If 2016 was the Year of Dead Celebrities, 2019 is shaping up to be the year of the Collapsed Investment Scheme.
Starting with the biggest of the lot, the collapse of the £230 million London Capital & Finance, we’ve seen the following schemes switch their lights off in 2019.
All have the following factors in common: they all issued investments not regulated by the Financial Conduct Authority, they all sourced investment predominantly from retail investors rather than institutional sources, and they all went into administration or another form of “official” shutdown in 2019.
Most had defaulted on their obligations before 2019 but the key is that the Government or a creditor officially brought the curtain down through a legal administration process in 2019.
| Scheme | At risk | Date | What happened? |
|---|---|---|---|
| London Capital and Finance | £230m | Feb | Assets frozen in January 2019 during an FCA investigation. Went into administration in February 2019. Subsequently revealed by the administrators to be a Ponzi scheme. |
| MJS Capital | £30m | Feb | Collapsed in early 2018. A winding up hearing was held in February and the company was put into liquidation in March. |
| Mederco | £27m | April | Sold various property-related investment securities including spaces in the Bury FC car park. Went into administration in April with 100% losses predicted for unsecured creditors. |
| Store First | £200m* | April | Promoted investment in storage sheds with a “guaranteed” 8% per year. First reports of failure to make guaranteed payments appeared around 2014. Reached an out-of-court settlement with the Government in April 2019, as a result of which four Store First companies (including those with obligations to investors) will be wound up. *according to Government court submission |
| Harewood Associates | £33m | May | Sold property-related investment securities from at least 2013 onwards. Went into administration in May. |
| Park First | £190m+* | May | Sister company to Store First. Shut down by the FCA in late 2017 as an illegal collective investment. Given 18 months by the FCA to return capital to investors who requested it. After 18 months it no longer had the money to return to them, and went into administration. *according to 2016 Park First marketing material |
| Allansons | £20m | May | Offered returns of 50% over 6 – 18 months for investing in litigation funding. Shut down by the Solicitors Regulation Authority in May. |
| Hudspiths | £50m | June | Promised returns of 5% per month. Stopped payments last year and put into voluntary liquidation in June. Investors have launched a bid to convert this to compulsory liquidation. |
| MBI | £80m | July | Offered investment in care homes and hotels. Went into administration in July following an investigation by The Guardian and ITV News. |
| Carlauren | £88m* | July | Offered investment in care home rooms paying 10% per year, as well as a cryptocurrency which could be used to pay for elderly care services. Appointed administrators last week. *estimated by Safe or Scam, an introducer for insolvency practitioners |
That’s just shy of a total of a billion pounds of retail investors’ money at risk of loss, depending on what (if anything) is recovered from the various administrations. And it’s only August.
Now, we need to beware of seeing patterns in what is just randomness. Humans are very good at seeing patterns where none exist.
In 2016, the death of David Bowie at the relatively ripe old age (for a famous musician) of 69 was followed by a year of low-grade hysteria in which every death of a celebrity was hailed as further proof that 2016 was “the worst year ever”. Dispassionate analysis showed that just as many well-loved celebrities died in any other year.
So is this normal? I’m struggling to make a list for 2018 that comes anywhere near the above. Privilege Wealth collapsed for £42m, Essex and London was shut down for £20m… any additions to this list on a postcard please.
It may well mark the worst year for the world of unregulated investment schemes promoted to the public since 2014, when the FCA won its case against Capital Alternatives, and Secured Energy Bonds went to the wall (the UK entity went into administration in early 2015 but the Australian parent collapsed in 2014).
Prior to that the worst year would probably have been 2009, when the global crash did what global crashes do and showed everyone who was swimming naked. Arch Cru (you remember, Greek shipping, Capita Fund Managers, and all that) was one of the highest-profile unregulated casualties in the UK in 2009.
What was that about patterns in randomness?
There’s probably an economics paper to be written there about the nature of 5-year cycles of investor demand in the unregulated sector. But Einstein arguably already wrote the conclusion decades ago: “The definition of insanity is doing the same thing over and over and expecting a different result.”
