Stephen Smith, 63, of Broughton-in-Furness, Cumbria, pleaded guilty at Preston Crown Court yesterday for his role in the pension scheme making prohibited loans.

He pleaded not guilty to a sixth charge of making a prohibited investment.

The prosecution accepted the pleas and The Pensions Regulator said it would offer no evidence in relation to the sixth charge.

He will be sentenced on 26 October.

Proceedings against a second defendant, Derek Thomas, 85, of West Yorkshire, ended following his death on 4 July. He had been accused of assisting or encouraging the investments contrary to section 44 of the Serious Crime Act 2007, He was a professional adviser to the scheme.

A third former trustee was also facing accusations.

David Boardman, 68, of Preston, Lancashire, another former trustee of the scheme, had been charged with making five prohibited loans from the scheme and one other prohibited investment. He pleaded not guilty and his case was concluded following The Pension Regulator telling the court it would offer no evidence against Mr Boardman.

The cases against the trio began in October 2022 when they were charged following an investigation by The Pension Regulator.

The allegations concerned loans and an investment of £700,000. These included three loans by the scheme to Stonewell Property Company Limited, which was the parent company of the sponsoring employer, Marcus Worthington and Company Ltd.

The scheme also made an investment in a retail park where the land had been let on a long lease to companies connected and associated with Marcus Worthington and Company Ltd.

The prosecutions have been brought under Section 40 of the Pensions Act 1995 and the Occupational Pension Schemes (Investment) Regulations 2005. Loans to a person connected or associated with the scheme employer are prohibited. 

Investments of more than 5% of the value of scheme resources in land occupied or used by, or subject to a lease in favour of, a person connected or associated with the scheme employer are also prohibited. Breach of Section 40 is a criminal offence and can potentially lead to an unlimited fine and/or imprisonment.