Three directors of Ethical Forestry Limited (EFL) are facing significant jail sentences after pleading guilty to fraudulent trading in a scheme that defrauded more than 3,000 investors of approximately $70 million. Directors Stephen Greenaway and Paul Laver, both 48, and Matthew Pickard, 55, conned investors between January 2008 and December 2015 by promising substantial returns from planting trees in Costa Rica. The investments ranged from $10,000 to $200,000 per investor.
Investors were assured their money was being used to plant trees, which would later be harvested for timber, yielding returns of 10 to 25 percent. EFL advertised an "intoxicating blend of hard finance and ecological consciousness," claiming investors could "make huge amounts of money and also make the world a better place." The company even issued a newsletter titled 'Ethical Times'. To make the investment more attractive, EFL offered to cover tree care and harvest processing costs, and paid short-term returns from periodical 'thinning harvests.'
However, prosecutors revealed that the directors, particularly majority shareholder Matthew Pickard, became "consumed" by the funds, using them to purchase Italian supercars, multi-million dollar mansions, and fund luxury holidays. The company's financial collapse was accelerated by the directors' withdrawals for personal gain. Returns from purported 'thinning harvests' were actually funded by new investors, a tactic described by prosecutors as a "Ponzi element."
Stephen Greenaway purchased a $1.9 million home known as 'Moonbeam' in the exclusive Sandbanks peninsula. He also spent $1.3 million on 26 cars, including three Ferraris, five Porsches, and a McLaren MP4-12C, along with $58,000 on watches and jewelry, and $180,000 on holidays. Paul Laver bought a $755,000 home, spent around $673,000 on 16 cars, and $29,000 on a home cinema. Laver also acquired a plantation called Cinco Ramas for $600,000 as a personal investment, separate from EFL investors.
Matthew Pickard's spending included a $4.3 million property, $30,000 on garden tiles, $283,000 on a yacht, and $170,000 on travel and holidays. Employees described Pickard as "dominant" and "number one" in the company, while Laver was seen as the "least significant figure," though still a key decision-maker. Former employees noted the directors' "frivolous and careless" spending, with cars often heard roaring into the parking area upon their arrival. One employee recalled it being a "running joke" to move sports cars from designated parking spots when potential investors visited.
The directors also paid $2.7 million to a company called Blackstar for a tax avoidance scheme that created a $40 million tax liability. The subsequent withdrawal of approximately $17 million from EFL left the company unable to pay its tax obligations to HMRC, worsening its financial outlook by $28 million.
By 2014, the scheme began to unravel as cost predictions proved inaccurate, revealing a significant capital investment shortfall. When the company lacked funds for 'thinning harvests,' the Financial Conduct Authority became involved, and EFL entered voluntary liquidation in 2015. At that point, EFL still had over 275,000 trees to plant for 475 investors who had paid $7.5 million, with documentation falsely claiming the trees were already planted.
Emma Luxton, Director of Operations at the Serious Fraud Office, stated that the investigation exposed the fraudulent scheme and that the guilty pleas are an important step toward justice and compensation for the victims. The sentencing hearing is ongoing.