FCA permanently bolts empty stable with extended minibond ad ban

June 23, 2020June 23, 2020 ~ Phoenix ~ 2 Comments

To nobody’s great surprise, the FCA announced last week that the temporary ban on marketing minibonds to retail investors would be extended indefinitely.

It would have been big news if the FCA had come up with any reasons why promotion of ultra high risk unregulated minibonds to retail investors should be allowed to start up again.

The FCA’s announcement glossed over the fact that even before the “ban”, high risk minibonds should never have been promoted to unsophisticated retail investors to start with.

To take the £230m potentially lost in London Capital and Finance as an example, the FCA had more than enough ammunition to stop LCF’s bonds being sold to retail investors without a general ban on minibonds, long before the scheme collapsed in late 2018.

LCF was systematically and brazenly promoted to UK retail investors via Google Ads and websites which misleadingly compared the bonds to FSCS-protected cash accounts. Its own website claimed at one point that it had “£685.3m assets held as security” to cover £215m of investor funds, which we now know from administrators’ reports was completely false.

The FCA’s Second Supervisory Notice in late 2018 belatedly confirmed this, at the same time the FCA sealed LCF’s fate by closing it to new investment. It could have done this at any time since 2014, when whistleblowers from the industry repeatedly tried to bring LCF to the FCA’s attention.

But the FCA did nothing. Not because there wasn’t a general minibond advertising ban in place. But because of the FCA’s belief that unsophisticated investors putting £230m they almost certainly can’t afford to lose in high-risk schemes doesn’t matter, on the grounds that it’s only £230m.

£1.4 billion still at risk

The FCA revealed that retail investors have £1.4 billion invested in “speculative illiquid securities”, a catch-all term for minibonds, bonds “listed” on backwater exchanges with almost no trading, and similar products. This is presumably even after £1 billion was lost from such schemes in 2019 alone.

The FCA acknowledged in December 2018 that its original temporary ban would result in some unregulated schemes collapsing due to new investment drying up.

To quote the Texas Chainsaw Masscare, who will survive and what will be left of them?

Meet the new boss

In other regulatory news, the Chancellor at last appointed a new permanent head of the FCA this week to replace the hapless Sir Andrew Bailey, appointing former civil servant and LSE head Nikhil Rathi.

Rathi is a lifelong mandarin, having been a private secretary to Tony Blair and then Gordon Brown from 2005 to 2008, then spending five years at the Treasury. He then spent 5 years at the London Stock Exchange, nominally a private company but in reality, being the gatekeeper between the private sector and retail investors, part of the UK financial regulatory skyline.

In his statement, Rathi listed his priorities as “vulnerable consumers, embracing new technology, playing our part in tackling climate change, enforcing high standards and ensuring the UK is a thought leader in international regulatory discussions”. Which, the nod to “vulnerable consumers” aside, is not what anyone hoping for a more active FCA to stem the tide of consumer losses and Financial Services Compensation Scheme levies wanted to hear.

Rathi’s belief that the priority of a country which makes up 3% of world GDP should be to become a “thought leader in international regulatory discussions” suggests we are in for more conferences about excellent sheep.

Earlier this year Hong Kong Securities and Futures Commission chairman Ashley Alder was being widely linked with the job, but either he decided to stay in Hong Kong, or the UK Government decided that someone with a reputation for an activist and interventionist approach would scare the horses.

So the signs are that Rathi isn’t going to be picking up the six-shooters that Martin Wheatley left behind in 2015 any time soon.

MJS Capital update: most of investors’ £42 million written off by directors

June 16, 2020June 4, 2020 ~ Phoenix ~ 7 Comments

The liquidators of MJS Capital have released an update into the first year of its winding up.

In total MJS Capital raised £42 million from investors, including via unregulated introducers. Claims for £36 million have been received by the liquidators and they estimate a further £6 million is yet to be claimed.

MJS Capital claimed that investors’ money would be invested in “low risk” arbitrage.

In reality, at the time of the liquidation, the bulk of investors’ money – £38 million, according to MJS’ balance sheet – was invested with just two companies, namely Angel World Family Office LLC , and Fortitude Capital.

The balance sheet puts the amounts owed by Angel World and Fortitude at £26m and £11m respectively, but the administrator goes on to put the amounts invested with Angel World and Fortitude at just £6m and £7m respectively. The only other assets held by MJS Capital consisted of a million or so loaned to other businesses, plus funds held by payment agents.

