The Manchester High Court has given Kevin John Kirkwood, aged 39 and Gary Quillan, 48, both of Liverpool, along with Gregory Gerard Garrett, 49, of Leamington Spa disqualification orders after they were found to have misled 209 investors.
Kirkwood has been banned for 10 years, while Quillan and Garrett both received 12-year disqualification orders.
Insolvency Service chief investigator Alex Deane has urged investors to always seek independent financial advice when looking to access their pensions savings.
Pension liberation scams involve tricksters persuading savers to access their pension funds before the age of 55 when permission has not been given by HM Revenue and Customs.
FCA: Pension liberation fraud seen as most common financial crime
Kirkwood and Quillan ran Liverpool-based KJK Investments while Quillan’s brother-in-law, Garrett, was director of G Loans, based in Windermere.
The Court heard clients seeking a loan were offered one by G Loans, on condition they simultaneously invest their existing pension in KJK Investments shares.
In a 30-month period, KJK Investments received just under £12m from 209 people and loaned roughly half of the money to G Loans.
The court heard investors were in effect “being loaned their own money”.
KJK Investments advertised a potential 6 per cent annual return on the investment and it was intended that the client’s pension would be used to repay the loan upon retirement.
The remaining funds received through the scheme were used on sales commissions worth £900,000 and director salaries of just under £500,000.
Money was also used to make further loans to other companies on uncommercial terms.
The Insolvency Service undertook a “confidential investigation” after it became aware of the scheme.
Both companies were wound up in the public interest on 15 April 2015 after petitions were presented to the court on 8 August 2013.
Passing judgement on 18 September 2019, district judge Obodai found that the directors had misled investors and deliberately caused the companies to obscure the relationship they had with each other, calling the scheme a “house of cards”.
The Insolvency Service’s Deane says: “None of the directors expressed any real regret for deliberately misleading people who were mainly small pension investors, and who were targeted because they were unable to get credit and required cash.
“Pension liberation is being widely promoted as an easy way of gaining early access to pension savings. Any schemes offering such benefits should be viewed with caution and independent financial advice should always be sought before entering into such a scheme.”