The Serious Fraud Office was reeling from another embarrassing failure yesterday after it dropped a long running prosecution that cost taxpayers at least £10 million.

Defence lawyers criticised the agency for wasting public funds after it withdrew its case against two Lincolnshire businessmen accused of swindling more than £150 million from hundreds of investors in an elaborate Ponzi scheme.

Lincoln Fraser, 39, and Jared Brook, 37, former directors of Imperial Consolidated Group, a Lincolnshire-based investment scheme that collapsed in 2002, were cleared of fraud yesterday after an eight-year battle that included two long trials.

The pair had already been acquitted last month of one charge of conspiracy to defraud after a nine-month trial, but had faced a retrial after the jury failed to reach a verdict on other charges of conspiracy and fraudulent trading. It would have been the second retrial after a jury failed to reach a verdict after a six-month trial in September 2008.

Mrs Justice Gloster, sitting at Blackfriars Crown Court, directed yesterday that the two men be acquitted of the remaining charges after the SFO said that it had decided it would be inappropriate to seek a second retrial. The SFO said that only an extraordinary case could justify a second retrial and that this was not such a case.The SFO, which opened the case after ICG went into administration in 2002, said that it had spent £10 million on the investigation and legal fees, although several people involved with the case said that the total cost to taxpayers was likely to be far higher.

Senior figures within the SFO are understood to have decided to cut their losses on a complicated case that was regarded as a hangover from a previous regime. A spokesman said that the agency would review its handling of the case to assess how it could better conduct such prosecutions in future. Richard Alderman, the SFO’s director, has pushed for more focused and speedier prosecutions since taking over in 2008.

Reversals

• The SFO has suffered a series of high-profile reversals in recent years. In 2008 the agency suffered a big hit after a judge threw out a case of alleged price-fixing against five drug companies after an eight-year investigation that cost £25 million. That followed heavy criticism of the SFO for abandoning an investigation into suspected corruption relating to BAE Systems’ dealings with Saudi Arabia.

Source – The Times Online – 05.07.2010