Long jail terms for sewer net fraud gang

A gang that tricked banks into lending them £160m to route fast net services through sewers has been jailed for a total of 44 years.

The four men were involved with a company called H2O that had access to sewers to route high-speed cables.

The four filed inflated and bogus contracts for broadband services with a finance firm and a Belgian bank to obtain cash.

The men were sentenced following a trial that lasted five months.

The complicated fraud scheme arose as the founders of H2O sought finance to help grow the start-up, which was founded in 2003 and went bust in 2011.

To help keep itself afloat, H2O sold on contracts it won to provide broadband via its sewer-based network to a separate company called Total Asset Finance (TAF), reported news site Ars Technica.

The cash H2O received for the contracts helped it expand and TAF got annual rental income from customers paying for their broadband service.

TAF turned to Belgian bank KBC for funds to help buy up all the contracts H2O was signing. As collateral, TAF handed over control of the contracts it bought to KBC.

By altering figures on the terms of the contract the fraudsters realised they could steal money from KBC, revealed court papers. Initially, the four men only changed the terms of existing contracts but later filed completely bogus deals.

The scam worked, said Judge Gledhill, because members of the gang worked at every organisation involved - H2O, TAF and KBC.

Stephen Dartnell and George Alexander from TAF were sentenced to 12 and 15 years in jail respectively. Simon Mundy from KBC was given seven years and Carl Cumiskey, former finance head at H2O, received a 10-year sentence.

"One of the least attractive aspects of the case has been the attempts of each of you to blame others, including each other, for what happened," said the Judge in his summing-up.