The loans to other business include £400k loaned to Tempus Media (London) Limited and used to acquire Tempus Magazine.

What happened to the rest of the £42 million invested is not clear from the report.

At the beginning of the liquidation the liquidator saw statements indicating an asset value of £36 million. This proved to be aggressively optimistic, as prior to the liquidators’ being called in, MJS Capital made settlement agreements with Angel World and Fortitude which left the potential asset value at £7 million.

Investors’ losses may yet be greater than this depending on what the liquidators manage to recover.

Angels and devils

MJS Capital had £7 million invested with Angel World, an entity in Dubai. Prior to the liquidation, with angry investors banging on the doors, MJS agreed with Angel World to take just £5.3 million in full and final settlement.

After a trawl of the emails relating to the deal, the liquidators were unable to find any evidence that this was not an honest “arms’ length” transaction.

Only an initial £250,000 was ever paid back to MJS, and even that was spirited out of MJS before the liquidators got in.

Angel World is now also in liquidation, meaning the chances of the liquidators recovering any of the remaining £5.05 million are unclear.

As for Fortitude, MJS had £6 million invested with their trading platform, but in another settlement agreement entered into prior to the liquidation, MJS agreed to accept just £1.6 million as full and final settlement.

When the liquidation began, Fortitude still owed £816k to MJS, of which the administrators (after serving a statutory demand) have so far recovered £141,000 and a Porsche valued at £70,000. A payment schedule is currently being negotiated for the rest.

Fortitude Capital claimed in its March 2019 accounts to have net assets of £7.4 million. These figures were not audited.

Let us remind ourselves at this point that in September 2019, months after the liquidators were appointed, CEO Shaun Prince was still insisting that MJS had “cashflow issues” and should never have been put into liquidation.

How Prince thinks MJS was ever going to repay the £42 million owed to creditors while writing off its own debts down to £7 million is unclear.

Former MJS Capital advisory board member Nigel Peck, who was director of an MJS shell company MJSC Marketing Limited, alleged that MJS operated as a Ponzi scheme by using new investor money to pay off existing investors who were threatening winding up proceedings.

A total of £450,000 was paid to 25 parties after the winding up petition was presented. As per the Insolvency Act S127, these payments are now null and void. The administrators have recovered a total of £31,000 so far and are mulling whether it is worth pursuing legal action to recover the rest, which has met with “significant resistance”.

Thames Valley Police are currently also investigating. The investigation was passed to a specialist team in Hertfordshire Police but then passed back to Thames Valley’s finest. Details of the investigation have not been disclosed.

MJS investors have been repeatedly contacted by recovery fraudsters claiming they can get their money back – after they pay a fee, which of course they never see again.

The liquidators report that the fraudsters not only know the investors’ contact details but also details of their investment with MJS.

How the recovery scammers obtained details of the investors’ investments is not known.

To date the liquidators have recovered £149k from MJS Capital. Their own costs stand at £525k and a further £354k in legal costs is due to Taylor Wessing for legal advice.

Allansons LLP goes into voluntary liquidation

June 11, 2020June 9, 2020 ~ Phoenix ~ 1 Comment

Allansons LLP, the solicitors behind a collapsed investment scheme which offered returns of 50% over 6-18 months, described as “zero risk” and “100% secure” by its third-party introducers, has gone into voluntary liquidation.

Voluntary liquidation indicates that sole director Roger Allanson instigated the process rather than investors doing so.

Allansons LLP raised c. £20 million from investors to fund it bringing cases on behalf of mortgage borrowers who had been the victim of “automatic mortgage capitalisation”.

A statement of affairs filed by Roger Allanson claims that the company is due £24 million in costs and fees from the various mortgage capitalisation cases it took on, which it represented would generate returns of 50% to investors in a 6-18 month timescale. When Allansons was shut down by the SRA, its clients were told to find other solicitors. How much if any Allansons LLP is still due to receive in client fees is unknown. Allanson’s statement of affairs says that of this £24 million, the amount that can be recovered is “Uncertain”.

£105,000 is also owed by members to the partnership. Since July 2019 the only member of Allansons LLP has been Roger Allanson. Allanson appears to be unaware of how much of the £105,000 he can afford to pay back to his own company, listing the amount recoverable as “Uncertain”.

The only other assets of Allansons LLP are £75,000 worth of book debts and £3,000 of furniture.

