Watchdog probes adviser over £2.4m

Stephen Higham, managing director of Oaktree Financial Services, has already confessed to taking more than £400,000 of one client's money and fraudulently paying it into his business account.

Receivers were called into Oaktree last week after the firm admitted it could not pay back the money.

Investigations by the FSA, Nottinghamshire's Fraud Squad, receivers and Financial Mail have established that at least £2.45m belonging to more than 30 of Oaktree's clients has vanished. But the final amount could be much higher as the full extent of the fraud is uncovered.

Higham created a bogus set of investment funds that he 'sold' to clients. But he paid the proceeds directly into the business, backed up with a complex paper trail of false invoices.

Richard Saville of receiver Begbies Traynor said: 'We are struggling to piece together exactly what happened. The computer records at the firm are completely different to the information clients were given and until they come forward so we can compare notes, we don't know the full extent of the problem.'

On Friday, receivers discovered two bank accounts that were not listed in any of the company's books. A computer, believed to have been used to produce fake certificates and contract notes, has also been recovered.

Higham, 52, from Radcliffe-on-Trent, Nottinghamshire, ran the firm jointly with his brother Chris, 49, the firm's other director. Chris Higham denies any knowledge of the missing money and is working with the FSA to unravel the books.

Stephen Higham has left Nottingham to stay with relatives. But some investors are angry that Stephen Higham's bank accounts have not already been frozen.

One investor who has lost more than £300,000 said: 'The FSA had a confession of fraud two weeks ago, yet they have not acted swiftly to protect our interests. The money could be anywhere by now.'

Stephen Higham had previously worked in the Middle East and met many of his clients there.

One former employee of Oaktree, who was made redundant last Tuesday, says: 'Wealthy clients, including some in Arab dress, would jet in from overseas and come and visit Steve in the office. He was always very secretive about his clients.'