Luxury handbag conman admits swindling thousands
A "charismatic and persuasive" conman who persuaded people to invest thousands of pounds to buy and sell luxury handbags has pleaded guilty to fraud.Jack Watkin, 26, gained his victims' trust by putting forward an "outward facade of a glamorous and luxurious lifestyle" but left them out of pocket, Chester Crown Court heard.A trial had begun on Monday but Watkin, of Alderley Edge, Cheshire, earlier pleaded guilty to six counts of fraud and will be sentenced on 3 September.The conman, who was in Channel 4 documentary Rich Kids Of Instagram in 2016, spent the money he swindled in London's Harrods store and stays in the capital's five-star Dorchester hotel, according to police.
Opening the trial, Matthew Kerruish-Jones, prosecuting, said: "The defendant put forward the outward facade of a glamorous and luxurious lifestyle."This, it seems, engendered trust and led a number of individuals to loan him large sums of money on the promise of either a financial return or luxury items. Neither of which materialised."
He said complainants would be left "out of pocket for large sums of money".He added: "The defendant would make excuses and avoid the complainants, all the while spending large sums of money on maintaining his seemingly lavish lifestyle."Watkin had defrauded business and individuals to the value of over £200,000, Cheshire Police said.The jury was told that the sought-after Hermes handbags cannot be purchased over the counter and any prospective customers have to be invited to buy one, making it a lucrative investment as the resale value can be much higher than the original price.
Watkin told his victims he had the contacts that could give them access to the handbags and that they could split the profits made on resale. They then handed over their money in good faith but when his victims questioned the lack of any bag or money he would make excuses.He duped one woman into handing over thousands thinking she was investing in the the luxury handbag when she was in fact paying his bills at the Dorchester.She, like the others, never received the handbags or their share in the profits of their resale.Watkin, who was remanded in custody, was also convicted earlier this year of nine offences related to indecent images.
'Created a ruse'
Speaking after the hearing, Det Cons Gareth Yates said: "Jack Watkin is a male who has built a lifestyle on social media, on Instagram, and that lifestyle is one of exuberance."So if anyone was to look at that profile, you would see fancy hotels, luxury cars, designer clothing, and he created a following, and that following allowed him to create a ruse to be the fraudster we now know, and convicted fraudster."Senior crown prosecutor Laura Atherton said: "Some of these frauds span several years."Clearly, to be able to convince an individual for that length of time that you are going to repay money and you are going to provide goods, you have to be an incredibly charismatic and persuasive person to keep that up."It's just got to the stage where things had ran on for so long that complainants have then come forward when they come to the realisation, as it's the crown's case, that their goods or their money were never going to materialise."
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Following the asset freeze, Middleton and Veritaseum settled with the SEC for $9.5 million in 2019. $7,891,600 of this was disgorged profits, which was then topped up by $582,535 in interest and a $1,000,000 penalty applied to Middleton personally. The court also granted a series of injunctions that practically banished Middleton from the digital asset industry. SEC lied to the court about money transfers That would have been the end of the matter, but now Middleton has asked the court to vacate the 2019 settlement on the basis that the SEC has 'committed fraud on the court through a calculated scheme that undermined judicial integrity.' When it initially took action against Middleton and Veritaseum, the SEC demonstrated the urgency of the case by claiming that Middleton was secretly dissipating investor assets to his personal accounts. According to Middleton's latest filings, this was a complete fabrication. At the freeze hearing following the SEC's initial enforcement action, SEC attorneys pointed to monetary transfers worth $2 million that were made by Middleton to what they said were personal accounts shortly after the SEC issued him with a Wells Notice (which notifies SEC targets of impending enforcement action). Middleton's attorneys said that these transfers were routine and had been occurring every six months for the past 18 months—something Middleton says the SEC knew but chose to dishonorably omit in its submissions to the court. Additionally, they said the accounts were not personal at all, but in the name of the company. Unfortunately for Middleton, the SEC was successful in persuading the Judge, who froze Veritaseum business assets. However, at a subsequent hearing, the SEC made further filings, which included additional evidence that Middleton now says corroborates his story about the payments. This includes a report filed by the SEC's blockchain expert Patrick Doody: buried at the bottom of a sworn statement canvassing VERI trading volumes, Doody admits that he was incorrect to previously characterize the destination accounts for the £2 million ($2.7 million) as belonging to Middleton when in fact the accounts were in the name of Veritaseum LLC. This allegedly never got the chance to come up to court at the time, as Middleton and Veritaseum reached a settlement agreement with the SEC shortly thereafter. According to Middleton's latest filing accusing the SEC of fraud on the court: 'Defendants contend this outcome was coerced by the SEC's misconduct before the Court, which froze Defendant's assets based on a lie, that rendered Defendants unable to afford to be able to proceed with legal fees to continue its fight. In effect, but for the SEC obtaining the asset freeze, Defendants would have been able to defend the allegations and proceed in the normal course of due process.' 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Is it enough to vacate the Middleton-Veritaseum ruling? Under U.S. civil procedure rules, a judgment obtained by fraud on the court can be vacated under Rule 60(d)(3). That wider section describes the court's authority to set aside previous judgments: critically, it says that any such request must be made within a reasonable time and no later than a year after the date of the judgment in order to be considered. However, what Rule60(d)(3) does is specify that nothing in those rules affect the court's ability to set aside a judgment for fraud on the court. Fraud on the court is a high bar to reach. Though no hard-and-fast definition exists, several U.S. cases have teased out the concept. SEC v ESM Government Securities Inc in 1981 analyzed Rule 60(d)(3) and ruled that for there to be fraud on the court, the misconduct must threaten the integrity of the judicial process itself and not just affect the merits of one party's case. Mere perjury or attorney misconduct is not by itself enough to qualify. U.S. v Buck in 2002 ruled that fraud in the court must include 1) a deliberate scheme to defraud the court, 2) with intention to deceive, and 3) which corrupts the impartial functions of the court. Middleton's latest filing argues that the SEC conducts satisfy all of these requirements. He says the conduct by SEC attorneys was intentional misconduct: they knew at the time of the asset freeze hearing that the destination of the fund transfers was a Veritaseum account rather than a Reggie Middleton account. This was done 'to create a sense of urgency to obtain the relief they desired – the asset freeze.' He also says that the conduct was such that it corrupted judicial integrity: the SEC attorney knew both that the information being presented at the freeze hearing was false and that the Judge was specifically relying on it in making her determination to freeze Veritaseum assets. The filing also points to the witness intimidation. This all pressured the defendants to settle: the frozen funds would have otherwise been used to mount a robust legal defense, but with the funds frozen, Middleton and Vertisaeum suffered fairly severe penalties due to his settlement with the SEC. In addition to the nearly $10 million worth of monetary penalties, he and his companies were barred from participating in virtually any securities-related activities, and Middleton was banned from serving as an officer or director of any securities issuer. Between those prohibitions, Middleton was practically frozen out of the digital asset industry. SEC's response The SEC filed their response to Middleton's motion to vacate last week. First, they deny any such fraud took place. 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Victorian pharmacist's shop sells for almost £17,000 at auction
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