fbpx

Property Investment – Professional Supervision is Vital to Guard Against Fraud

24th February 2023 By

Fraud is a very real risk faced by investors in property developments and that is why detailed professional supervision of projects is so essential. The point was powerfully made by a case in which a family fell victim to dishonesty and lost millions on the ill-fated purchase and redevelopment of a luxury flat.

Following the flat’s purchase for £7.75 million, the project was to be administered by a man who would receive 5 per cent of profits generated on the property’s resale. In the event, there were no such profits and members of the family, who had substantially bankrolled the project via single-purpose corporate vehicles (SPVs), lost the entirety of their £2.5 million investment.

The offender, amongst other things, made fraudulent cash calls on investors, paying their funds into his personal accounts. Evidence emerged that he had spent their money on his personal rent, private school fees and a smart car. The project eventually fell apart when the flat’s freeholder obtained an injunction, requiring discontinuation of the works that had been carried out without permission. Mortgage payments were not met, and the denouement came when the flat was sold at auction for £5.5 million.

After the SPVs launched a private prosecution, the offender was convicted by a jury of a number of offences under the Fraud Act 2006 and the Forgery and Counterfeiting Act 1981. He was sentenced to a total of seven years’ imprisonment and was disqualified from acting as a company director for 10 years.

In rejecting his appeal against the sentence, the Court of Appeal found that he had been granted due credit for his mental health issues and other mitigation. Given his personal use of investors’ funds, there could be no suggestion that his offending was merely an attempt to keep the development show on the road. His challenge to the convictions was also dismissed.

Source: Concious

Latest News

Tenants Can Purchase Freehold When Landlord Cannot Be Found

11th June, 2024 By

The Leasehold Reform, Housing and Urban Development Act 1993 gives qualifying leaseholders the right to join together to buy the freehold of their properties – a process known as collective enfranchisement. A recent case demonstrated that this right can be exercised even when the landlord cannot be found. The leaseholders of two flats in a terraced house wished to purchase it from the landlord, but were unable to ascertain his whereabouts and therefore could not serve notice on him under Section 13 of the Act. They therefore applied for an...

Court Refuses to Set Aside Divorce Order Applied for by Mistake

6th June, 2024 By

While the courts have a range of powers to set aside orders, they will only exercise them in limited circumstances. In a somewhat surprising case that has attracted much comment, the High Court declined to set aside a final order of divorce that had been applied for by mistake. A couple separated in January 2023, after more than 21 years of marriage. In October that year, while financial remedy proceedings were still ongoing, the wife's legal representatives inadvertently applied for a final order of divorce in respect of her instead...

Waiting Time for Grants of Probate Falls

3rd June, 2024 By

Following concerns last year about delays in processing probate applications, recent figures from HM Courts and Tribunals Service show that waiting times for grants of probate are continuing to improve. The average time from submission of a probate application to probate being granted fell to 11.3 weeks in March 2024, a decrease from 13.7 weeks in February and 13.8 weeks in January. This is the lowest figure since March 2023, when the average was 10.8 weeks. The longest waiting time since then was in November, at 15.8 weeks: that month,...

Late Appeal Against Tax Penalties Rejected

31st May, 2024 By

It is incumbent on taxpayers to make sure they fully comply with their obligations to file returns and pay any tax due. The point was illustrated by a recent case in which a taxpayer whose return had not been received by HM Revenue and Customs (HMRC) failed to persuade the First-tier Tribunal (FTT) that he should be permitted to appeal against the resulting penalties. On the evening of 31 January 2014, the man had completed his 2012/13 Income Tax return on HMRC's website. Shortly afterwards he went to Cyprus, and...