A total of £23 million is owed by Allansons to creditors, including £20 million owed to litigation funding investors.

“100% secure with FSCS” claims

Third-party introducers claimed that the investment was backed by the FSCS by way of a complicated structure which involved an obscure insurance broker, Box Legal, undertaking to compensate investors if the litigation insurance didn’t pay out (which it didn’t).

FSCS Box Legal — The “any **valid** claim” bit may be Box Legal’s escape clause here.

Box Legal recently filed accounts for August 2019 (i.e. a few months after the collapse of the scheme) which show no sign of recognising any liability for the £20 million lost.

The details of Allansons’ investors were sold without investors’ consent to cold-callers who contacted investors offering other litigation investments. Who obtained and sold on the Allansons investor list is unknown.

An action group on Facebook remains active (at time of writing it had over 250 posts in the last month) but details are private.

We review Quanloop’s loan investments paying interest of up to 10%

June 9, 2020May 31, 2020 ~ Phoenix ~ 14 Comments

Quanloop borrows money from investors at the following rates:

6.5% to invest in “low risk” loans with a loan to value (LTV) of up to 55%
9.5% to invest in “medium risk” loans with an LTV of up to 85%
13.9% to invest in “high risk” loans with an LTV of higher than 85% or entirely unsecured

Quanloop is currently running Facebook ads claiming “Quanloop will pay you at a far better rate than any bank has to offer”.

Quanloop restricts the amounts that can be invested in the “high risk” plan to 33% and the “medium risk” to 50% of the remainder, meaning that the maximum “target interest” (for 33% in each) is 10%.

On its website Quanloop claims, at time of writing, that “Today our investors are earning 14.85% [annualised] average profit”. I was unable to get my head around how this squares with its current offer with a maximum target of 10% – bearing in mind that not all investors will opt for the maximum risk and maximum target return. On the same website it claims “to be able to add over 15% annual profit to your money”.

Who are Quanloop?

Valentin Ivanov Quanloop founder — Quanloop founder Valentin Ivanov

Quanloop is an Estonian company registered with the Estonian financial regulator as a “limited partnership fund”. It is headed by Valentin Ivanov.

How safe is the investment?

Quanloop claims to offer “low risk” investments and that “…your money is guaranteed by the total assets of the fund, first – by the loan you have financed and second – by the other investments and rights Quanloop has.”

In reality, as with any loan to an individual company, Quanloop is an inherently high risk investment. Regardless of what Quanloop says it is doing with the money, whether it is investing in loans with less than 55% LTV or investing in unsecured loans, a loan to an individual company is inherently high risk, especially an obscure unlisted company in Estonia.

Secured lending is not risk-free as there is a risk that if the underlying borrower defaults, the security cannot be sold for enough to cover the loan.

Investors in asset-backed loans have been known to lose 100% of their money when it turned out that there were not enough assets left to pay investors after paying the insolvency administrator (who always stands first in the queue).

We are not in any sense implying that the same will happen to investors in Quanloop, only illustrating the risk that is inherent in any loan note even when it is a secured loan.

If investors plan to rely on this security, it is essential that they hire professional due diligence specialists (working for themselves, not Quanloop) to confirm that in the event of a default, the assets of Quanloop would be valuable and liquid enough to compensate all investors. Investors should not simply rely on what Quanloop tells them about their assets.

Quanloop claims to be better than a no-risk deposit account, describes its investments as “low risk”, and over-eggs the fact that its loans are secured, even though this does not change the fact that loaning your money to an individual company has an inherent possibility of up to 100% loss.

All of this is misleading, as confirmed by the Financial Conduct Authority. (UK regulation is what matters here, given that Quanloop is sourcing investment from the UK public via Facebook ads.)

Should I invest in Quanloop?

This blog does not give financial advice. The following are statements of publicly available facts or widely accepted investment principles, not a personalised recommendation. Investors should consult a regulated independent financial adviser if they are in any doubt.

As with any individual loan note to an unlisted startup company, this investment is only suitable for sophisticated and/or high net worth investors who have a substantial existing portfolio and are prepared to risk 100% loss of their money.

Any investment claiming to be able “to add over 15% annual profit to your money” is inherently very high risk. As an individual, illiquid security with a risk of total and permanent loss, lending money to Quanloop is much higher risk than a mainstream diversified stockmarket fund.

