The High Court has shut down a property investment company for defrauding close to £20m of investors’ money.
Essex and London Properties was incorporated on 15 April 2005, with a registered office in Sidcup, Kent.
It claimed to purchase properties with the intention of selling them on at a profit or getting rental income for investors.
Potential investors were approached directly or via intermediary platforms, who received 35 per cent of the invested amounts and offered partnerships in a limited partnership scheme.
Investors were persuaded to invest by offers of an 8 per cent annual return paid quarterly if the money was held for three years or 12 per cent if the money was held for one year.
Over an 18-month period, more than 800 people invested in the company anywhere between £5,000 to over £100,000.
Essex Police, which has an ongoing investigation calculates to date £18.9m has been obtained from creditors and investors.
The reality was ELP only purchased a single property; a house in Harwich for £147,000 which is less than 1 per cent of the overall amount of money collected from investors.
But ELP gave information to investors claiming it had purchased numerous properties that had rapidly increased in value.
Furthermore ELP falsified Land Registry documents showing the company owned more property than it did.
Investors made payments through a number of escrow agencies.
Insolvency Service investigators examined the income and expenditure of statements made by one of these agencies and found existing investors received their interest payments.
Yet these payments were not from any meaningful return on their investment but from payments made by new investors.
As a result of the investigation by the Insolvency Service, the secretary of state for business energy and industrial strategy issued the petition to wind up the company, which claimed to have debts of over £11m.
On 27 September 2018, the High Court heard the petition against the company which was unopposed and ordered the company into liquidation.
In her ruling Judge Barber pointed out this was a case “crying out for a public interest winding up”.
Insolvency Service chief investigator David Hill says: “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 in reality 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 by Essex Police, who are liaising with the Crown Prosecution Service with a view to prosecuting a number of suspects.”