The founder of a corporate finance brokerage has told a jury of his shock at discovering his company’s name had been used in an alleged fraud.

Steven Hawkins, director of Paradigm VL Group, was giving evidence for the prosecution at the trial of Jason Scales.

Mr Scales, 30, of The Bretney, Jurby, is accused of using forged documents in relation to his company Ettyl Limited’s attempted purchase of Stobart Air in 2021.

He denies one count of fraud and two counts of supplying an article for use in a fraud.

Mr Hawkins told the jury that he had first become aware of Ettyl over the Easter weekend of 2021 when he was introduced to Mr Scales who said he was trying to buy Stobart Air and Carlisle Airport.

Mr Scales claimed he had already put down a sizeable deposit of £1m - although the witness said he never saw any evidence of that. He said the Ettyl director never mentioned any financial support from the Manx government but had told him they were supportive of the proposal.

The Paradigm founder told the court that the would-be airline buyer said he had an investor in the Isle of Man but they were ‘deliberating somewhat’ and he was trying to ‘move things on’.

Mr Scales asked Paradigm to provide an offer letter for £13m and for this paid a fixed fee of £5,000.

Mr Hawkins stressed that this was a facility letter and not actually an offer of a loan, for which due diligence would be required, and it was only later did it become apparent that the defendant had wanted a loan.

The witness said Mr Scales had raised concerns about the wording of the letter, saying it needed to be ‘more robust’ and more specific about the offer of finance.

He said the following Saturday, he was informed that funding would actually be required as the island investor had pulled out.

Mr Hawkins, who moved back to the UK in 2014 after living in the island since 1998, denied having any discussions with the Isle of Man government about their underwriting a loan for £13m.

‘Did Paradigm ever offer to lend £13m underwritten by the Isle of Man government,’ prosecutor James Robinson asked. ‘No,’ replied the witness.

He said his company went on to try to source third party funding, a process he said would have been made much easier if there had have been financial support from the Manx government.

In early June, however, Mr Hawkins read on iomtoday.co.im that Stobart Air had pulled the plug on the deal with Ettyl.

It was only at police headquarters after Mr Scales’ arrest, that the witnesses were shown the two forged documents at the centre of the prosecution case.

The letters, one purporting to be signed by former chief secretary Will Greenhow and the other by Department for Enterprise chief officer Mark Lewin, stated that the government was backing the deal and underwriting a £13m loan facility to be taken out with lending agent Paradigm.

Asked what his reaction was when he first saw the documents, Mr Hawkins replied: ‘I was quite shocked actually.’

The witness also denied drafting an email to Mr Scales to which the guarantee document was attached.

Mr Hawkins said that by mid-May relations with the defendant had became ‘strained and hostile’ and he had blocked him on WhatsApp following an exchange he deemed to be ‘quite threatening’.

Trial continues.