Before investing investors should ask themselves:

How would I feel if the investment defaulted and I lost 100% of my money?
Do I have a sufficiently large portfolio that the loss of 100% of my investment would not damage me financially?
Have I conducted due diligence to ensure the asset-backed security can be relied on?

If you are looking for a “guaranteed” investment, you should not invest in loans to Estonian companies with a risk of 100% loss.

Accumulate Capital follows Signature playbook, threatens legal action, claims 8 x 3 is not 24

June 4, 2020June 4, 2020 ~ Phoenix ~ 1 Comment

In early May I reviewed Accumulate Capital’s unregulated loan notes, which were touted as an “Asset Assured Accumulator” paying potential returns of 15% per year.

Accumulate Capital is run by an ex-alumni of Signature Capital, Paul Howells, who formerly described himself as a “Partner” at Signature on his LinkedIn page. Its corporate entity was originally incorporated as EQT Capital Limited by Sarah Schofield, a director of two Signature companies. Signature Capital collapsed into administration in April.

Let’s be very clear – the fact that both Accumulate’s once and current owner were ex-Signature alumni does not mean that Accumulate is the same company as Signature.

One thing Accumulate and Signature do share however (apart from ex-Signature staff) is a predilection for pointless legal threats, while withholding information from their own lawyers.

Back in May 2019 Signature threatened me with legal action over various points in my review. Among their complaints were that I’d said they offered returns of up to 16% per year, which their lawyers vehemently denied despite me being in possession of the promotion in question. They also complained that my review hadn’t paid enough attention to the fact that Signature’s investments were backed by a corporate guarantee.

In January 2020 Signature attempted to argue in court, in a vain attempt to dodge honouring its debts, that this corporate guarantee – the same one they’d threatened to sue me over – didn’t actually exist, because the paperwork wasn’t witnessed. This argument was thrown out of court on its arse. Anyway, enough ancient history, let’s get back to Accumulate.

24% commissions — Got any high net worth or sophisticated clients with money burning a hole in their pocket?

Shortly after my article was published, Accumulate contacted me with various complaints. Some of these related to third-party comments left underneath the article, which have been dealt with as the commenters’ responsibility. Accumulate’s main beef against me personally is that I’d noted a section on their website which promised to pay introducers “up to 24% commissions” .

The fact that Accumulate paid up to 24% commission, according to its website at time of publication of my review, significantly raises the risk of the investment. Assuming it pays out the full 24%, it means it has to generate a 32% return just to get back to the investor’s original capital. That’s before accounting for its own costs, and the returns paid to the investor. (Accumulate’s website touted returns of 15% per year in a testimonial.)

Accumulate’s lawyers claimed “This claim does not feature anywhere on our client’s website and has never been made on its website.” This was false. The original review even included a screenshot of the 24% commission claim, just in case anyone thought I’d decided to start randomly making things up after two and a half years of running Bond Review.

Accumulate Capital commission — Accumulate Capital’s “partner_programme_enq” webpage as it stood at the time of my review.

It gets better. According to Accumulate’s lawyers, it was “out of context and misleading” to note that Accumulate advertised commissions of up to 24%, because “a 24% figure was once referenced in a promotional document” [and continuously on Accumulate’s website at the time of the review] “but with an explanation, which you have omitted, that this was three payments of 8% commission.”

As readers will note from the screenshot above, I omitted nothing, as the advertisement to introducers in question didn’t mention anything about the 24% being paid in three instalments.

More importantly, it doesn’t actually matter. Last time I checked my calculator, 8 x 3 = 24.

And if it’s “misleading” to say that 8 x 3 = 24, Accumulate’s website was equally misleading.

Accumulate has since scrubbed the page in question, which now returns a “404 not found” page.

Accumulate then allegedly doubled down on misleading their own lawyers, who told me “Our client has not changed its website or removed any reference to the 24% commission – it was never on its website.” As can be confirmed from the above screenshot of Accumulate’s website as at 16 April, and a comparison with the same page now, this is also false.

Although Accumulate and Signature are entirely different companies, I can’t help being reminded of Signature complaining about me saying they’d offered 16% per year to their investors, when a quick search of their own email server would have confirmed they did.

Similarly, Accumulate’s hapless lawyers could have simply run a “site:” Google search on their clients’ website, instead of wasting investors’ money (lawyers are expensive) claiming that the above webpage never existed.

Accumulate also complained that “Paul Howells has never been a director or partner of Signature Capital.”

