A land banking firm which conned more than 1,200 investors out of millions may have to repay around £15 million after losing a High Court case.
The ruling marks another step for the Financial Services Authority (FSA) against unauthorised investment schemes.
The latest case was against Asset Land Investments plc and Asset LI Inc, which ran illegal land banks by using a collective investment scheme which was unauthorised by the FSA.
More than 1,200 people paid the firms up to £25,000 each for worthless plots of land in what the court determined was an illegal scheme.
Investors were told that they could earn significant profits within three years after the land had received planning permission or was sold.
No compensation
Those putting money into Asset Land, run by David Banner-Eve and Stuart Cohen, were told that the plots were lucrative and would become more so with planning permission with property developers lining up to buy them.
However, planning permission was never granted for any land owned by the firm.
As the scheme was unauthorised, investors were not covered by the Financial Services Compensation Scheme.
During the case, the judge said Mr Banner-Eve was ‘deliberately dishonest’ when he was giving evidence and he must have known of the claims being made by his brokers to clients.
Mr Cohen didn’t attend his trial and took no part in the proceedings.
The FSA first acted in June last year, when injunctions were granted against the companies and the two defendants. Their assets were frozen and the directors were banned from selling more land to potential investors.
More FSA action
The financial watchdog is also looking for a court order to enforce payment of £15 million from Mr Banner-Eve and Mr Cohen as well as seeking to ban the two men from being involved in any scheme selling land banks for business.
Repaying investors who their lost money is easier said than done since FSA investigators have only located a small amount of the cash that was handed over and it’s not clear how the money will be repaid.
In addition, there is also an investigation under way by Trading Standards in to the activities of Asset Land which could lead to criminal charges.
Tracey McDermott, the FSA’s enforcement director, said: “Having proved in court that this land bank was unauthorised has created a precedent for us which will help us tackle other similar schemes.”
She added that the scheme’s investors would only receive a small amount of their investment back but while the FSA is committed to tackling such enterprises, investors should be wary of investing in any unauthorised scheme because they tend to carry great risks
To get more information, complete the contact form here
4 landbankers just got 7 years each in the UK for selling 35M pounds of worthless greenbelt land. Hopefully more criminal prosecutions will follow rather than the somewhat useless FSA wrist slaps. The charges were conspiracy to defraud which I think is a good description of most of the companies offering UK land banking plots.