The Financial Services Authority (FSA) has won its first criminal conviction for boiler room fraud.
David Mason has been sentenced to two years in prison and disqualified from being a director for six years after being found guilty of the practice, the regulator announced.
The business man was found guilty on 13 counts of undertaking regulated activity without permission, three of money laundering and one of making misleading statements.
Tracey McDermott, acting director of enforcement and financial crime at the FSA, said: “This prosecution must be seen as part of the development of our strategy in the fight against the major menace to the public posed by boiler rooms. Mason was at the heart of a sophisticated boiler room scam and without his involvement the deals could not have been completed and the proceeds laundered.
“Like all boiler room fraudsters, Mason was dishonest and posed a very serious threat to honest investors.”
Boiler room fraud involves fake companies cold-calling investors and selling them shares in non-existent firms.
Mason was found to have managed the selling of £270,000 worth of fraudulent shares in EduVest - certificates for the shares were never issued and the firm was not listed on the PLUS stock exchange as originally promised.
David Sinclair at Axiom Capital was also fined £68,000 for "unwittingly" allowing Mason to launder money through a bank account under his control.
By Jim Ottewill