The FSA has obtained a High Court judgment against an unauthorised mortgage investment scheme, the Premier Property Plan.
The scheme had taken £737,000 in investments from around 50 investors by offering a guaranteed annual return of 13.5 per cent.
PPP's advertising material referred to both the PIA and Imro, giving the impression it was regulated. On March 29, the court found Richard Prentis and Steven Halsey guilty of operating a scheme without authorisation, making misleading statements and dishonestly concealing material facts from investors.
Prentis had previously operated a similar scheme, the Secured Property Investment Plan, which was shut down by the regulator only a few months before PPP was established. The defendants claimed they had not knowingly breached the Financial Services Act but admitted they were conducting investment business without authorisation.
They issued a counter-claim seeking damages against the FSA, which was subsequently dismissed by the court.
The FSA obtained an injunction against the scheme in September 2000 freezing its assets, which enabled the regulator to secure 99 per cent of investors' funds.
FSA director of enforcement Dan Waters says: “Unusually in this case, the FSA was alerted to the scheme after only a few weeks of operation. As a result, the PPP accounts were frozen before any investors' money could be paid away in the form of loans.”