Key Takeaways
- In Shaw v Coleman Capital, the High Court entered summary judgment for £17,484,668.06 against an investment firm in liquidation and its bankrupt controlling director, after finding that the investor’s money was never invested as promised.
- Fraudulent misrepresentation in investment funds arises where dishonest statements about custody, segregation, liquidity or returns induce an investment and cause loss. Poor performance alone is not fraud.
- A summary judgment fraud claim can succeed without a trial where documents prove the case and the defendant offers no credible, documented explanation.
- A director who personally makes fraudulent representations is personally liable, even when the company is also liable and has entered liquidation.
- Under section 281(3) of the Insolvency Act 1986, discharge from bankruptcy does not release a debt incurred by fraud. A reasoned fraud judgment therefore keeps its value.
- Records from custodians and brokers often prove where the money actually went. Preserve every email, WhatsApp message, statement and payment record as soon as a withdrawal fails.
- Freezing and proprietary injunctions can be obtained before a claim is issued, which protects assets while liability is decided.
- Go Legal is rated Excellent with over 300 five-star reviews and 5/5 on Trustpilot and Google, placing our solicitors among the best-reviewed litigation lawyers in England and Wales.
Can Fraudulent Misrepresentation in Investment Funds Lead to a £17.5m Judgment?
Yes. In Shaw v Coleman Capital LLP & Ors [2026] EWHC 2546 (BP), a chartered surveyor who placed about £17.5 million with an investment manager obtained summary judgment for fraud against three defendants. He won even though the firm was in liquidation and its controller was bankrupt.
The case matters because it shows three things at once. A fraud claim can be decided quickly, without a full trial. The individual behind the company can be held personally liable. And a fraud judgment survives the wrongdoer’s discharge from bankruptcy.
It also shows what wins these claims: a documented trail matching each promise to what actually happened to the money.
What Happened in This Fraudulent Misrepresentation Investment Funds Case?
An investor was told his money was safely segregated and invested, when in fact it was being used to fund another group company. In Shaw v Coleman Capital LLP & Ors [2026] EWHC 2546 (BP), the High Court found that the promises made to him bore no relation to what happened to his money.
Christopher Shaw, a successful chartered surveyor and businessman living in Gibraltar, placed about £17.5 million under the management of Coleman Capital LLP and Matthew McClean between September 2020 and April 2024. Mr McClean also controlled Coleman (Europe Holdings) Limited, a Gibraltar company that was Mr Shaw’s counterparty under a loan agreement and the third defendant.
How were the investment funds said to be held and invested?
The money fell into three categories:
- Coleman Funds Monies: £3,669,796.42, to be invested in Cayman-based Coleman funds.
- KH Assets: securities worth £814,871.64, transferred from a Kleinwort Hambros portfolio.
- LIBOR Deposit Monies: £13,000,000, to be placed in “1Y LIBOR SONIA OIS (Overnight Index Swap) or other money market deposit products agreed”.
Mr Shaw was told the funds were genuine, with independent safeguards. Figures would be verified by Centaur, audited annually by BDO and held through Goldman Sachs. His money would sit in a segregated account in his name at Linear Investments Ltd, an FCA-regulated prime broker. Payments went through accountants Jones & Partners Ltd to Linear.
The representations also covered liquidity and returns. Mr McClean confirmed there would be “no lock in” and that the deposit products could be sold whenever required. He reported a rate of “5.89 [%] locked” and later messaged “Ok. Done. 6.095 sold” and “Re bought at 6.22”. Monthly statements bearing Coleman Capital’s name and FCA registration number showed £9 million in a “Fixed Interest Deposit” attracting “Monthly Interest”.
What happened to the investor’s money in practice?
None of it was invested in the Coleman funds or placed in a segregated deposit. Linear’s evidence showed it went to CAMG, another Coleman group company controlled by Mr McClean. CAMG used it for proprietary trading, paying other investors’ redemptions and reducing its own negative balance with Linear.