I have never claimed that Paul Howells was a director of Signature Capital, but that doesn’t change the fact that he described himself as a Partner on his LinkedIn profile.

He then attempted to scrub his association with Signature from the Internet, but evidence of his time at Signature remained on his profiles with Apollo.io (which scrapes from LinkedIn) and Vimeo long enough to be saved for posterity.

So in summary:

Paul Howells is a former Partner of Signature, based on his own LinkedIn profile.
Accumulate openly offered, at the time of my review, up to 24% commission to introducers.
Both these facts were correct as at the time of my review, despite Accumulate attempting to scrub both from the Internet.
Accumulate have wasted their investors’ money on lawyers attempting to browbeat me into removing the above facts from my review.
Which is money they can’t afford to waste given that they offer rates of 15% per year on investors (based on their testimonials at the time of the review) while paying up to 24% commission to their introducers (based on their website at the time of my review).

My review noted that Accumulate’s investments, being unregulated loans to an obscure unlisted company, are inherently high risk with a possibility of 100% loss.

Investors should think long and hard before investing with a company that wastes money on attempting to conceal verifiable facts.

We review The Hit Rate Edge – betting Ponzi claiming 25% per month returns

June 2, 2020May 29, 2020 ~ Phoenix ~ Leave a comment

The Hit Rate Edge Sports Betting, which is currently promoting itself via Facebook ads, claims to offer “tax-free income” of 25% per month and “consistent income no matter what happens to financial markets”.

In a recent post on its Facebook page it claims it is a “complete no brainer” for savers earning no interest to get higher returns by investing in its betting scheme.

Who are The Hit Rate Edge?

The Hit Rage Edge does not have a public web presence beyond its Facebook page and does not openly disclose who is behind the company. A blog post obliquely refers to “our founder” without stating who the founder is.

However, in addition to its corporate Facebook page, THRE has a Facebook group called “The HIT RATE EDGE Sports Betting”. This group has two admins – THRE’s corporate profile and one Chris Legge. On its contact page, THRE also lists its email address as leggesolutions.co.uk. Legge Solutions Ltd is wholly owned by Christopher Raymond Legge.

So as per its contact details, The Hit Rate Edge = Legge Solutions = Chris Legge.

Legge / the not-so-mysterious founder claims to have “created many algorithmic trading systems over his thirty-seven-year financial services career that traded mainstream assets classes [sic], stocks, bonds, currency, ETFs, options, property derivatives” etc.

No further details of Legge’s prodigious career are provided. Legge’s LinkedIn profile lists his only position in his entire career as the aforementioned Legge Solutions, which was founded ten years ago in January 2010. According to Companies House, Legge was born in April 1977, meaning he started his career in finance and developing algorithmic trading systems at the tender age of seven. When I was seven I was only just starting to get to grips with Pac-Man.

How safe is the investment?

Although anyone can make 25% from a good month of betting (you can generate a 100% return in 30 seconds from roulette), it is impossible to consistently make 25% month in month out. Betting is a zero sum game and the expected return is zero, minus costs.

That is a side issue however, as even if The Hit Rate Edge’s magic 25% per month algorithm was real, it would still be breaking the law.

The Hit Rate Edge’s offer to take investors’ money and generate passive returns via gambling amounts to a collective investment scheme.

While there are references to “software licences” and “the customer’s own betting account” which may represent a pretence at not offering a collective investment, THRE’s promotions make it clear that day-to-day control of investors’ money is passed to THRE.

The HRE system automatically distributes its profits each time your account increases to a predetermined income level; 10%, 15%, 20% or 25%. The frequency of income payments is dependent on the level of profits generated by the HRE system. The HRE software automatically withdraws profits from your betting exchange account to your bank account.

Running a collective investment scheme in the UK requires authorisation from the Financial Conduct Authority. As does issuing financial promotions, including its Facebook ads. THRE is not regulated by the FCA, so by running a collective scheme and issuing financial promotions, they are committing a criminal offence.

The only reason THRE hasn’t registered with the FCA and opened a collective fund the legal way, is that in doing so they would have to reveal that their magic formula that produces 25% monthly returns doesn’t exist.

As THRE has no magic formula producing 25% monthly returns, the only means it has of paying returns to investors is the investors’ own money, making THRE a Ponzi scheme.

