A former millionaire who illegally invested £11million in pensions in his motorcycle business has been given a suspended sentence.
Stuart Garner brought the iconic motorcycle brand Norton back to the UK after buying the rights in 2008.
His business received millions of pounds from the government and was backed by MPs.
But hundreds of people have lost money after investing in three pension schemes where Garner was a trustee.
He broke pension rules by investing all of their money in his business when he shouldn’t have used more than 5%.
Judge Nirmal Shant QC sentenced him to eight months’ imprisonment but suspended it for two years, meaning he will not go to prison unless he commits another offense within that time.
She said real damage has been done to the people investing in the pension systems.
“It’s not just financial damage,” she said.
“I have read statement after statement about the trauma you have inflicted on the lives of ordinary people who thought they were investing in their future.
“Many of them spoke of broken relationships, serious illness and the misery of having to work much longer than they had planned because of the financial damage they caused.”
Derby Crown Court heard that many members of the pension schemes had attempted to withdraw money but were told it was not possible.
William Hays, prosecutor, said people were owed around £10million in January 2020 when the company went bankrupt and it was still unknown how much money they would get back.
The 227 members of the schemes included Robert Dewar, who transferred his £120,000 pension to one of the schemes in 2012 and died in October 2019 at the age of 64.
“I just don’t know how [Garner] can live with himself,” said Mr. Dewar’s daughter Sally Holmes.
“Because it’s not just us. How could he do this to so many vulnerable people who trusted him, believed in him, believed in him?”
Ms Holmes spent three years before her father’s death trying unsuccessfully to free up money from his pension.
Her father had multiple sclerosis and she said the money could have paid his mortgage and household bills while his condition worsened.
Instead, his wife had to take over his work as a self-employed commercial real estate agent while looking after him.
“His condition deteriorated to the point where he ended up being only able to move his arms and even his hands,” Ms Holmes said.
“He needed help eating, drinking, washing, dressing and her [Mrs Holmes’ mother] still had to work full time because you just can’t make money and there was no backup.
“I even sent him [Stuart Garner] an email reading “He has died now, it’s too late for us, this is the state he died in. We just wanted to be able to take care of him.” He never answered.”
Norton Motorcycles has since been bought by the Indian company TVS Motor Company.
In June 2020, the Pensions Ombudsman ordered Garner to pay millions of pounds back to pensioners who had invested in his three schemes, saying he had “acted dishonestly and in breach of duty”.
However, he never repaid the money and was declared bankrupt in May 2021.
This comes after Leicester City Council pursued Norton Motorcycles for defaulting on a £750,000 economic development loan personally guaranteed by Garner.
The 53-year-old had pleaded guilty to three counts of breaching the rules of the pension scheme when he appeared before Southern Derbyshire Magistrates’ Court earlier.
The case was then sent to Derby Crown Court for sentencing.
William Hays, an official for the Pensions Authority that prosecuted Garner, said the loss of money caused “significant difficulties for those unable to withdraw it.”
Some have been unable to pay mortgages and have been forced to keep working longer than planned, he said.
Some have suffered from mental health issues, marital problems, stress, trouble sleeping, loss of confidence and self-doubt, he added.
“You call yourself ‘a total jerk,'” said Mr. Hays.
Garner’s lawyer Peter Caldwell said he was “disgraced” as a result of what happened and suffered “serious mental health crises”.
“He was on medication,” Mr Caldwell said.
“He’s trying, in his own words, to deal with it. There are acute episodes where he needs help.”
He said Garner failed to realize he was breaking the law, which prosecutors accepted.
“This wasn’t a position where he knew about the restriction and still went and did what he was doing,” Mr Caldwell said. “He does not have.”
He said Garner personally made £30,000 in payments to pension scheme members before he went bankrupt.
“Your Honor should understand that he sincerely expresses his remorse to you and others,” Mr Caldwell said.
Motorcycle News news editor Jordan Gibbons said he believes there should be an investigation into what happened.
“There will be some red faces in government,” he said.
“Millions and millions have been either granted or lent to the Norton business through various investment programs. Stuart was the poster child for Brexit. He was in advertising. Stephen Barclay [then Brexit Secretary] went and toured the factory.
“The systems were set up 10 years ago. It seems amazing to me that people wouldn’t have realized sooner that a lot of the money that was in the business came from pension schemes where the money should never have come from. “
A glowing profile in The Times in March 2012 described Garner as ‘one of a kind, a committed Midlands millionaire hopelessly in love with a battered old bike shop and now finding himself at the forefront of George Osborne’s ‘March of the Makers’. “
George Osborne, then Chancellor of the Exchequer, visited Norton Motorcycles in July 2015 to announce £4million in government funding for the company.
Vince Cable also visited Norton as Business Secretary in 2011 to announce a £625,000 government-backed loan.
“This iconic company, whose brand once inspired a generation of motorcycling enthusiasts, is a prime example of British business innovation,” he said at the time.
“I hope many more companies will be inspired by what Norton will achieve through this funding.”
Garner told Derbyshire Life, a local magazine, about his “simple” approach to business.
“Making a motorcycle business monetize didn’t seem like a very complex problem and I think the simplicity of my approach made it successful,” he said in an article published in January 2015.
“My design team knows it’s complicated to build a great bike, but when I met with these guys, my approach was, ‘Just hit the make button, guys.’
“I gave them the problem of making the bikes and by not getting bogged down in details I was able to focus on the rest of the business – taking care of finance, brand equity, market position, distribution and dealer network – in order to a higher level Sell price than it costs and make a profit.
“The deal is really simple: buy the product for £1, sell it for £2 and make sure you’re working for less than £1.”
Mr Gibbons said the deal appears to be doing well on the surface.
“They started developing new models, they launched them, they raced at the Isle of Man TT, they developed a racing team, they signed star riders, including John McGuinness, who is one of the most famous TT riders of all time ‘ he called.
“I guess they just spent too much money developing new bikes, racing them, judging by the sounds, buying fancy cars and things like that, and not just building enough bikes to sell and ship them. It really is that simple.”
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