That balance was more than US$5 million negative by the end of 2021, nearly US$11 million by the end of 2022 and over US$18 million by the end of 2023. Linear’s data showed Mr McClean instructing transfers to CAMG on the same days Mr Shaw’s money arrived.
Mr Shaw had no real-time visibility of his assets and depended entirely on what he was told. In March 2025, he asked for £1 million back. It was not paid. He then demanded everything back. Nothing was returned.
Coleman Capital LLP entered liquidation on 6 August 2025. Mr McClean was bankrupt from 12 August 2025 to 12 August 2026 and moved to Dubai after proceedings began.
If your statements, custody information and withdrawal responses do not line up, our commercial litigation solicitors can assess the evidence trail and your recovery options.
What Issues Did the Court Have to Decide in the Investment Fraud Claim?
The central question was whether Mr McClean and his companies had committed fraud, and whether that could be decided without a trial. Several further questions followed on liability, jurisdiction and insolvency.
What must an investor prove in a fraudulent misrepresentation claim?
A fraudulent misrepresentation claim, also called deceit, requires five connected points:
- The defendant made a representation of fact.
- The representation was false.
- It was made dishonestly: the defendant knew it was untrue, did not believe it, or was reckless as to whether it was true.
- It was intended to induce the investor to act.
- The investor relied on it and suffered loss.
A promise about the future can be a statement of present fact. Saying money will be placed in a segregated account represents that the speaker currently intends to do so. If that intention never existed, the statement may be fraudulent when made.
Was this poor investment performance or a fraudulent investment scheme?
Mr Shaw said his money was never invested at all. As the judge put it: “His case is not poor investment, but theft.”
Mr McClean denied fraud. He blamed Omnia Group Holdings AG, Linear, market conditions and a liquidity crisis. He argued the loan agreement left “Coleman Multi Strategy Product” undefined. His own evidence described redemption requests from other investors coinciding with private equity and real estate commitments.
Can a director be personally liable for investment fraud?
The court had to decide who was liable: Mr McClean personally, the LLP, the Gibraltar company, or all three as joint tortfeasors. Mr McClean relied partly on the fact that Mr Shaw was himself a director and minority shareholder of the Gibraltar company.
Which procedural and contractual questions arose?
The court also had to decide:
- whether Mr Shaw could seek summary judgment when no defendant had filed an acknowledgment of service or defence;
- whether to lift the insolvency stay protecting Coleman Capital;
- whether the Gibraltar company could rely on a Gibraltar exclusive-jurisdiction clause and a clause 13 negotiation, mediation and arbitration process;
- whether it was improper to seek a fraud judgment so that the debt would survive Mr McClean’s bankruptcy and escape a contractual liability cap; and
- how much each defendant should pay.
How Did the Court Decide the Summary Judgment Fraud Claim?
The court entered summary judgment against all three defendants because none had a real prospect of defending the claim and there was no other compelling reason for a trial.
Can a fraud claim be decided without a full trial?
Yes. Under CPR 24.3, the court may give summary judgment where a party has no real prospect of succeeding and there is no other compelling reason for trial. The old rule barring summary judgment wherever fraud was alleged was abolished in 1992.
Courts remain cautious with fraud because it is a serious allegation. They can still assess the documents and reject an account that is unsupported or contradicted by contemporaneous records.
Because no defendant had filed an acknowledgment of service or defence, CPR 24.4(1)(a) required permission to apply. The court granted it. Mr McClean had engaged with the merits through a witness statement and skeleton argument, and a reasoned judgment would help show the debt survived his bankruptcy and assist enforcement abroad.
Why was the evidence strong enough for a merits judgment?
Mr Shaw’s evidence linked four stages:
- What he was told, in emails, WhatsApp messages, a structure diagram and the loan agreement.
- The payments and assets transferred in reliance on those statements.
- The interest and performance reported in later statements.
- Linear’s records of where the money actually went.