THRE refers in its ads to limited liquidity in the betting markets, as a means to justify time-limited FOMO marketing (Fear Of Missing Out). This just emphasises that their claim to be able to generate returns of 25% per month (which equates to 1,355% per year) is nonsense. If you had a magic algorithm that generated returns of 25% per month, but it only worked for a limited amount of money, you would not offer it to random people via Facebook ads and limit your own returns.

Should I invest with The Hit Rate Edge?

Any investment offering a ROI of 25% per month is in reality a virtually guaranteed loser for all but those running it. The mathematics of Ponzi schemes guarantees that the vast majority, if not all, of investors will lose their money.

Do not invest unless you are prepared for total losses.

Westway Holdings collapses into administration

June 1, 2020May 31, 2020 ~ Phoenix ~ 49 Comments

Westway Holdings has collapsed into administration, according to the Gazette.

Reviews left on Trustnet suggest the company stopped repaying investors around November 2019.

I reviewed Westway Holdings in January 2018 and concluded that, despite Westway’s brochure claiming “income underpinned by Government allowances”, its bonds were inherently high risk.

In June 2019 an individual calling himself “Mark” claimed in the comments under the review “many of your statements are factually incorrect and seem designed to scare people” and “every investor to date has received every coupon payment due, with over £2 million repaid upon maturity of historical bonds” (which sounds like inside information to me, unless Westway were touting this irrelevant factoid in promotions or investor communications).

“Mark” failed to point out any incorrect statements in my review. Westway collapsed a few months later.

How much investor money is at risk in Westway is not known, as the company fell overdue with its accounts around the same time that it stopped paying investors. (A figure of £20 million has been mentioned in the review comments but this is unverified.)

How do I get my money back from Westway?

Westway’s investor list has already made its way into the hands of recovery scammers, who have contacted investors already knowing about their Westway bonds. Anyone who cold-calls you claiming they can get your money back from Westway or want to buy your bonds is a scammer.

How Westway’s investor list was leaked to recovery scammers is not known.

If you were advised to invest in Westway by an FCA-regulated company, you may be able to recover your money by making a formal complaint to them.

If the company refuses to provide compensation, the complaint can be taken to the Financial Ombudsman, which can order compensation up to a defined limit. If the company is unable to pay, you would be covered by the Financial Services Compensation Scheme up to £85,000 per person.

Investors should avoid Claims Management Companies (CMCs) as they are unnecessary, often have a lower success rate than direct complaints, and charge eye-watering fees. The FOS and FSCS process is slow but straightforward.

Otherwise the standard procedure is to write off the investment and treat any recovery as a bonus.

We review Buy to Lease’s unregulated car investment paying 8 – 12% per year

May 26, 2020May 26, 2020 ~ Phoenix ~ 3 Comments

Rent To Lease Limited, an offshoot of car supplier and credit broker Get Me Car Finance Limited, is offering investment in leased cars to investors paying up to 12% per year as follows:

8%pa for investments of £10k – £15k
9% for investments of £15k – £30k
10% for £30k – £50k
11% for £50k – £100k
12% for investments over £100k

A “special offer” on Buy To Lease’s website raises the offered rate of return for investments over £10k to 10% “while the coronavirus lockdown is in force”.

This is a pretty tasteless variation on FOMO (Fear Of Missing Out) time-limited marketing. It’s a global pandemic killing tens of thousands of British people, not a bank holiday. And FOMO marketing is highly dubious for any high-risk investment anyway (investors should not be pressured into making a decision).

Investors’ money is used to buy a car from Buy To Lease, which is then immediately loaned back to Get Me Car Finance, which in turn lends the car to one of its customers. Get Me Car Finance “guarantees” both to pay the offered return, and to repay the investor’s capital even if the car is lost / stolen / destroyed.

While Get Me Car Finance is FCA-regulated as a credit broker, its investment scheme is not. Get Me Car Finance has no authorisation to run a collective investment scheme.

Who are Buy To Lease / Get Me Car Finance?

Buy To Lease is run by founder Myles Cunliffe.

The main business entity is Getmefinance Limited, which was incorporated in 2010, and is backing the “guarantee” to repay the investor’s capital. Getmefinance’s last accounts show net assets of £52k (£212k assets minus £160k creditors). Due to its small size, the accounts were unaudited and contained very little information.

How safe is the investment?

Buy To Lease claims its investment is “a simple, safe way to earn GREAT RETURNS”.

