Property Fraud Nets £20 Million From Investors
Fraudsters running a property Ponzi scheme conned 800 would-be investors out of almost £20 million.
Essex and London Properties collapsed with debts of more than £11 million in January 2018 after promising an 8% return on money invested for a year or 12% for three years.
Police investigating the fraud reckon £18.9 million was raised by charging the investors between £5,000 and £100,000 to join the scheme.
Despite the promises, the company only bought one property - a house in Harwich, Essex, valued at £147,000. But the sales team claimed the company owned more property that was increasing in value and falsified Land Registry documents to dupe investors into thinking the business was much more successful.
Police inquiries revealed investors were paid interest on their investments from the cash paid by new members joining the scheme.
The documents also showed agents introducing new investors were paid up to 35% of the value of their investment. A London High Court judge has wound up the company in the public interest.
David Hill, Chief Investigator for the Insolvency Service, which took the case to the court, said:
“The company persuaded members of the public to part with substantial sums of money to invest in property. Only one property was purchased and the money raised from the public was used to benefit those running the company.
“As so often is the case, if an investment scheme appears to be too good to be true, it probably is. There is an ongoing investigation into those individuals controlling Essex and London Properties Limited by Essex Police, who are liaising with the Crown Prosecution Service with a view to prosecuting a number of suspects.”
The company was based in Sidcup, Kent. A Ponzi scheme is a complicated fraud in which existing investors are paid returns from cash collected from new investors. The scheme is named after American con-artist Charles Ponzi.
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