The definition argument failed because Mr McClean had later supplied a definition and repeatedly said the money would go into the Coleman funds. He did not address the withdrawal, performance or LIBOR representations at all. He accepted that CAMG received the money through Linear and that the accounts were “not fully segregated as originally described”.
The judge found Mr Shaw’s evidence “full, cogent and precise” and the defendants’ evidence “thin to the point of inconsequence”. The judgment states:
“I am struck by the failure of the defendants (and especially the second defendant, as the controlling mind of the first and third) to explain exactly what has happened to the claimant’s money. After all, they really must know.”
“In the modern finance world, operated and recorded by computers, connected by the internet, it is inconceivable that such documentation would not exist and be available to the defendants.”
“Disaster may unfortunately strike the most careful of investment managers. But honest managers do not usually lose everything.”
On Mr McClean’s move to Dubai without a convincing explanation, the judge said: “The obvious inference is that he is running away.” That reinforced a picture already drawn by the documents.
Who was liable, and for how much?
Mr McClean was personally liable because he made the representations, knew they were false and caused the loss. Acting through a company did not protect him: “He is liable not because he was a director but because he committed a fraud.”
His dishonest state of mind was attributed to Coleman Capital, because a third-party victim was suing the corporate wrongdoer. The LLP was also a joint tortfeasor. The Gibraltar company made representations in the loan agreement and shared a common design with Mr McClean. Mr Shaw’s directorship and shareholding were “pure window-dressing”, because he had no visibility of transfers and no control over them.
The court rescinded the loan agreement for fraud, so clause 7.3, which capped liability at 120% of the aggregate loans, fell with it. Damages were:
- £3,669,796.42 for the Coleman Funds Monies;
- £814,871.64 for the KH Assets; and
- £13,000,000 for the LIBOR Deposit Monies.
Coleman Capital and Mr McClean are liable for all three sums. The Gibraltar company is liable for the Coleman Funds Monies only. Seeking a fraud judgment so that the debt would survive bankruptcy, or to escape the cap, was no objection once fraud was established.
Why did the jurisdiction and arbitration clauses not help the defendants?
The Gibraltar company had submitted to the English court. Its solicitors accepted service, its sole director swore an affidavit on its behalf, and it consented to the freezing injunction continuing without reserving jurisdiction. No defendant applied under CPR Part 11 or sought a stay under section 9 of the Arbitration Act 1996. The judge said:
“What you agree to do can be unagreed, and not only by words, but by actions too.”
What Did the Decision Mean for Investors, Directors and Insolvency Practitioners?
The decision shows that a reasoned fraud judgment keeps its value even where the firm is in liquidation and its controller has been bankrupt.
What should investors do when account statements and custody records do not match?
Verify statements independently the moment a mismatch appears. A statement produced by the manager proves only what the manager said. In Shaw, the decisive evidence came from Linear, which showed what was actually held and moved.
Warning signs from this case include a manager who controls a connected company’s account at the same broker, fixed deposits that no custodian will confirm, and an unpaid withdrawal request. New money being used to pay other investors’ redemptions is a classic warning sign of a scheme in trouble.
What risks do directors and investment managers face?
Directors who personally make dishonest representations are exposed personally, whatever corporate vehicle they use. A defence built on market losses or third-party failures is unlikely to succeed where third-party records show the money was used for other purposes. Leaving the jurisdiction does not stop an English court granting judgment.
The court also rejected two side attacks. Acting for two claimants against the same defendants is not improper in itself, and any conflict allegation must be properly particularised. The complaint that Mr Shaw’s solicitors designed the structure misunderstood the claim, which was that the defendants operated it fraudulently.
What should insolvency practitioners and creditors consider after an insolvency fraud judgment?
Under section 130(2) of the Insolvency Act 1986, proceedings against a company being wound up need the court’s permission. The test is “What is right and fair according to the circumstances of the case.” The court lifted the stay for this application because a judgment would facilitate Mr Shaw’s proof in the liquidation and one decision against all defendants reduced the risk of inconsistent findings. The liquidator, also Mr McClean’s trustee in bankruptcy, stayed neutral.
