Doctor turned financier Gerald Smith was sentenced to eight years behind bars today for stealing £33 million from collapsed software company Izodia.
Smith, a qualified GP, was given two consecutive four-year jail sentences and banned from being a company director for fifteen years at Cambridge Crown Court..
The judge said Smith, who pleaded guilty to ten charges of theft and one count of false accounting at a Serious Fraud Office prosecution in April, would be freed from jail on licence after serving half his prison term.
The court heard how Smith, 51, used the stolen money to buy a yacht and pay off interest on business loans but the SFO said it was confident of recovering most if not all of the losses.
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In 2002, Smith, a director of Orb, a now-defunct Jersey-based investment group, phoned Morley Fund Management, an investor in Izodia, with a proposition to turn the software firm into a property vehicle.
Smith offered to pay above the market price for Morley’s stake in Izodia but the talks collapsed leaving Morley with its investment.
Later it emerged that Izodia’s single major asset, a £33 million cash pile, was missing and had been transferred to Mitre Property Management, a unit of Orb, on Smith’s orders. Smith then siphoned off the cash and attempted to conceal the fraud by supplying Izodia’s directors with false paperwork.
The SFO decided not to pursue its case against Jarlath Vahey, an Izodia director at the time of the money transfer, who had been charged with conspiracy to defraud and theft.
AIM-listed Izodia’s share price peaked at the height of the dot-com boom. Its market value hit £1.7 billion in March 2000 but by mid-2002 it was a cash shell with £33 million in its accounts.