Carlauren administrator publishes report; investor money diverted to private jet and luxury yachts

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.

4 thoughts on “Carlauren administrator publishes report; investor money diverted to private jet and luxury yachts

  1. My question is
    Carlauren was promoted by property agents and other unregulated introducers, many of whom did not have authorisation to recommend investment in unregulated investment schemes.
    Why on earth are not held accountable for?

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  2. Was Carlauren a collective investment scheme? Looks to me like it wasn’t, based on the provisions of paragraph 5 of the Financial Services and Markets Act 2000 (Collective Investment Schemes) Order (SI 2001/1062). While the headline CIS definition is section 235 FSMA is short and sweet, the devil is in the detail of this statutory instrument.

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  3. It was Park First with rooms in a care home instead of car park spaces, which was Capital Alternatives with car park spaces in place of parcels of land.

    No day-to-day control + pooled investor money = collective investment scheme.

    I’m not seeing anything in paragraph 5 which changes that. Carlauren didn’t issue minibonds, it leased investors’ rooms back off them, as Park First leased back the parking spaces in exchange for the fixed return (without which nobody would have invested).

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  4. For those not familiar with the FCA vs Capital Alternatives Appeal in January 2015 you will find it here: https://www.bailii.org/ew/cases/EWCA/Civ/2015/284.html

    In essence although Capital Alternatives argued it wasn’t a collective Lord Vos ruled it was based on the criteria – stated above by Brev – basically saying it’s necessary to look at the substance rather than the form. In other words although it claimed to be a closed ended scheme it was in fact operated as a collective.

    A simple example in the case of Carlauren would be if you invested in one of the rooms with the idea of earning an income from it, Carlauren can “manage” the room from the point of view maintenance – you don’t have to do that yourself, you can pay for administration services – but if it was left vacant and all investors received their income from the property as a whole regardless of occupancy, then it was “pooled” and consequently a collective. This is what the courts concluded about the parcels of land in this case.

    It’s a fascinating read and although Slater & Gordon, in 2017, claimed Balckmore Global (the offshore unregulated fund that dozens if not hundreds of defined benefit pensions were invested into via QROPS, before Blackmore switched to mini bonds) wasn’t a collective, in their attempt at a “proposed claim for defamation” acting on behalf of Tweedledum & Tweedledee, by using the same logic as Lord Vos it can easily be shown the fund was operating as a collective – i.e. examining substance not form. Nothing ever came of the threat – S&G were stupid even to consider it, but I guess blood sucking lawyers will anything for money! There is more on this at https://pension-life.com/blackmore-global-investment-scam-represented-by-slater-and-gordon/ if you’re interested – which you probably aren’t.

    Tweedledum & Tweedledee have a lot to answer for, from their part in generating 200 leads a month for Capita Oak & Henley scams, to pension transfers into Blackmore Global and now the stuggling Blackmore Bonds … the list just goes on and on … and the FCA have a lot to answer for for just letting them do it …. in my opinion that is.

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