,456 birds sold to customers or allocated under the guaranteed chick scheme, at least 925 did not exist and 420 ostrich chicks were sold or allocated as being of greater breeding maturity than was actually the case. The company was beginning to run aground. In early 1996 OFC was wound up by the DTI on public interest grounds. The case was accepted for investigation by the SFO in April 1996 and Bennett was charged in July 1998.
The role of Jack Bennett
Bennett controlled Wallstreet Corporation and opened and operated off shore bank accounts in the Isle of Man and the Cayman Islands for the benefit of all the Defendants in the case. These arrangements enabled large sums to be removed from OFC, which would otherwise have been available for the benefit of investors.
The indictment
Between 22 December 1994 and 7 April 1996, Brian Phillip Ketchell, Allan William Walker and Jack Bennett conspired together to defraud such members of the public as might be induced to invest monies with The Ostrich Farming Corporation Ltd ("the Company") by dishonestly:
1. Misrepresenting that the Company intended to supply investors with the ostriches that they had been promised;
2. Through the medium of Wallstreet Corporation or otherwise, diverting for the benefit of themselves funds that were required to honour the Company's promises to investors.
Notes for editors:
1. Five persons were charged in this case. Brian Ketchell and Allan Walker the business founders are mentioned above. The other two are Kevin Jones and Russell Jones, brothers, who were salesmen employed by OFC. The Jones' brothers were tried with Ketchell and Walker but were acquitted on 21 June. Jack Bennett was not tried at that time because of ill health.
2. The sentencing of Ketchell and Walker was widely reported by the Press on 23 June. Reporting restrictions were in place then with regard to mention of Bennett.
3. The investigation of the case was carried out jointly by the Serious Fraud Office and the Nottinghamshire Police.
4. The SFO Case Controller was George Mills. Prosecuting counsel were Julian Baughan QC and Mark Paltenghi. His Honour Judge Appleby Q.C. commended Detective Inspector James Crossley and the team for their work.
David Jones - 020 7239 7001
Caroline Paul - 020 7239 7004
(out of hours mobile 0781 807 6688)
