Victims of £80m fraud are 'in denial'

City of London Police fear at least 600 people around the world have lost huge sums to a gang of Ferrari-driving fraudsters behind a bogus high-yield fund.

They say it is one of the biggest "Ponzi" style fraud schemes - the same type of rip-off committed by Wall Street broker Bernard Madoff - detected in Britain.

The criminal investigation focuses on a Knightsbridge-based finance firm and several companies linked to it. Three men - one director and two financial consultants - have been arrested on suspicion of conspiracy to defraud and money-laundering and remain on bail. But investigators have been struggling to win the support of victims who refuse to believe their life savings are gone.

Senior officers took the unusual step of holding a series of meetings at the City force's HQ for hundreds of people embroiled in the fraud.

During a series of highly-charged presentations they faced down claims that their inquiry is responsible for the collapse of the fund.

Officers outlined evidence against the gang and asked victims to fill in statements and compensation claims. Det Supt Bob Wishart, of City of London Police's fraud squad, said many victims cannot accept people they trust have cheated them.

He said: "These victims have been totally hoodwinked. They have been befriended and groomed by bad guys.

"They think these people are friends and they have placed complete trust and have given over a lot of personal information and it is very difficult to break that link of trust.

"Consequently we get this situation where we find they do not believe us. That is the power of the fraudster."

Many victims were introduced by family members, friends and business associates they met at wealthy sports clubs and West End bars.

Police said several victims have already lost their homes, others have been declared bankrupt and some have attempted suicide.

Among the victims were a Sixties pop star and representatives of several high-profile sportsmen and a number of other household names.

They travelled from across Britain to hear some of the evidence gathered by investigators as they unravelled the sprawling fraud. One north London woman in her twenties shouted: "How can £80million just disappear?" After the meeting a 48-year-old Welwyn Garden City woman who does voluntary work said her family had lost about £50,000 they saved from benefits for the care of her teenage son, who has cerebral palsy.

She said: "Because you trust them you feel these people are close friends and would never do something like this.

"We knew they had Ferraris and lived in big houses but we thought they were successful consultants."

Officers think some of the missing money may be held in accounts in Dubai, the Cayman Islands and Thailand. They have seized assets worth about £1million but the finds are just a small portion of the missing cash.