Store First court case kicks off: Government alleges £200m “house of cards”

The court case brought by Business Secretary Greg Clark against unregulated storage pod investment scheme Store First kicked off in Manchester’s Business and Property Court on Monday.

Representing the Secretary of State, Paul Chaisty QC alleged that Store First raised £206 million from investors on the basis of “misleading information and testimonials”. The Government believes that Store First and related companies should be wound up to protect investors.

Store First insists that the scheme is viable and that winding the business up would cause investors to lose their money.

The Lancashire Telegraph continues:

Mr Chaisty said the company would claim that pods had not been sold since 2016 and Store First outfits were financially sound now.

“We say and will seek to demonstrate that the proposition that these companies are financially sound is absurd. It is a house of cards,” he added.

Mr Chaisty alleged any positive balance sheet figures for various Store First companies had been generated by internal loans between different arms of the business.

He also told the court that any suggestion investors would “face chaos” if their winding-up orders succeeded was hard to accept, as another company Paystore, run by Mr Whittaker’s wife, managed many of the storage pods.

Leading the counter-attack for Store First was Nicholas Peacock QC.

Nicholas Peacock QC, for Store First, said the Secretary of State had sought two major undertakings, from his clients.

One was for a compensation scheme to be established, he told the court, which would result in a payout of £34million, which was not financially viable.

The Business Secretary had also sought to have Mr Whittaker barred from being a company director, said Mr Peacock, which was also unacceptable.

Mr Peacock said 14 other undertakings had been proposed by Store First, including no further pod sales, a “profits top-up” scheme and an offer to manage any of their units in private investor hands.

An annual audited report would also be produced, detailing the company’s performance and leases for any unwanted pods could be surrendered, he said, with the ground rent waived, where applicable.

Exactly what Store First’s proposed “profits top-up” scheme consisted of is not specified, but it is likely to be less generous than the original proposition, under which investors were “guaranteed” a return of 8% for the first two years, and offered “projected” returns of 10% in year 3 and 4 and 12% in year 5 and 6.

It will also be less generous than the £34 million compensation scheme that the Secretary of State demanded, given that Store First says it can’t afford that.

Nicholas Peacock QC has experience in this field, having previously represented the Financial Conduct Authority against Asset Land Investment plc. Asset Land was an illegal “landbanking” unauthorised collective scheme that was shut down by the FCA in 2013. The case went all the way to the Supreme Court, which affirmed that Asset Land was an illegal collective scheme.

Having helped the FCA shut down Asset Land three years ago, Peacock will now be doing his best to ensure the Business Secretary doesn’t do the same to Store First in the next few weeks.

Unlike Asset Land or Store First’s sister scheme Park First, which was coincidentally found to be an illegal unauthorised collective scheme by the FCA in November 2017 and subsequently restructured, Store First has not been deemed an unauthorised collective scheme by any court or regulator. Individual property investments are not subject to UK investment regulation.

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4 thoughts on “Store First court case kicks off: Government alleges £200m “house of cards”

  1. “on the basis of misleading information… ” an interesting choice of phrase by Chaisty, he doesn’t go so far as to call it “fraud”.

    However, ALL scams deliberately use “misleading information” to market their product and raise subscriptions from retail investors who are guilty of nothing but ignorance to know that what they are being told are lies!

    The scam I got caught up in and saw 75% of my pension invested in Blackmore Global (reported by the BBC: https://www.bbc.co.uk/news/business-42776709 ), another firm run out of Manchester by the way, by Phillip Nunn & Patrick McCreesh who also run Blackmore Bonds plc reviewed here numerous times.

    Blackmore Global is an opaque, unregulated Isle of Man registered collective investment (says so in their brochure on page 8) except when it suits them and then they claim it’s not a collective! They made the latter claim in a litigation threat some years ago because promoting an unregulated collective to UK retail clients is unlawful. However that’s what the brochure says and it could easily be shown to be operating as a collective under the criteria of FSMA 2000 s.235.

    The brochure makes the claim “utilising the expertise of regulated investment managers”. This is not true. The brochure names the investment managers as Meriden Capital Partners EAFI, a Spanish firm, but I have an email from a managing Partner of Meriden, flatly denying this and also confirming they are not authorised to act as investment managers anyway!

    The brochure also claims investments include “traditional funds” but I have an email from the Maltese trustee detailing the investments my pension went into and there wasn’t a traditional fund in sight, only opaque private ventures some of which were no longer trading!

    I was also told (in writing) by the unregulated adviser – who misled me into believing he was FCA authorised to give investment advice, but the FCA have denied this – promoting Blackmore Global, that it was regulated in its jurisdiction – but this was fraudulent misrepresentation because Blackmore Global is an unregulated IoM fund!

    So this all begs the question if: “The Government believes that Store First and related companies should be wound up to protect investors”, on the grounds investors were sold it on “misleading information”, why it is that other funds are not likewise wound up for the same reason?

    Every scam uses misleading information – they are hardly going to own up to operating a scam and are telling you lies are they?

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  2. I invested my pension with store pods first trough Berkeley Burke over 8 years ago now . For bout 50 thousands pounds any one no wot Going on I have been in touch with the pension ombudsman but there don’t seem to no the answer . Any one can help how to try get my money back thank you

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