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.”