GREEN INVESTMENT SCAM EXPOSED: £70M TREE SCHEME COLLAPSES AS THREE DIRECTORS GO TO JAIL

A supposedly ethical investment opportunity built around tree plantations in Costa Rica has ended in prison sentences after three company directors were found to have defrauded thousands of investors out of about £70 million.

Matthew Pickard, Stephen Greenaway and Paul Laver, former directors of Bournemouth based Ethical Forestry Ltd, were sentenced at Southwark Crown Court to a combined 15 years and nine months for fraudulent trading. Pickard received six years, Greenaway five years and three months, while Laver was sentenced to four years and six months. All three were also disqualified from acting as company directors for 10 years.

The scheme targeted around 3,000 investors, many of whom were encouraged to move pension savings into the forestry investment programme. Investors were promised substantial long-term returns from trees planted and eventually harvested in Costa Rica, with the proposition combining financial returns with an environmental message.

Around two million trees were planted, but prosecutors said the business failed to allocate sufficient funds to maintain the plantations or establish the infrastructure required for harvesting. The investment proposition therefore could not deliver the returns promised to investors.

While investors were being encouraged to put more money into the scheme, the directors were allegedly extracting funds from the company.

The Serious Fraud Office said approximately £14 million was withdrawn through a tax avoidance arrangement, contributing to the financial deterioration that eventually brought Ethical Forestry down. The court heard that the directors used millions of pounds for luxury properties, sports cars, holidays, yachts, watches and other personal expenditure.

Pickard was reported to have taken about £8.2 million, while Greenaway received about £3.1 million and Laver about £2.5 million. Their spending included luxury homes and dozens of high-performance vehicles.

The scheme also allegedly used apparent investor returns to maintain confidence in the business. Prosecutors told the court that some payments presented as harvest returns were actually funded from money obtained from other investors, helping create the appearance that the underlying forestry model was working.

That element makes the case particularly significant for financial crime professionals. A legitimate looking investment product can conceal serious weaknesses when investor communications, financial statements and actual asset performance are not independently tested.

The case also exposes the vulnerability of pension investors to schemes that combine high promised returns with an emotionally attractive social or environmental purpose.

Ethical investment has become an increasingly important part of the global financial system, but the Ethical Forestry case demonstrates that environmental branding can also become a powerful tool for establishing credibility with investors.

For compliance teams, the warning extends beyond traditional fraud detection. Investment businesses need controls capable of identifying conflicts of interest, unexplained related party payments, excessive director withdrawals, inconsistencies between reported assets and actual operations, and unusual movements of investor funds.

The case is also a reminder that due diligence cannot stop at the company brochure or investment proposition. Investors and intermediaries need to establish whether the underlying assets exist, whether they are independently valued, whether they are being maintained and whether the cash flows supporting the promised returns are economically credible.

The collapse of Ethical Forestry came after years of investor fundraising. By then, thousands of people had placed retirement savings into a business that prosecutors said had been hollowed out from within.

The message for the financial sector is stark. A green investment label is not a compliance control. When governance fails, even an ethical investment story can become a vehicle for financial crime.

Compliance takeaway: The Ethical Forestry case demonstrates the importance of looking beyond the stated purpose of an investment product. Pension and investment schemes require robust due diligence over underlying assets, cash flows, director remuneration, related party transactions, use of investor funds and the independence of reported returns. Environmental or social credentials should never substitute for financial and governance scrutiny.