Car crash wrecks $1.5m fraud plan

A SCHEME by a Swedish businessman to defraud British banks - including the Royal Bank of Scotland - that loaned him money for two sports cars almost worked until he crashed a rare, $1.5 million (£800,000) Ferrari.

After an eight-month investigation, Bo Stefan Eriksson, 44, appeared in Los Angeles County Court to answer charges that he stole two Ferrari Enzos and a Mercedes SLR and shipped them to the United States without the knowledge of the banks.

Eriksson pleaded no contest last week to drink-driving charges related to the crash in Malibu in February that made headlines worldwide when pictures emerged of the wrecked Enzo, one of only 400. It was scythed in half when it struck a telephone pole on Pacific Coast Highway at about 157mph, leaving a half-mile trail of debris and its 650bhp engine in the middle of the road.

Eriksson, who was found dazed but not seriously hurt at the scene, told police he was a passenger and could not recall what happened. He said the driver, "Dietrich", had run off.

Investigators found a gun magazine near the crash scene, but could not track down Dietrich. Police believe this was a fictional character concocted by Eriksson and another man found at the scene, Trevor Karney, an American who allegedly backed up Eriksson's story that he was racing a high-powered Mercedes McLaren, which police also believe to be fictitious.

Prosecutors say the former executive with the now-defunct videogame company Gizmondo Europe, who declared bankruptcy with more than $200 million in debt a month before the crash, had transferred ownership of the cars, valued at $4 million, to employees.

He then shipped them abroad, though the cars were legally bound to remain in the UK under repossession proceedings following defaults on their loans.

Tamara Hall, for the prosecution, said: "While [the banks] were looking for Mr Eriksson in the United Kingdom, he was living it up and sporting those vehicles right here in the US."

Defending, Jim Parkman argued that the case was essentially a civil suit that should not be contested in a criminal court, while pointing out that Eriksson had built up significant equity in both cars.

In a hearing dealing largely with administrative issues, the court heard testimony on the loan agreement from a banking representative, Ian Hyett. In July, Superior Court Judge Craig Veals ruled that the wrecked car was the property of RBS and its subsidiary, Capital Bank, while Lombard Bank and Yorkshire Bank owned the other two.

RBS contacted the LA county sheriff's department after the Ferrari crash made global headlines to say it owned the car because it was supposed to have been repossessed.

The Enzo, with a top speed of 217mph and capable of doing 0-60mph in just 3.3 seconds, had previously been displayed by Gizmondo at glittering press events heralding Eriksson's company's challenge to giants Sony and Nintendo. Eriksson, whose celebrity and champagne-fuelled parties became legend in media circles, helped to launch a hand-held product described as a "futuristic multi-entertainer".

It failed to break into the marketplace despite private investment totalling more than 150 million.

Eriksson was jailed twice by Swedish courts in the 1980s, including a three-year sentence for cocaine and weapons offences. In 1993, he was sentenced to ten years for his role in defrauding a Swedish bank of 2 million. Before that, Eriksson was known by Swedish police as "The Banker", as the head of a gang known as the Uppsala Mafia.

If convicted of the charges of embezzlement and grand theft, Eriksson faces up to 11 years in prison.