Until a few months ago, John Hirst was a fixture at the Mallorca Cricket Club. Like so many other British expats who settled on the island, the Yorkshire-born businessman relied on it as a hub for his social and business affairs.

“He was a good clubman. He played for the Sunday second XI when business would allow,” said a friend. “He would go to cricket club dinners.”

Known by friends as Hirsty, he was by all accounts one of the most well-liked members of the tight-knit community of foreigners. “He was quite active on the social scene, always out at parties and dinners,” said Kate Mentik, the deputy mayor of Calvia, where many of the island’s British community live. “He was very much a man about town.”

It wasn’t all play. Hirst was an investor and a very successful one. He drew heavily on friends at the club to find new clients. The offer was extraordinary: “guaranteed” returns of 20% regardless of the gyrations in the market. Judging by the five-bedroom villa in the Santa Ponsa resort, where he and his wife Linda lived, they had no reason to doubt him.

Many of his cricket team-mates handed over retirement savings, as did colleagues from the Rotary Club and the English Speaking Residents’ Association. He collected more than £20m in all. Then he left.

When he and his wife moved from Mallorca abruptly in August, people were perplexed. Clare Jury, who runs Nice Price, a British food supermarket, with her husband Dave, said: “There were rumours he had leukaemia and had gone back to the UK. Nobody knew for sure.” Others suspected something more sinister.

On Friday, their worst fears were confirmed. The Serious Fraud Office announced it had launched an investigation into Gilher Inc, a fund registered in the Seychelles and Cyprus that “targeted expatriates resident in Mallorca”.

It is understood that more than 150 people, most of them British expats, but also some from France and America, are affected.

In one of the last letters Hirst sent to investors in mid-October, he said: “A few clients have questioned if I was ill at all and for those who require evidence please e-mail me and I will send you evidence.” He added: “Those of you who have been with me many years will know that, until this credit crunch, things ran very smoothly for seven years and things have just got very complicated since.”

It is thought that Hirst has returned to the UK but not yet contacted the authorities. However, he has hired Opus Law, a firm specialising in serious fraud cases.

As news of the SFO investigation spread in Mallorca, disbelief turned to anger. “The majority of the guys here are finding it hard to get their heads round this,” the friend said. “He was a decent bloke — not a flash git. The John that is being talked about now does not equate with the John I knew personally.”

The case bears striking similarities to that of Bernard Madoff, who defrauded investors of more than $65 billion (£39 billion) by taking money from a network of friends and colleagues to pay off other investors.

Like Madoff, it is thought that Hirst relied on a group of “feeders”, informal agents who would bring him new clients. He enjoyed the spoils of his apparent success. He drove a Mercedes sports car and had a state-of-the-art snooker room in his villa in Santa Ponsa.

At his marriage to Linda, many of the guests were also clients. Jury said: “They had this big wedding. It went on all weekend and everything was paid for.”

While many of those affected are understood to be wealthy, sophisticated investors, others have much more modest means and could be ruined. “I know 10 people who had money with him. They’ve got between £10,000-£200,000 invested. I know of a plasterer who had £30,000 with him. There are also some older people who had invested their life savings,” the friend said. “People are feeling a mix of anger and a huge dollop of embarrassment.”

Jury said Hirst had tried to lure her into investing. She declined. “He’s known round here as a kind of financial adviser. It’s a pretty small community,” Jury said.

“I gave him a wide berth. He was always trying to get investors, promising 15%, 30% guaranteed returns. It couldn’t be true but I know a lot of people who went with him.”

A victim support group has been set up on the island by 65-year-old Jan Fitzgerald who has invested €80,000 with Hirst over the past eight years. To date, about 40 people – mostly elderly — have joined. “This will destroy lives. It is just unbelievable,” said Fitzgerald.

Meanwhile, questions are mounting. “On one side there are a lot of people accusing him,” Mentik said. “On the other there are a couple saying, ‘John’s a good guy. He’ll sort this out.’ ”

Back at the cricket club, they are waiting for answers. Rob Hughes, the club secretary, said: “I don’t know where he is. He’s not been round the club in a while.”

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