However, ultimately investors are not investing in a car, but in Get Me Car Finance itself. That means they are investing in an extremely small company with net assets of only £10k according to its last accounts. If the end-user does not make sufficient repayments to fund the investor’s returns of up to 12% per year after Get Me Car Finance’s own costs, and the car cannot be sold for enough to make up the difference (cars depreciate notoriously quickly in value), the investor is relying on Get Me Car Finance to pay their interest and capital.

Investment in a tiny company with only £10k in net assets is not, by any stretch of the imagination, “safe”.

Should I invest with Buy To Lease / Get Me Car Finance?

As with any investment in a tiny unlisted company, this investment is only suitable for sophisticated and/or high net worth investors who have a substantial existing portfolio and are prepared to risk 100% loss of their money.

Any investment offering up to 12% per annum yields should be considered very high risk. As an investment in an individual micro-cap company with a risk of total and permanent loss, Buy To Lease is much higher risk than a mainstream diversified stockmarket fund.

Before investing investors should ask themselves:

How would I feel if the investment defaulted, Get Me Car Finance did not have the money to back its “guarantee”, and I lost 100% of my money?
Do I have a sufficiently large portfolio that the loss of 100% of my investment would not damage my lifestyle?

If you are looking for a “safe” or “guaranteed” investment, you should not invest in securities offered by micro-cap companies with a risk of 100% loss.

If you are looking for an FCA-regulated investment, you should invest in mainstream FCA-authorised collective investments, not unregulated investments run by car loan brokers.

Fuzzy Brush reprieved from strike off, finally files 2017 accounts

May 19, 2020May 18, 2020 ~ Phoenix ~ 6 Comments

Fuzzy Brush Products Limited has finally filed its accounts for December 2017, resulting in a strike-off notice that had hung over it since December 2018 finally being lifted.

Fuzzy Brush offered preference shares paying up to 14.43% per year to investors, and also promoted investment in Fuzzy Brush vending machines paying up to 19.7% per year.

Its investments were promoted by the Daily Express tabloid, and also by The Investor Crowd, run by Nick Lomax, who previously ran a company which scammed investors into buying wine that didn’t exist and was banned from being a company director for 11 years. The Investor Crowd claimed investors could “invest safely” by investing in Fuzzy Brush’s high risk unregulated preference shares; its website is now defunct.

Lomax’s ban did not extend to running unregulated websites promoting unregulated preference shares, and there is no suggestion that Fuzzy Brush broke any laws by using Lomax to raise money from high-net-worth and sophisticated investors.

Fuzzy Brush Products was legally required to file its accounts for December 2017 by September 2018. A strike off notice was issued against it in December 2018. Had it succeeded, Fuzzy Brush Products would have been struck off the register and all its assets forfeited to the UK Government.

The strike-off was suspended after a creditor objected, and has now been lifted after the company finally filed its 2017 (and 2018) accounts.

Despite The Investor Crowd claiming “Transparency is Key” in one of its promotions for Fuzzy Brush, the accounts are unaudited, did not include a profit and loss account and provide very limited information – so how they took so long to file is something of a mystery.

From December 2016 to December 2018 Fuzzy Brush Products Ltd’s share capital increased from £1.0 million to £1.9645 million, which seems likely to reflect the issue of £964,500 worth of preference shares to investors.

Retained earnings meanwhile declined from £121k to £49k over the same period, which means the company’s profits in that period did not cover the dividends paid out, and previous years’ profits were used to fund the dividends.

Fuzzy Brush Products remains overdue with its confirmation statement (details of who controls the company) by a year and four months.

Fuzzy Brush continues to promote itself via its investinfuzzybrush.com website, claiming “15% capital growth” and “up to 9.5% fixed interest”, despite having no FCA authorisation to issue financial promotions. It previously claimed in a 2018 puff piece to be targeting an AIM IPO by 2021.

We review Argonaut FX’ investments paying 7%-18% per month

May 12, 2020May 12, 2020 ~ Phoenix ~ 1 Comment

ArgonautFX is currently advertising returns of 7% per month via Instagram Stories.

On their website they claim to offer an “Income Generator” with an average return of 7.3% per month and a “VIP Fund” with an average return of 18.4% per month (and a higher minimum investment).

Its literature claims Argonaut targets returns of 60% per year and has “proven capital risk exposure of less than 10%”.

A “Capital Guarantee” Fund is also listed as “Coming Soon”.

Investors’ money is supposedly used to trade forex and commodities using “blended New York hedge funds strategies and algorithms”.

