James Sanders spent £1.5m dealing profits on Georgian townhouse, cars and watches is jailed

James Sanders spent £1.5m dealing profits on Georgian townhouse, cars and watches is jailed

• James Sanders, 35, made fortune from illegal deals
• He bought a five-storey property worth £5million a few doors from JK Rowling’s west London residence
• Broker allocated himself a £100,000 car fund, and set aside £500,000 for ‘miscellaneous’ items
• His wife Miranda and business partner James Swallow were also jailed
  

By Rebecca Camber

PUBLISHED: 10:12 EST, 20 June 2012 | UPDATED: 20:10 EST, 20 June 2012

In his own words, he was greedy, arrogant and invincible.

City trader James Sanders appeared to have it all â€" a £9million property portfolio including a mansion in Kensington, a stable of fast cars and a multi-milllion pound business.

But the 35-year-old City trader and his glamorous wife Miranda, 34, were in fact funding their luxurious lifestyle from illegal deals, thanks to secret financial information passed on by her sister and brother-in-law in America.

Heading for a fall: James Sanders with his wife Miranda. The father of two pleaded guilty last week to insider dealing

Yesterday the couple swapped their £5million Georgian mansion for a prison cell after both were jailed for insider dealing.

Sanders was sentenced to four years, while his wife got ten months.

Southwark Crown Court heard how the pair pocketed more than £1.5million by placing bets on the stock market based on insider tips gleaned from Miranda’s brother-in-law Arnold McClellan, 52, a partner with financial firm Deloitte who handled major US company takeovers.

Sanders, who ran his own brokerage firm in London earning £1million a year, gleefully boasted: ‘I’m the golden boy coming home smelling of roses’.

The address in Kensington where the Sanders are said to have lived

The father of two used his profits to splash out on a five-storey property  worth £5million, originally intended as an investment.

He treated the Georgian mansion, just off Kensington High Street, to a £1million makeover complete with a £35,000 wine cellar in the basement.

When he snapped up the property for £1.1million less than the asking price, he bragged that his winning mantra was ‘buy at the point of maximum fear’ and said: ‘Once the credit crunch is over I’m going to be quids in.’

Sanders also used the cash to pay off his mortgage on the couple’s £3.75million townhouse in Holland Park and allocated himself a £100,000 ‘car fund’ to pay for his 328 GTS and 575M Maranello Ferraris, a Maserati and Bentley.

When investigators raided his home, they found an extraordinary handwritten list in which Sanders meticulously set out his spending of £50,000 on Rolex watches, luxury holidays, designer clothing and fine wines.

He also splurged £60,000 on a diamond for his wife, £150,000 on improvements to the Holland Park home and £60,000 on premium bonds, while he gave his father, Tim, and Miranda’s father, Michael, £20,000 each in cash.

Yesterday the court heard how the couple got rich thanks to tips on forthcoming acquisitions passed on by Miranda’s millionaire older sister Annabel McClellan, 39. She  is now serving 11 months in a US federal prison for obstructing an investigation into the racket.

The housewife, who lives in San Francisco, had daily conversations with her sister in which she was said to have passed on confidential information from her husband about transactions involving five US companies.

The two families were exceptionally close and enjoyed equally opulent lifestyles.

Co-conspirators: James Swallow (left), a fellow director and founder of Blue Index, was jailed for ten months. Annabel McClellan (right) was sentenced to 11 months in a U.S. federal prison for obstructing an investigation into financial tips

McClellan, a mother of two, met her husband while working in Deloitte’s London office when she was in her early 20s. The couple married and moved to America in 1996, where she divided her time between renovating the family’s $2.1million (£1.3million) home in an upmarket  neighbourhood, Bikram yoga and doing charity work.

But as investigators in the US and Britain were closing in on the insider dealing, the bored housewife began developing a sexually explicit social networking business. Called ‘My Nookie’, it was billed as ‘the app your sex life and social life can’t be without.’

Their scam was uncovered when the Financial Services Authority in Britain launched its first ever joint investigation with the United States Securities and Exchange Commission (SEC), which led to Sanders’s brokerage firm, Blue Index, being shut down and the couple’s assets seized.

