Financial ombudsman rejects investors' fraud claims over collapsed Vashi jeweller
The Financial Ombudsman Service has rejected fresh submissions from investors who claim they were defrauded in the collapse of luxury jeweller Vashi, marking the latest setback for victims seeking accountability in a case that has left authorities seemingly inactive. The investors, who collectively lost millions, had hoped the ombudsman would intervene after the jewellery company entered liquidation in 2023 with debts of £170 million, leaving a trail of financial discrepancies and unanswered questions.
Background and Context
Vashi, founded by gem expert Vashi Dominguez, operated high-profile stores in London, Birmingham, and Manchester before its spectacular collapse in April 2023. The company had attracted substantial investment from prominent business figures including John Caudwell, founder of Phones4u, Nick Wheeler of Charles Tyrwhitt, and Clive Schlee, former chief executive of Pret A Manger. According to Companies House filings, Vashi claimed sales exceeding £100 million in 2021, yet internal documents reviewed during liquidation revealed the actual figure was just £5 million. Liquidators discovered that the £156 million in stock declared to investors was valued at merely £100,000, highlighting the scale of the financial misrepresentation.
Key Figures and Entities
Vashi Dominguez, who leveraged media appearances including slots on ITV's This Morning to build his brand's credibility, has reportedly left the United Kingdom and remains uncontactable by authorities. Twenty investors, led by Craig Goodfellow whose group lost more than £3 million, submitted complaints to the Financial Ombudsman Service alleging that Lloyds, NatWest, and HSBC should have detected what they claim was fraudulent behaviour. The investors' case was prepared by Stuart McFadden, co-founder of fraud recovery company Refundee, who argued that the banks failed in their duty to protect customers from what they characterise as an authorised push payment (APP) scam.
Legal and Financial Mechanisms
The investors' case centres on the concept of APP scams, where victims are tricked into transferring money to accounts controlled by fraudsters. Despite submitting forensic accounting evidence from Vashi's records between 2019 and 2023 and a legal opinion from a criminal barrister, the FOS senior investigator maintained that the discrepancies "isn't enough to evidence an intention to defraud investors." In correspondence obtained by The Times, the investigator noted that while the disparity between actual company accounts and investor presentations was concerning, it did not meet the threshold for intervention under the voluntary CRM Code governing APP scams. The FOS also pointed out that neither the Serious Fraud Office nor the Metropolitan Police had opened formal investigations into Vashi's collapse.
International Implications and Policy Response
The Vashi case highlights significant challenges in the UK's framework for protecting investors from corporate fraud, particularly when sophisticated financial instruments are involved. Some frustrated investors have reportedly turned to international authorities, including the FBI in the United States, seeking alternative avenues for justice. The case raises questions about the effectiveness of voluntary banking codes versus regulatory enforcement, and whether the current system provides adequate protection for sophisticated investors who conduct due diligence but are still misled by fraudulent financial reporting. With the FOS decision now under review by a senior ombudsman, the outcome could have implications for how similar cases are handled in the future.
Sources
This report draws on company filings from Companies House, correspondence from the Financial Ombudsman Service, and reporting published in The Times between 2023 and 2024. Additional information was obtained from statements provided by fraud recovery company Refundee and liquidation documents related to Vashi's collapse.
