Safe or Scam LLP, an American introducer which brings together investors in collapsed investments and insolvency practitioners / lawyers, has claimed in an open blog published on Monday 5 August that Carlauren has not appointed administrators, contrary to a statement from Carlauren in late July.
Carlauren claimed on 23 July that it had “instructed administrators”, and that “a full update with procedures and next steps will be distributed tomorrow”. A number of media outlets, including Bond Review, took this to mean that the company had gone into administration, especially against the background of Carlauren’s widely documented financial problems.
Safe or Scam however states:
This led to a number of media outlets picking up the story and reporting that Carlauren Group was in administration. It was not. As of today’s date it is still not in administration. We do not know why Carlauren Group would choose to mislead investors like this. We can only assume it was because they knew the use of the word “instructed” has no meaning in relation to an administration. The important word is “appointed” and Carlauren Group did not appoint any administrators. We can only assume this was a stalling tactic designed to prevent investors from combining to appoint an administrator. Carlauren was trying to buy time. As far as investors are concerned the only company in administration which is relevant to them is Accordiant Ltd. That company is the one which owes the rental payments.
Filings in The Gazette show however that Quantuma LLP were appointed last week as administrators to three Carlauren companies: Carlauren Care Limited, Carlauren Lifestyle Resorts Limited, and Accordiant Limited.
Quantuma LLP was recommended to Carlauren investors by Safe or Scam.
Carlauren Care and Carlauren Lifestyle Resorts are not mentioned in Safe or Scam’s blog but Accordiant is. Safe or Scam also says that Quantuma intends to place all Carlauren companies into administration.
Quantuma is representing creditors of Accordiant Ltd because that is its job and to do that effectively it must interview the people who controlled that company. Murray is not going to take their advice because the Quantuma position is that ALL Carlauren companies ought to be placed into administration for the protection of creditors and assets. We would be amazed if any administrator would ever consider taking advice from Sean Murray. He is a man who buys a private jet with investor money and thinks elderly care can be paid for with a new kind of crypto-currency he has just devised.
So in short: Safe or Scam says that Carlauren as a group is not in administration, however three Carlauren subsidiaries definitely are according to the Gazette, and the administrators’ intention is to expand this to the whole group.
Earlier in the blog, Safe or Scam alleges that Carlauren was a Ponzi scheme, whose business model was to buy properties and sell off the rooms at a 300% markup to investors, on the promise of a 10% per annum return.
Any returns the investor received, according to Safe or Scam, were funded by their own investment or those of others, rather than returns from the care home or any other business.
The model appears to be that a Carlauren SPV company buys a property for X. The bedrooms are then described as care studios and sold off to individual investors for 4X i.e a 300% mark-up. In some cases the mark-up was higher. The SPV company retains the freehold of each site along with ownership of communal areas such as restaurants, lounges, kitchens and gardens. […]
Another element of the investment was that investors were promised an unrealistic and unachievable guaranteed rental of 10% per annum. This may have been achievable if the rental was based on the true market value of the bedroom e.g £20,000, but when Carlauren described these as “care studios” and was selling them for £100,000 each the rental commitment of £10,000 per year was impossible to achieve. The only reason for selling rooms for £100,000 was to raise enough cash to give the investors some of their own money back under the pretence of it being their rental payments. Needless to say all rentals on all sites ceased a few months ago.
Carlauren Group letter to investors of 10th July 2019 states “week ending last Sunday realised the largest turnover since we began of £147,000, this equates to an annual turnover of £7.6m of which we estimate a net margin after hotel running costs of 35% (£2.67m)”. Even when using their best ever week figures and applying that as a yearly revenue estimate, they admit they are currently £5m short every year on the rental payments they owe to investors. Carlauren has never explained to investors how they were able to make the rental payments. Perhaps it is time that they did.
Carlauren would have to admit that the payments came from the investor’s own money and then later from the money paid by new investors buying into the next property. […]
It is worth pointing out that Carlauren Group has commitments to make rental payments to investors on more than a dozen sites which are still closed and non-operational. Carlauren just kept buying more and more sites for X to sell at 4X because that was their only way to raise enough money to meet the ever-growing rental commitments.
Carlauren Group’s £2.5 million pad
Research by Safe or Scam into Companies House records shows that a Carlauren subsidiary named Carlauren Resort 22 Ltd borrowed money from Together Commercial Finance, secured against various Carlauren properties owned by various Carlauren special purpose vehicles, and a £2.5 million residential property in Poole bought by Carlauren Resort 22 itself, known as Western House.
Western House is described by its former estate agents as
An outstanding bespoke built residence situated in beautiful landscaped grounds of around one acre. Located in Branksome Park, a conservation area covering several hundred acres, an area renowned for its natural beauty with tree lined avenues, indigenous pines and rhododendrons.
Complementing the sophisticated interior is a superb outdoor swimming pool, as well as east facing manicured grounds lined by mature trees providing seclusion and privacy. A short drive away are the superb water sports facilities of Poole Harbour with several yacht clubs and marinas, as well as miles of Blue Flag award winning sandy beaches.
For what purpose Carlauren Group used investors’ money to buy Western House is not currently known. But it certainly sounds as if whoever lives there has been better provided for than Carlauren’s former care home residents.
As and when the Gazette or Companies House publishes updates on Carlauren’s administration or non-administration, we’ll bring you more…