How Stuart Garner Dodged Jail

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Former Norton boss Stuart Garner will not serve any prison time for his embezzlement schemes. (Paul Bryant/)

Stuart Garner stood in Derby Crown Court at the end of March for illegally investing pension funds into Norton Motorcycles before the company spiraled into administration and was broken up to be sold—but he walked free after the judge handed down a suspended sentence.

Garner pleaded guilty to three offenses at a hearing at Derby Magistrates Court in February, and the case was referred to the higher Crown Court for sentencing. In the UK, Crown Courts have greater sentencing powers than Magistrates, but the judge accepted that Garner did not know that he was breaking the law and opted to give him a suspended sentence rather than imprisoning him. Garner was sentenced to eight months imprisonment for each of the three crimes but with those sentences suspended for two years. That means the sentences will only be enforced if he offends again during that two-year period. As well as the suspended sentence, Garner was banned from being a company director for three years and told to pay costs to The Pension Regulator (TPR), which brought the prosecution, of 20,716 pounds (equivalent to $26,927).

Related: Norton V4CR Cafe Racer Prototype Shown

Garner’s crimes consisted of investing nearly 100 percent of the assets from three defined contribution pension schemes that he established and was trustee of—the Dominator 2012, Commando 2012, and Donington MC schemes—into Norton shares. Under the Occupational Pensions Schemes (Investment) Regulations 2005, no more than 5 percent of a pension scheme’s assets can be invested into an “employer-related investment.” Investments into the schemes amounted to around 11 million pounds ($14.3 million) but by the time Norton fell into administration there was a shortfall of approximately 10 million pounds ($13 million). Documents show that in 2018 there were a total of 227 members of the three pension schemes.

In June 2020, the Pensions Ombudsman ordered Garner to make restorative payments of 15.7 million pounds ($20.4 million)—higher than the original 10 million pounds to account for interest. An independent pension trustee firm was appointed to pursue Garner for the money, but he has since been made bankrupt. Efforts to recover the funds are still ongoing.

Nicola Parish, executive director of frontline regulation at TPR, said: “Despite being an experienced businessman, Stuart Garner illegally took money from three pension schemes to prop up his struggling business.

“As a result of Mr. Garner’s criminality, savers, whose interests he was supposed to safeguard as a trustee, have been affected by substantial financial losses to their retirement savings and have been caused significant distress. It is only the right he is punished for this. Trustees must have full knowledge and understanding of the restrictions which apply to pension scheme investments. Trustees may face prosecution or regulatory action if they fail to abide by those restrictions.”

Judge Nirmal Shant QC, giving Garner the sentence, said: “You controlled the Norton Motorcycle business and in 2012 the business needed funds and you raised around 11 million pounds by establishing three funds which were under your control. You were obligated to act in a prudent manner according to law. You are an experienced businessman and you must have known there was a conflict of interest. It is quite plain the reason was that the banks were not prepared to lend you the money.”

However, the judge also gave Garner credit for admitting his guilt and accepted the argument, made in mitigation by Garner’s lawyers, that he didn’t know he was breaking the law when he used the pension funds to prop up Norton’s finances.

Related: Former Norton CEO Facing Jail Time

Indian manufacturing giant TVS bought the Norton name in 2020 and is working to relaunch some models, including the V4CR cafe racer. (Norton Motorcycles/)

Garner, 53, bought Norton in 2008. He took on the firm after Kenny Dreer spent years consolidating the Norton trademarks, which had been scattered among multiple owners, to create the US-based Norton Motorcycles company. Dreer also developed the updated Commando 961 that would become the basis of the “new” Norton’s range. Returning Norton to the UK, Garner set up the business and his home at the sumptuous Donington Hall. Garner was touted as a British success story by the UK government, which also provided the company with several million pounds in loans and grants, before the company fell into administration in January 2020 over an unpaid tax bill of 300,000 pounds.

In April 2020, Indian manufacturer TVS bought parts of the company, including the name and the intellectual property for the bikes, and has since established a new manufacturing facility in Solihull, near Birmingham, where it is working to get Norton back on its feet—relaunching the 1,200cc V4SV superbike that was developed under Garner and creating the V4CR cafe racer that was unveiled late last year.

 

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[bud]

It's a travesty how he has had such a total disregard of the law. Living the high life with investors, and employees money.  Now gets such a light sentence.

[MikeHorton]

Yup some people whoost their pension money have since passed away I'm site the streets of it all didn't help. You can defraud HMRC and pretty much be guaranteed a lengthy stretch do what he did and nothing. I don't even think a proceeds of crime order was placed upon him but I might be wrong