At time of writing the somewhat-distracted UK Government has not announced any measures to
- require any investment security promoted to the UK public to register with the FCA (as in the USA), and provide full, regular and independently-audited disclosure regarding its financial position
- sack senior FCA management and impose a new senior management team with a mandate to change the FCA’s regulatory culture from the top down, so that it focuses on stopping those who are breaking the rules instead of micromanaging those who aren’t
- reverse the disastrous reforms instigated by the Liberal Democrats in 2011 which allowed anyone to register a limited-liability company in the UK at the click of a button (before 2011 you had to use a registered company-formation outfit)
- close all Intelligent Finance ISAs immediately to new business and reserve tax relief for regulated investments
- close the Companies Act loophole that allows companies to delay filing accounts indefinitely with no sanction
- ban all advertising platforms, broadcasters and publishers (this means you, Facebook and Google) from carrying ads for unregulated investments, on pain of a substantial fine payable to the FSCS
But in the Government’s defence, the Chair of the Treasury Select Committee did make it clear a few months ago that she is very, very cross.
None of the above measures would stop losses to unregulated investments entirely (the UK is a free country and nobody is going to stop me withdrawing all my money and throwing it into the sea), but it would severely reduce losses to retail investors like those detailed above.
Which is the entire point of the billion-pound-plus that the UK public spends every year on the regulatory system via the premiums, charges and interest it pays via regulated companies, which in turn pay for FSCS and FCA levies.
Alternatively we can all just sit here and see what kind of weird and wonderful nonsense collapses in 2024.
an absolutely brilliant summary and yet the year is not over!
Naturally additions to the 2019 list are also welcome on a postcard.
It’s not like there’s a Confederation of Unregulated Investment Schemes I could check to ensure the list was comprehensive.
Blackmore are late with their interest payments promised not later than yesterday.
Blackmore switchboard jammed with calls. Not good news one day after interest was supposed to have been paid. Very suspicious- possibly a big announcement in the not too distant future.
Well that’s their proudly stated (and irrelevant) “100% of payments made on time in full” out of the window, if true.
Very sadly true- but much worse is yo come I fear.
Another superbly written article about something I would prefer not to read about!
Having regard to Blackmore’s late interest payment (or more accurately non-payment) can the FCA freeze their accounts instantly to avoid monies disappearing over the very lengthy default period? I recall that technically in a company-investor question they are not in default for 90 days. Nevertheless given the 2019 scenario with funds disappearing worldwide through elaborate schemes surely something can be done. Any views?
Brev? That is not your real name is it Brev? Neither are you running this site from the goodness of your heart, are you? You are an FCA registered person selling commercial finance products but using this ‘smoke & mirrors’ website to obtain investors data to then target for your core business.
[Further gibberish removed. -Brev]
That’s a weird post – [Some random dude’s name removed – Brev] If Brev is not the real name of the author of this site, then how do you know Brev is “an FCA registered person selling commercial finance products” …. maybe you could provide the FCA registration number? Maybe you could provide some evidence of this claim or is it just bluster and hot air?
I can’t say as I’ve seen any “selling” of anything by Brev if I’m honest.
I grow tired of unsubstantiated claims …. corroborate it with hard evidence so we can all verify it!
I see this kind of thing all the time, often from disgruntled scammers when they’ve been “called out” …. “put up or shut up ” I say ….
0 out of 3 ain’t bad. Carry on being salty.
OK, that action is even more weird ….
If that earlier post was suggesting @Kamal__M is the author of this site then deleting and replacing with: “Some random dude’s name…” is, imho, lending weight to that premise …. hmmm …. I always believed (and tentatively, still do) Brev is: a) female and b) a senior citizen … Some of the “phrases” used in blogs point to that conclusion …. should I rethink this …. not sure? If I give in to my cognitive biases, I can’t, in my own mind, associate anyone with the suggested name with some of the phrases used by Brev in some posts …. interesting theory ….
Future Fuel Renewables Plc late on their interest payments too
Not surprising. The current regulations do not deter those who take advantage of vulnerable or naive investors. All individuals or firms selling any form of investment product should be registered and monitored from day one including guarantors for all liabilities. The FCA does not encompass all such entities especially those trading from outside the UK. Furthermore, FCA does not and probably does not have the resources or funds to do compliance visits or vet the management and/or directors but this is an urgent necessity.
