What to watch out for

Essex and London Properties Limited was set up in 2005 as an investment vehicle for property investors. The company purchased properties with the intention of selling them on at a profit or generating rental income for their investors. 

More than 800 Investors paid sums between £5,000 and over £100,000 over 18 months hoping to receive the 8% annual return paid quarterly if the money was held over three years or 12% for one year. 

Sadly, the company only purchased one property, a house in Harwich for £147,000, less than 1% of the overall investment amount. Despite this, the company claimed to have purchased numerous properties that had increased in value and falsified Land Registry documents showing the company owned more property than it actually did.  

Insolvency Service investigators found that existing investors received interest payments, not from any investment returns, but from payments made by new investments – the company was in effect operating a Ponzi scheme.  

The company was shut down by the High Court in September 2018 for misusing over £20m  of investors money. Essex Police continued to investigate the individuals controlling the fund.

While the investigation was ongoing, The Official Receiver found several false ‘recovery schemes’ were operating, targeting investors in the fund, claiming that they could retrieve invested capital from the liquidation process for them. 

False schemes

Some of these went so far as to pretend to act in cooperation with the Official Receiver or impersonated the Insolvency Service itself. 

The Official Receiver will never contact anyone offering to recover their money for a fee or recommend another organisation offering the same service. 

Chris Horner, Insolvency Director with BusinessRescueExpert said: “One of the best ways to protect yourself from these scams is to learn a bit about the insolvency and administration process. 

“Once a company has entered liquidation, any assets realised are used to repay the debts that caused the company to become insolvent. 

“Investors can register as creditors with the liquidator so they can have a claim on the company’s assets. Once the liquidation process has been resolved then they’re able to distribute any remaining funds to creditors. 

“There’s no other way for assets to be recovered so don’t believe any company that says they can do it for you. You’ll end up losing even more money as a result. “