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Property investors lose £9 million to scammers
3 March 2016
The companies offered discounted and money back deals to property investors that turned out to be shams.
Hometrader Group Plc and Hometrader (North West) Ltd, along with Newbury Venture Capital Ltd, scammed hundreds of investors, the Insolvency Service told the High Court.
The companies ran several buy to let schemes – one of the most popular was The Privilege Club.
Nearly 230 investors paid £5,000 each to sign up to the member-only web site offering discounted property deals.
The problem was none of the homes were professionally valued and they were offered to the investors at inflated prices, the court was told.
Hundreds of other investors agreed joint ventures with Newbury Venture Capital on the understanding that they were the sole partners.
The deal was structured so investors paid a 25% deposit to buy a property with a 75% mortgage and would receive their deposits back plus profits of between 20% and 50% within 26 weeks.
If the property was unsold, they would have their deposit refunded plus £2,500.
When the Insolvency Service asked the companies to provide evidence of investors who had made a profit or received a refund, the directors could not provide any.
Investigators also suspected the property deals were potential mortgage frauds.
Colin Cronin, who supervised the Insolvency Service investigation, said: “In ordering Newbury Venture Capital Ltd into liquidation the court found that the company had operated with both a lack of transparency and a lack of commercial probity, had adopted misleading sales practices and failed to keep proper accounting records.
“When the company was challenged to show examples of investors who had made profits on their investments no such evidence was forthcoming.”