@Keith. I am not convinced current legislation is inadequate. “vulnerable” or “naive” investors would, imo, be categorised as “retail” – ie unsophisticated and/or Low Net Worth, according to legislation. It is therefore unlawful to promote unregulated products to these people. However, legislation not enforced is not worth the paper it is written on.
It’s more about a lazy FCA/Action Fraud not using the available legislation than it is about inadequate legislation, imho.
People are undeterred from taking advantage of vulnerable or naive investors because there is no downside to doing so and the rewards are great – Surge taking 20% commission for example, for pretty much no effort and most likely no punishment.
Hardly surprising that the idiots behind this scam are now spunking money on pricey London PR firms who state they have solutions to match problems. Here is a problem:
One of Britain’s best known and most loved entrepreneurs had a short love affair which would have severely damaged his reputation had it reached the ears of the media.
He came to us for crisis management advice and confessed “I’ve been a fool. I love my wife and now I am being blackmailed. What should I do?”
Here is a solution of theirs:
The entrepreneur in question deeply regretted his infidelity, not because his affair was about to be exposed but because he truly loved his wife and daughters.
He showed us the blackmail letter. It said “I want £50,000 or I am going to the press. Pay up or suffer the consequences.”
There was only one thing to do – report the matter to the police. We arranged for him to meet with a very senior police officer who took over the case.
The policeman had been round the block a few times and he knew exactly what was required – a quiet word in the blackmailer’s ear.
She was warned she would be prosecuted for attempted blackmail if she took her story to the media.
Needless-to-say, the story never reached the media’s ears and to this day the entrepreneur remains happily married with his reputation intact.
So, a PR firm employed by these people has the power to influence senior cops.Not surprising really. Considering the history of certain people and sums of money involved.
Not that I can see how the “anon” comment is relevant to the article, scammers don’t need “pricey pr firms”. The authorities really are a lame bunch. The Ark scam, masterminded by Stephen Ward – https://pension-life.com/mastermind-stephen-ward/ goes back almost a decade! Victims have seen no restitution whatsoever. According to the linked article: “2011 saw the Pensions Regulator place the [Ark] scheme in the hands of Dalriada Trustees. The High Court called the Ark scheme a “fraud on the power of investment”. Stephen Ward is still free and enjoying all the money he half-inched off people!
However, back to the comment by Anon. If I’m honest, I feel sorry for his wife and daughters who are living a lie. I don’t believe he “loves his wife”. He seems more concerned about his reputation – “would have severely damaged his reputation” and “happily married with his reputation intact”.
The guy should be honest to the persons he claims to “love”. Dishonesty isn’t a characteristic of a loving relationship imho.
I have read your report and can say it pretty sums up the Ponzi schemes that are going around in the UK , with laws that seem to be allowing the culprits to walk away without legal implications .
I cannot say that I know any of the projects you have mentioned in the report , but allow me to mention that I am one of about 2400 investors who also fell for similar schemes in student pods . The developer goes by the name a Al ALPHA , and the building are managed by a subsidiary called Alpha student management . They promised 10% returns and eventually I stopped paying a year ago and has since gone into administration. It is estimated that the total investment amount is circa 250 million pounds covering around 18 projects , 16 of which are student housing and 2 holiday homes. Figured to comment on your report to tell you that our issue is probably the biggest yet . The approach was brilliant using a real estate agent by the name Emerging Property who did an amazing job marketing the projects and was able to attract investors from all over world as well as the UK . How you find the time to ask about this and I’ll be more that happy to help .
You have overlooked Best International and Greyfriars driven by Brad Lincoln (Sunday Times Exposed: Mastermind).
Dubai Car parks, ABC Offices in Malawi, Enviroparks sheds in the Welsh valleys, Orthios toxic waste land in Angelsey, all failed and also wrapped up in Greyfriars DFM Portfolio 6 which Lincoln controlled, taking in £60m of pension funds in 9 months and it now where exactly?
Oh and thats before we remember it was Best Intl that brought us the Waterside Bond for LCF that was eased into Greyfriars P6