The Pensions Regulator (TPR) has published its full report into how Patrick McLarry, the former chief executive of Yateley Industries for the Disabled, defrauded the charity's pension scheme.

The Regulatory Intervention Report details how McLarry used the funds to buy properties in the UK and France and invest in an antiques business owned by his wife, before being sentenced to five years in prison and disqualified from being a company director for eight years.

Patrick McLarry was the chief executive and company secretary of Yateley, a charity that provided employment and training to individuals living in on-site specialist accommodation, and was also a director of VerdePlanet, the corporate trustee company that ran the charity’s pension scheme.

According to the report, TPR received a whistle-blower report from a scheme adviser in 2013 which raised concerns about the investment of scheme funds in businesses with a connection to VerdePlanet.

Consequently, TPR sent a Special Procedure request to the Determinations Panel, who appointed Dalriada Trustees as an independent trustee to the scheme.

Dalriada highlighted a number of concerning investments made by VerdePlanet on behalf of the scheme, including payments which were being made directly from the scheme accounts to Patrick McLarry and Roy Grimwood, who was a VerdePlanet director and Yateley’s board of trustees chairman, as well as transfers to Patrick McLarry and his wife’s French personal bank accounts.

Additionally, Dalriada warned that scheme funds were being invested “inappropriately and without appropriate legal and investment advice”, with these investments including a helicopter training school and an antiques business which was owned by Patrick McLarry’s wife, Sandra McLarry.

TPR said Patrick McLarry “provided multiple conflicting explanations about the investments and payments and how they were used, particularly in relation to the money transferred to his account in France”, adding that he and Grimwood had tried to deflect attention away from their actions by making a series of complaints about TPR’s investigation – none of which were upheld.

The regulator was forced to prosecute Patrick McLarry for the bank statements of his French personal bank account after he failed to hand them over, which led them to discover that he had used the funds to purchase two properties.

At this point a criminal investigation was launched, which saw TPR examining data from the charity’s computer system and working with police to execute search warrants at McLarry and Grimwood’s homes.

TPR also reviewed 20,000 documents as part of the criminal investigation and took witness statements from key staff at the charity, its auditors, the scheme actuary and the independent trustee.

Following this, February 2019 saw TPR launch a prosecution against Patrick McLarry for fraud by abuse of position and against Sandra McLarry for money laundering offences, with both initially pleaded not guilty to the charges.

The regulator said it decided it was not in the public interest to pursue a prosecution against Roy Grimwood.

However, Patrick McLarry changed his plea to guilty just before the trial started in November 2019, leading TPR to decide it would no longer be in the public interest to pursue a prosecution of Sandra McLarry for money laundering.

As well as being sentenced to five years in prison, Patrick McLarry was also stripped of an MBE and ordered to pay £286,852 back to the scheme.

TPR executive director of frontline regulation, Nicola Parish, said: “Today’s report is a lesson to all would-be pension fraudsters. TPR is at the ready to use our powers to bring criminals like Patrick McLarry to justice and, where possible, return scheme members’ stolen savings.

“TPR, working with colleagues from other regulators and law enforcement agencies, will pursue criminals who exploit others’ hard-earned savings for their personal gain.

“Whistleblowers were pivotal to the success of this case. We remind trustees, advisers and scheme members who have suspicions or concerns about the way their workplace pension is being run that they can contact us via the whistleblowing form on our website.”

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