Who are Argonaut FX?

No details of who is behind the business are provided on Argonaut’s website.

In its footer Argonaut claims to be a trading name of DBPP Limited, which is an FCA-regulated insurance broker trading as Foryounity. Despite this, in a disclaimer Argonaut FX claims to be “not licensed or regulated by the Financial Conduct Authority” which makes no sense, as DBPP Limited is FCA-regulated. That and other inconsistencies initially made me suspect a “clone scam”, i.e. that ArgonautFX had copy and pasted Foryounity’s website and their company name.

That changed when I looked at Argonaut’s Facebook page. Argonaut has a Facebook group “Argonaut FX Mastermind”. The admins of this group are Argonaut FX’s corporate profile and Rakesh Kumar Morar. The moderators are Raj Aziz and Vincent Procopiou.

Companies House shows the directors of DBPP are Rakesh Morar and Barnaby Procopiou, with Barnaby Procopiou also being the company’s owner. I wasn’t able to confirm whether Barnaby and Vincent Procopiou are relatives or the same person.

The Facebook profiles are too old to be fake, so, despite the inconsistencies, it appears that ArgonautFX checks out as a genuine offshoot of DBPP / Foryounity.

I contacted Foryounity last week and they haven’t responded. I also contacted their network Tuto Money to ask what authorisation their appointed representative had to run a collective fund, but again, no response as yet.

Note that none of this digging would have been necessary if, as is standard, ArgonautFX had disclosed details of its directors and ownership on its website.

Investors should think carefully before investing with a company which is not upfront about the identity of the people behind it.

How safe is the investment?

ArgonautFX states that they are running a collective forex trading investment.

The MAM (Multi Account Manager) allows the funds to be pooled, while remaining in your client account. Why is this beneficial? The funds can be traded as one whole pool, whichallows larger trades, increasing profit/loss, therefore allowing you to achieve targets you would not be able to see with only £500+. Greater diversification brings about lowered riskmanagement through exposure.

Running a collective investment requires authorisation from the FCA. Whie ArgonautFX / DBPP is FCA-registered (despite its claim to the contrary), neither it nor its network, Tuto Money, has authorisation to manage investments. ArgonautFX is therefore breaking the law.

If ArgonautFX actually had a magic way to consistently make 7-18% a month (that’s 125% – 629% per year), they would keep it to themselves, and would have no need to break the law or dilute their own returns by soliciting investment over Instagram.

The reason why ArgonautFX hasn’t applied for permission from the FCA to manage its collective fund and promote it to the public is that in doing so they would have to reveal that their magic algorithms from New York that produce 60% – 629%+ yearly returns don’t exist.

As ArgonautFX has no magic formula producing 60%+ yearly returns, any returns to investors will either be illusory (“numbers on a screen”) or, if real money is paid into an investor’s account, this will be funded by the investors’ own money or that of others, which would make ArgonautFX a Ponzi scheme.

Its claim that the investment has “proven capital risk exposure of less than 10%” is also nonsense. Regardless of what strategies Argonaut claims to use, handing your money to the control of an obscure small company has an inherent risk of losing 100% of your money.

Bogus past performance

Like many Ponzi schemes using forex trading or other forms of gambling as their story, ArgonautFX’s literature is big on screenshots supposedly showing their trading accounts, with lots of pretty graphs and big numbers showing super-duper returns.

Screenshots of trading accounts are not a substitute for FCA registration and audited accounts.

In the absence of FCA registration and audited accounts, Argonaut’s graphs are equivalent to claiming you can generate 60% per year by gambling on roulette and “proving” your outlandish claims by showing the investor a video of some random wins at a roulette table.

Even if they represent genuine performance for somebody’s money over some timeframe, performance graphs are not proof that Argonaut is in fact generating external revenue from forex trading and using it to fund returns of 125 – 629% per year to investors.

If Argonaut’s screenshots had anything to do with their returns, they would have no problem opening their books and registering their collective fund with the FCA, but they haven’t. As Argonaut operates illegally, any information from them is nonsense until proven otherwise.

Should I invest with ArgonautFX?

Any investment offering a ROI of 125%+ per year is in reality a virtually guaranteed loser for all but those running it. The mathematics of Ponzi schemes guarantees that the vast majority, if not all, of investors will lose their money.

testimonial — Sophisticated investors please form an orderly queue.

Do not invest unless you are prepared for total losses.