Jersey-based Monty Python film financier funnelled client millions into failing venture

Wednesday 30 May 2018

A former Jersey financier has been banned from working in the industry after secretly pumping millions of client money – including that of “vulnerable” individuals – into a film company set up by Beatle George Harrison in a bid to rescue it from financial ruin.

David Francis, CEO of Jersey-based Horizon Group, was found to have funnelled nearly £3.5million from eight “ultra high-net-worth” individuals into the deteriorating HandMade Films, which had previously enjoyed success with Monty Python’s Life of Brian and Lock, Stock and Two Smoking Barrels, through companies he set up and controlled.

Despite pledging up to £1million each, those investors – some of which were described as “unsophisticated” – were not made aware of HandMade’s “dire” financial position: in liquidation with creditor claims of over £30million.

He was ousted from Jersey’s finance industry following an investigation by the Jersey Financial Services Commission, which found that he had acted with “a most serious lack of integrity”, but appealed this decision in the Royal Court. But that decision was upheld, and Francis ordered to pay £375,000 towards JFSC’s legal costs.

The news comes just months after Patrick Meehan, the former Manager of Led Zeppelin and Black Sabbath who formerly held a directorship with HandMade, was disqualified alongside two other directors in the UK over a "lack of candour", which included taking $5million of investor money to fund a project that had already been suspended because its star was injured in a car accident and using that money to pay off a director's relative.

During Francis' appeal, Advocate Beverley Lacey defended the JFSC's ruling before the Royal Court. Presided by Commissioner Michael Birt, who sat with Jurats Pitman and Nicolle, the Court heard that Francis' media dealings began when Horizon set up an investment opportunity in 2007, in which eight clients contributed to a fund aimed at providing pre-production finance to films.

Pictured: George Harrison, the Beatle who founded HandMade films. (Steve Mathieson)

By 2009, HandMade films was undergoing serious cash flow issues, leading it to require “emergency” funding.

According to court documents, a plan involving Francis and other high-net-worth investors was then “hatched” to rescue and eventually take over it using a company called Almorah. But further funds were still needed – the channel for which came via a partnership with another company called Paragon. 

In total, £3.445million was transferred from his clients into Paragon – but instead of staying there, that money was transferred back to Almorah, which Francis controlled. From there, the money was used to settle HandMade’s debt pile of £31million. This "conflict of interest" was never disclosed to investors.

While the Court said it "appreciat[ed] that the money from the Paragon investors was used to pay the pressing debts of HandMade rather than being retained by Almorah" and that no financial gain was made due to HandMade's insolvency, it was still acknowledged that there was a "clear and evident conflict of interest."

Pictured: The JFSC found that Mr Francis had acted with "a most serious lack of integrity." 

Represented by Advocate Sinel, it was Francis’ case that he wasn’t the true driving force behind Almorah. Nonetheless, in an interview with the JFSC, who carried out investigations between 2011 and 2012, he said of himself: “Certainly people internally felt that I was the driving force behind the company, felt that I was the, the bright one, the enigmatic one, however you want to describe it, and again, I never set out to make myself out, I can’t think of a more eloquent way of saying it as, as ‘Billy Big Balls’; it was never my aim.” 

It was also argued that "the man in the street" may not understand the difference between the JFSC's finding that Francis had acted with a "lack of integrity" and acting with dishonesty. The Court recommended that the JFSC publish a guidance note to clarify this.

The Commissioner nonetheless upheld the JFSC’s decision. Francis attempted to appeal a second time, but this was later withdrawn, with his advocate stating that the former financier, who now resides in Wales, was “not well enough, physically or financially, to continue, with the Appeal."

Pictured: The Royal Court upheld the JFSC's findings.

Following the judgement, the JFSC released a public statement condemning Francis' actions. Chairman Lord Eatwell has since commented on the "landmark" ruling: “We are pleased that the Royal Court accepted that the actions of the Jersey Financial Services Commission were justified and agreed with its finding that Mr Francis lacked integrity and was incompetent. As the Judgment makes very clear, there is no place in our finance industry for those that lack integrity and fail to treat their clients fairly.