Discharge from bankruptcy normally releases provable debts, but section 281(3) excepts debts incurred by fraud. A contract claim against Mr McClean alone would have offered far less. Creditors should consider whether a fraud claim against an individual exists alongside any claim against the company.
The claim against Linear was settled by a Tomlin order, and any recovery must be credited to avoid double recovery. The proprietary, conspiracy, fiduciary duty and dishonest assistance claims were stayed with liberty to restore, because the evidence of where the money ended up was incomplete.
Our solicitors advise on creditor strategy in insolvency proceedings, including proofs, stays and claims running alongside a liquidation or bankruptcy.
What does the case mean for custodians and brokers?
Custodian records can decide the case. Linear’s data proved the funds were never held as represented. Custodians and brokers should keep clear audit trails of whose money is held and who instructed each transfer, and expect to be asked for evidence. Allowing a client account to run a negative balance of over US$18 million also carries obvious litigation and reputational risk.
What do other investment fraud decisions show?
Courts regularly award substantial damages to defrauded investors:
| Case | What the court decided |
|---|---|
| Candy Ventures SARL v Aaqua BV | £4,623,919 plus interest in damages for deceit, where representations about major prospective investors and advanced negotiations were false, known to be false, intended to induce reliance and relied upon |
| Mather v Rattan | The Court of Appeal upheld a £1 million award concerning a biotechnology investment, confirming reliance and causation |
| Smithers v Persons Unknown | Claimants who said they were induced to invest about £10.5 million in a fraudulent cryptoasset trading business succeeded against the relevant defendants |
| Jaffe v Greybull Capital | The Commercial Court found deceit established and certain investors entitled to rescission |
In Jaffe v Greybull Capital, the schemes were also unauthorised collective investment schemes under section 235 of the Financial Services and Markets Act 2000. That engaged relief under section 26, which applies to agreements made in breach of the general prohibition on carrying on regulated activities. Where an investment was sold through an unauthorised structure, it is worth assessing a statutory route alongside deceit.
How Can Investors Preserve Evidence and Protect Assets After Suspected Investment Fraud?
Secure every record, identify every party and consider urgent court protection before money or documents disappear.
How should I investigate a suspected fraudulent investment scheme?
- Stop further payments.
- Preserve complete copies of emails, WhatsApp messages, pitch materials, agreements, statements, payment instructions and withdrawal requests.
- Prepare a dated schedule matching each promise to the payment made in reliance on it.
- List every company, director, intermediary, custodian, broker, accountant and bank involved.
- Ask custodians and brokers to confirm account ownership, holdings and transaction history.
- Compare reported performance against those third-party records.
Concealment can also affect time limits. In Mather v Rattan, the Court of Appeal confirmed an investor’s claim was not time-barred because the fraud could not reasonably have been discovered earlier. Do not assume that relying on concealment is safe, though. Delay gives assets time to move.
What urgent court orders may help with investment fraud recovery?
Protective orders preserve assets while liability is decided. They do not decide whether fraud occurred.
In Shaw, the court granted proprietary asset-preservation injunctions and worldwide freezing injunctions against all three defendants before the claim form was issued. It also granted a proprietary injunction against Linear and allowed service on the Gibraltar company by email to Mr McClean’s address.
A freezing injunction restrains a defendant from dissipating assets up to the value of the claim. A proprietary injunction protects specific assets said to represent the claimant’s own money. Tracing work then follows the money through accounts and entities.
Frequently Asked Questions
Speak to Investment Fraud Solicitors Today
Every week of delay gives a wrongdoer time to move money, close accounts and lose records. The investors who recover most are usually those who preserve evidence and seek protective orders before the other side realises a claim is coming.
Our commercial litigation solicitors advise investors, directors and insolvency practitioners across England and Wales on fraud claims, urgent injunctions, tracing and enforcement. We can assess whether your loss reflects poor performance, breach of contract or fraud, and identify the fastest route to recovery. Call us on 0207 459 4037 or book a free consultation.
