The administrators of Carlauren Group have released their initial report into a total of 25 Carlauren companies.
Carlauren Group was an unauthorised investment scheme which solicited investment in care homes for returns of 10% per year. It slowly and painfully collapsed in 2019, leaving a trail of building sites and traumatised vulnerable OAPs as it did so, after becoming unable to pay its liabilities.
Investors’ money was in theory to be used to do up stately buildings and convert them into care homes. The administrators lay bare the reality:
The Joint Administrators believe that the Group had invested in assets which were not integral to the business model, including software development, a travel business which included the acquisition of a private jet and luxury yachts, and private residences. The investors had significant concerns as to the reasons for the Group making such acqusitions and investments, and the sources of funding, given the Group was at this stage failing to complete renovation projects as expected and failing to provide investors with returns as expected. There were large intercompany loans between many Companies within the complex group structure.
The Group’s business model which it operated is fundamentally flawed and unsustainable which led to the Group’s failure.
By “private residences” the administrators may be referring to Western House in Poole, a 5-bedroom pad valued by agents at a cool £2.8 million. Despite being owned by Carlauren Resort 22 Ltd (and mortgaged to a bridging lender), as confirmed by Companies House records, it showed no obvious potential for commercial development as a hotel or care home.
Pages 12-13 list various freehold properties owned by the Companies, which total around £22 million based on the prices Carlauren bought them for (plus one property, Coverdale Court in Yeovil, Somerset, whose price was unknown) – considerably less than the amount owed to creditors.
Before its collapse, Carlauren borrowed money from bridging lenders including Together Commercial Finance. These had security over some of Carlauren’s freehold properties which will reduce the amount available to Carlauren’s unsecured investors.
How much investors’ money is at risk is not currently known for certain; a figure of £76 million has been mentioned by Safe or Scam, but the true extent is not known “due to the quality of the Group’s financial records”.
The administrators have asked Sean Murray to provide Statements of Affairs detailing the assets and liabilities of the Carlauren companies. While he has “been assisting the Joint Administrators” he has not yet provided completed Statements of Affairs.
A number of motor vehicles, watercraft and aircraft were owned by Carlauren Travel. Director Sean Murray’s predilection for flying around in a private jet was already known, but why a hotel and care home business would need watercraft is beyond me.
When Carlauren was taken over by the administrator, it had only £5,977 left in the bank account belonging to Heritage Hotels. All other bank accounts had been exhausted. The Administrators have been unable to secure even the £5,977 and it is believed to have been spent in the course of trading.
Carlauren invested money into “intellectual property” which include its failed and half-baked (even by cryptocurrency standards) care home shitcoin.
The administrators have pegged their fees for sorting out the complicated web of Carlauren companies at £3.3 million.
Unauthorised investment scheme
It is indisputable at this point that Carlauren was run as an unauthorised collective investment scheme. The two necessary prongs are that investors did not exercise day-to-day control (tick) and that investors’ money was pooled to pay their returns (given that Carlauren didn’t even manage to get the care homes built, therefore large numbers of investors weren’t getting their 10% returns from the fees attributable to “their” care home suite, tick).
That Carlauren was using care home properties as a basis for the scheme does not change the fact that it was by nature a collective scheme. An investment with a promise to pay 10% fixed returns is an investment in a company and not in property (which does not have a fixed yield).
Carlauren was promoted by property agents and other unregulated introducers, many of whom did not have authorisation to recommend investment in unregulated investment schemes.
Despite Carlauren managing to take in somewhere around £76 million (in the absence of a more specific figure from the administrators), and the scheme hitting the national papers when their shitcoin made it to the BBC’s Technology pages, not so much as a warning was issued to investors by the FCA, let alone an investigation into their unauthorised collective scheme.
Another regulatory triumph to boost investor confidence in the “open for business” UK.