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Ponzi property scheme worth £20m shut down after buying one house

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  • 05/11/2018
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Ponzi property scheme worth £20m shut down after buying one house
A property investment company that misused almost £20m of investor cash to operate a ‘Ponzi scheme’ has been shut down by the High Court.

 

In just 18 months, more than 800 people invested between £5,000- £100,000 with Essex and London Properties Limited (ELP).

The firm claimed to purchase properties to either sell at a profit or generate rental income for investors, who were offered returns of between 8% and 12%

But in reality ELP only purchased a single property – a house in Harwich for £147,000, worth less than 1% of the overall amount of money collected from investors.

The company falsely told investors it had purchased numerous properties that had rapidly increased in value and created fraudulent Land Registry documents to show the company owned more property than it did.

Investors received their interest payments, not from any meaningful return on their investment but from payments made by new investors, the Insolvency Service said.

The company essentially operated a Ponzi scheme.

 

Money benefited company bosses

The Insolvency Service, the Secretary of State for Business Energy and Industrial Strategy issued the petition to wind up the company and in September the High Court ordered the company into liquidation.

David Hill, chief investigator for the Insolvency Service said: “The company persuaded members of the public to part with substantial sums of money to invest in property.

“Only one property was purchased and the money raised from the public in reality was used to benefit those running the company.

“As so often is the case, if an investment scheme appears to be too good to be true, it probably is. There is an ongoing investigation into those individuals controlling Essex and London Properties Limited by Essex Police, who are liaising with the Crown Prosecution Service with a view to prosecuting a number of suspects.”

The Insolvency Service advised investors to respond only to communications from the Official Receiver.

 

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