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FSA secures winding-up order against land bank

The FSA today secured a winding-up order against one unauthorised land bank and secured a world-wide injunction against another in the High Court as part of its crackdown on land banking.

The High Court made a winding up order against Plott UK and approved the appointment of a liquidator who will now identify, realise and distribute the company’s assets to its creditors.

In a separate hearing, the High Court continued a world-wide freezing and restraint order against European Property Investments.

The FSA believes that EPI is a “phoenix” of Plott. It says EPI took over Plott’s business once the FSA’s action against Plott began.

Between May 2009 and April 2011, Plott collected approximately £3.9m from UK consumers.

Plott had been marketing plots of land as an investment opportunity and operating an unauthorised collective investment scheme. While the FSA does not regulate land as an investment, it does regulate the operation of CIS’s.

Plott promised its investors a return of investment of between 200 and 300 per cent on average, yet at least one of the sites it was promoting was in a designated area of outstanding natural beauty and therefore highly unlikely to ever receive planning permission.

Many of its customers invested a minimum of £10,000 with the company, but the FSA says some Plott customers invested hundreds of thousands of pounds with the company.

Until the liquidator has completed its investigation into the company’s activities, the FSA says it is unable to confirm whether any funds will be available to give back to Plott’s victims.

The regulator says EPI owned two sites that Plott was promoting, however it appears to have only become active after the FSA took action against Plott.

In the short time it was operating, between April 1 and May 25, 2011, EPI accumulated around £639,000.

Currently the FSA has frozen and secured £180,000 while the rest was transferred out of EPI’s account before the freezing order was obtained.

The FSA is pursuing a civil case against EPI for operating an unauthorised CIS, but today’s injunction means that the firm will be breaking the law if it sells land or engages in any activity involving a CIS.

FSA acting director of enforcement and financial crime Tracey McDermott says: “This is an important outcome and sends a warning to other unauthorised land banks that the FSA can and will act decisively to shut them down.

“In our experience operators of unauthorised land banking schemes do not work in isolation, they often work together and their schemes are evolving. We are working hard to stop them but the lesson remains: do not deal with unauthorised businesses as you are not covered by the Financial Services Compensation Scheme.”

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. Dominic Thomas 8th June 2011 at 3:29 pm

    A fool and his money are easily parted… is there any real point in protecting people that believe that a 200-300% return doesn’t have a possible (probable) downside? !!

    Presumably these people are also protected from driving a car or using a tin opener, knife and fork… for goodness sake make sure they keep away from the relvolving door at the front of the FSA building!

    Whilst it is good that scams are shut down, there comes a point when one has got to ask…

  2. Many of the problems of the FSA are down to the fact that their brief was so restrictive. Many investments in property are not regulated and therefore sharp practices developed like these and all the FSA could do for many years was to state that they were powerless to do anything because it was unregulated activity. That was until they suddenly got their act together and deemed is to be a CIS, yet again too late for many consumers who lost many thousands of pounds an investment that was allowed to operate many years in a totally unscrupulous way. I remember watching a Panorama programme on these types of investments, not so long ago, and was shocked how a regulator could not take action on a more swift basis.

  3. good work on the part of the FSA, a lesson learned indeed. GO AFTER THE CRIMINALS !!!!

  4. Let’s be honest, if the regulator isn’t taking a sledgehammer to miss a walnut then they’re usually closing stable doors.

  5. For once lets give the FSA some credit.

    Well done.

    Once again thought this proves why consumers should seek independent advice rather than believing that they have been specially selected for a unique investment opportunity – if an investment was going to deliver 200-300% don’t they think that pension funds et al wouldn’t be having a piece of the action.

    Then again should we protect people against their greed – because that is what these scams feed on.

  6. I agree with the first comment. Who are these mugs? There seems to be millions of them around. I say it serves then right. If they had bothered to seek proffesional advice they would have been told. it my opinion they are greedy and stupid. it beggars belief that there are actually people out there who fall for the African letter scams, think they won lotteries they never entered, and seriously believe they can make 22-300% returns. The question is: Why are the owners selling this land if they are about to make an immense fortune out of it?

  7. Who is paying for all this?
    Need I ask?

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