High Court awards £17.5M against Coleman Capital fund manager for fabricated returns

A UK High Court found Coleman Capital's director fabricated monthly statements while routing £17.5M in client funds to a separate entity for proprietary trading.

Coleman Capital director flees to Dubai as High Court enters £17.5M fraud judgment

The monthly statements looked fine. They showed steady returns, Goldman Sachs custody, and a segregated account bearing the investor's name. The custodian's own trading records told a different story — and that gap is now the subject of a landmark fraud judgment, insurancebusinessmag.com reports.

On October 9, 2026, the High Court's Business and Property Division granted summary judgment of approximately £17.5 million against Coleman Capital LLP, its controlling director, and a Gibraltar-registered holding company, Coleman (Europe Holdings) Limited. The basis: fraudulent misrepresentation — in plain terms, deliberate deceit.

Three pools, one investor, no returns

The investor — a chartered surveyor and businessman — placed a total of approximately £17.5 million with the firm and its director between September 2020 and April 2024. The money fell into three pools: roughly £3.7 million described as the Coleman Funds, approximately £800,000 in equities transferred from a Kleinwort Hambros portfolio, and £13 million earmarked for a LIBOR-linked deposit account.

The pitch, as documented in emails, presentations, and a formal offering memorandum, was elaborate. The investor was told his money would go into a Cayman-based fund using Goldman Sachs as prime broker, independently administered, audited annually by BDO, and held in a segregated custodian account with the option to withdraw at any time.

None of that happened.

Funds routed to separate entity for proprietary trading

Evidence from the custodian, Linear Investments Ltd, showed the money was instead routed to Coleman Asset Management Group — another entity controlled by the same director — and used for proprietary trading and to pay out other investors who were redeeming. The director himself conceded in a witness statement that "the accounts were not fully segregated in the way originally described and that the investment profile differed from initial expectations."

Meanwhile, the investor received monthly statements bearing the firm's name and FCA registration number, each purporting to show his balances growing with positive returns. The custodian's trading data painted the opposite picture: Coleman Asset Management Group's running balance with the custodian was negative by more than US$5 million at the end of 2021, nearly US$11 million by the end of 2022, and over US$18 million by the end of 2023. Custodian data further showed the director instructed transfers to that entity on the same days the investor's money arrived.

The investor's case was that the director must have known the monthly statements he sent were untrue. In his evidence, the director did not say the statements were true, gave no explanation for them, and did not address them at all. The court, in granting summary judgment, found the defendants had no real prospect of a successful defence.

"He is running away"

When the investor requested £1 million back in March 2025, nothing came. When he asked for everything back, nothing came either. The court stated plainly: "Disaster may unfortunately strike the most careful of investment managers. But honest managers do not usually lose everything."

The defendants never filed an acknowledgement of service or a defence. The director submitted a witness statement denying fraud and attributing the losses to third-party failures — principally a default by a company called Omnia Group Holdings AG and the conduct of the custodian. The court found that defence unparticularised and unsupported by any documentation. In the modern finance world, the court observed, "it is inconceivable that such documentation would not exist and be available to the defendants."

One further detail did not escape the court's attention. The director, who had been based in the UK throughout the investment relationship, moved to Dubai after proceedings were issued. "The obvious inference," the court said, "is that he is running away."

Fraud finding survives bankruptcy

The court entered summary judgment on fraud specifically — rather than a simpler default judgment — for enforcement reasons. Under the Insolvency Act 1986, a debt arising from fraud is not extinguished when someone is discharged from bankruptcy. The director had been bankrupt from August 2025 to August 2026, but the fraud finding means the £17.5 million liability follows him regardless.

The court also set aside the loan agreement between the parties, removing a contractual cap that would have limited liability to 120% of the loans made. A cap in a contract obtained by fraud does not survive once the contract is unwound.

Damages breakdown

Damages were assessed at £3,669,796.42 for the Coleman Funds, £814,871.64 for the transferred equities, and £13,000,000 for the LIBOR deposit monies. Coleman Capital and the director are liable for the full amount; the Gibraltar holding company is liable only for the Coleman Funds portion.

The remaining claims — including efforts to trace and recover the actual assets — were stayed, with the investor's legal team noting the full picture of where the money went remains incomplete.

Implications for PI and D&O underwriters

For professional indemnity and directors' and officers' underwriters providing cover to regulated investment managers, the case presents a textbook scenario: fabricated performance reporting, misappropriated client funds, a controlling director who is the sole point of failure — and a fraud judgment that no insolvency process can extinguish. The judgment puts underwriters on notice that such findings, once entered on a fraud basis, carry consequences that outlast even formal bankruptcy proceedings.

Coleman Capital LLP is currently in liquidation.

Source: Google News UAE — Dubai