Fraud probe boss sold fake shares

A DOTCOM entrepreneur at the centre of a fraud investigation sold bogus share certificates to friends and family for hundreds of thousands of pounds, Financial Mail has established. Steve Laitman, founder and chief executive of E-district, took the cash in return for certificates created on his computer.

The certificates bore Laitman's signature and one purporting to be from another board member. Other would-be investors who gave Laitman cash were given IOUs promising to provide shares in the future.

Backers lost thousands of pounds when the company was engulfed in scandal. The fake shares case has added a twist to the investigation by the Metropolitan Police.

The fraud squad was called in by E-district last year when directors became suspicious of Laitman's trading figures. It emerged that customer numbers had been fabricated and Laitman had spent cash from his own bank accounts to inflate the group's revenues by £980,000. It is thought that Laitman could have used the cash raised through the false shares and IOUs to fund his fake revenue stream.

The possible fraud against Laitman's friends emerged when police trawled through his computer files and uncovered the list of names. A company spokesman confirmed that 'certain false share certificates' had been uncovered during their investigation.

One man told Financial Mail he had given Laitman £10,000, which he believed would go towards buying shares. He said: 'There are 16 people who gave money. I think the total was £720,000.' Sources close to the investigation said this figure had yet to be confirmed.

A police investigation into E-district-has been hampered by Laitman's longstanding heart condition. Scotland Yard would only say that its investigation was continuing. But it is understood that detectives are preparing papers for the Crown Prosecution Service.

Since the fake figures scandal broke last year, E-district has been restructured under new management and renamed Yoomedia. A Yoomedia spokesman said of the fake shares: 'The company sees this as a matter between Mr Laitman, the recipients of the bogus shares and the police, as appropriate.'

In an out-of-court settlement in February, Laitman's shareholding was distributed to existing investors. The £980,000 he paid into the company in false revenues was retained by the business and will be recorded in the accounts as an exceptional gain.