Investigators discovered 26million emails and 24,000 phone conversations which were automatically recorded at the Blue Index office. Many referred to deals based on the tips, while in some Sanders laughed at the prospect of getting caught.

List: James Sanders allocated himself a £100,000 car fund, and set aside £500,000 for 'miscellaneous' items, including watches, clothes, holidays and wine

He boasted to his father, a double glazing salesman: ‘There’s no doubt in my mind we’re gonna absolutely cane it over the next year or two because these tips are f***ing brilliant.’

Peter Carter QC, prosecuting, said the plan was for Sanders to pay half of the profits to the McClellans, but investigators were unable to trace any money transfers.

The taped telephone calls in fact suggest that Sanders considered cheating the couple by siphoning off the cash into a secret account.

After the tips made his clients more than £12million, Sanders planned to sell his firm for £8million, but he was arrested in May 2009 before he could cash in.

When questioned, Sanders claimed not to know the McClellans â€" but when they left Bishopsgate police station his wife immediately ran to the nearest phone box to call her sister.

THE CALLS THAT TRAPPED 'GOLDEN BOY'

• On October 30, 2006, he introduced his father Tim to the insider dealing scheme, telling him: ‘It’s a good one. 
  It’s Annabel, Miranda’s sister, her husband is the head of Deloitte Touche in the whole of the US, he’s the sixth most senior person out of 100,000 employees in the country.
  ‘He’s done the deal on a US company that’s $23.77 at the moment and they’re going to be bid for at $28 next week, 100 per cent so I’m going to do something quite big on it... (Arnold McClellan earns) $1million dollars a year, earns nearly as much as me poor fella. He’s 47, he’s worked 18 hours a day for 35 years!’

• On November 1, his father joked:  ‘Is this not insider dealing?’ ‘Urm, no not really,’ replied Sanders laughing. ‘Yeah, well try proving it,’ his father said. Sa nders added: ‘Yes exactly.’
  

• On March 16, 2007, Sanders told his father: ‘I’ll be sending you a cheque for your birthday this year... I’m the golden boy coming smelling of roses.’

• On April 2, 2007, Sanders told his father: ‘There’s no doubt in my mind we’re gonna absolutely cane it over the next year or two because these tips are ****ing brilliant.’

• On November 7, 2006, Sanders asked his wife: ‘Any more tips from Annie?’ Miranda replied: ‘No.’

Yesterday Andrew Radcliffe, defending Sanders, said: ‘He has expressed himself in this way that he acted out of greed, arrogance and a feeling at the time of invincibility.

‘He is embarrassed at the person he was and totally ashamed of his own conduct and also that he involved and implicated others unjustly.’

Mr Justice Simon jailed Sanders for four years and he was disqualified from running a business for five years after admitting ten counts of insider dealing between October 2006 and February 2008.

He told Sanders: ‘You were the driving force behind the criminality. You knew how the system worked and you traded jointly with your wife so as to generate large sums for the direct financial benefit of the two of you.’

Sanders’s wife, who runs an exclusive property business in Kensington and Chelsea, remained impassive as she stood by him in the dock, impeccably dressed in a tailored trouser suit and stilettos.

She received a ten-month sentence for three counts of insider dealing. Both had previously pleaded guilty.

James Swallow, 34, a fellow director of Blue Index, was also jailed for ten months after admitting three counts of insider dealing.

Senior trader Christopher Hossain, 36, and Sanders’s friend Adam Buck, 35, were cleared of any involvement in the scandal after a trial last month.

In America Annabel McClellan was jailed in November last year after admitting obstructing justice for lying to SEC investigators.

She also paid $1million (£635,000) to settle an SEC lawsuit which alleged that she and her relatives netted $23million (£14.6million) from illicit trades.

As part of the settlement, in which she did not admit wrongdoing, the SEC agreed to drop its claims against her husband, who was allowed to quietly retire from his high-powered job.

The couple now face a confiscation hearing in which the FSA  will seek to claw back all of their assets.

They have already sold their Holland Park home and their Kensington mansion is on the market.

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