The worst scams of 2012
2012 has been a big year for scammers. Here are some of the worst offenders.
2012 was a marvellous year for British sport, other than football's abject failure in the Ukraine. We could all cheer the Tour de France, the US Open , the Olympics, the Paralympics, golf and England's first test match series win in India for a generation.
Sadly, it's also been a record-smashing year for scams. As soon as one is shut down, another two spring up. Landbanking turned into carbon credits, which in turn morphed into rare earth elements. And the betting is 2013 will see yet another variety of the same racket?
It's hard to calculate amounts as many victims never report losses.
Some don't tell families – they suffer their shame in silence – while a good number don't even admit it to themselves. I've met Nigerian letter losers who still believe there is a fortune waiting even after handing over their savings and their home to the fraudsters.
It's been a busy year for my friends at the Insolvency Service, the government agency that closes the worst scam firms down. So using their files, here's some of the all too many lowlights of the year.
Turning maggots into millions – or not
Alchemists promised to turn lead into gold. The guys behind Spitfire Partnership, whose brief life ended 23 November when the High Court ordered liquidation in the public interest, convinced investors they could convert maggots into a quick 78% profit.
Their scheme envisaged turning a former Lincolnshire maggot farm into a waste transfer station. It targeted elderly investors, who were told £12,000 would become £20,000 in two years. The promoters took well over £100,000 – how much exactly is not clear as records were chaotic.
The court was told Spitfire operated an unsustainable business model with no commercial benefit to customers. It had not undertaken any waste transfer planning or research, it had not applied for planning permission (despite claiming it already had a permit) and did not own the maggot farm. And it also operated an illegal collective investment scheme.
Those selling this fraud took 60% as upfront commission.
Landbankers get comeuppance
Llewellyn Adam Hannah-Shelton and Samuel Lucas Hannah-Shelton, who mis-sold parcels of land for investment, have been disqualified from being company directors. The brothers ran Britannia Land Management Ltd, Regency Land Group Ltd and Regency Land Sales Ltd, all wound up by the High Court.
The Insolvency Service investigation found they purchased farm land in East Sussex and Lincolnshire and then sold small parcels at an 850% mark-up. They took £430,000 from vulnerable investors.
The court heard that L A Hannah-Shelton “did not dispute he caused the companies to make misrepresentations to clients with regard to the companies capabilities and expertise, expectation of returns on investments, the likelihood of getting planning permission and future development prospects of land”.
The companies had no physical presence in the UK and operated from a ‘virtual office’ in Spain.
Potential investors were provided with sales documents which were full of lies. The FSA says it is now getting fewer landbanking complaints as scam firms switch to other unregulated assets.
Ripping off the retired
Gary Hexley and Michelle Hexley, who ran a Birmingham property investment company, were disqualified as directors for a total of 11-and-a-half years for misusing investors’ money.
The husband and wife team accepted at least £584,764, mainly from retired workers, who were told their money would be invested in rental and sale properties. Instead Gary Hexley paid more than £500,000 to another company he controlled, which collapsed. He also took £1.2 million in deposits for a buy-to-let scheme which was never built. He “lent” this money to yet another company he controlled.
Insolvent insolvency advisers
Andrew Godfrey John Lazell, 72, the director of Frazer and Frazer Limited, which provided unregulated insolvency services to individuals and businesses, has been disqualified from being a director for five years following an investigation by the Public Interest Unit (North), part of The Insolvency Service.
Lazell took in £115,000 – including £66,049 from one victim – but did nothing with it. The probe found he failed to exercise control over the company and failed to make sufficient enquiries into its affairs.
Nor did he bother over much with record keeping.
Dodgy charity's old clothing washed in public
Two connected North London companies, Helping Arms Ltd and Rogaile Ltd, which falsely claimed to collect clothing for charitable or benevolent purposes in Eastern Europe and Africa were closed down by the High Court in the autumn.
The Insolvency Service investigation showed Helping Arms mainly operated as a commercial venture despite misleading statements online, in leaflets and bag labels concerning its charitable or benevolent purposes. It earned £645,000 but “no evidence was found showing any funds going to the alleged intended recipients”.
Timeshare “saviours” dupe victims
Seven connected companies which mis-sold membership of a holiday scheme, while ostensibly helping victims of dodgy timehare deals, were wound up in the public interest by the High Court.
The “Club Class” seven encouraged out of pocket timeshare owners to sign up to a group action.
But there were no lawyers. Instead, there was a “one-off” opportunity to give up timeshares in part-payment for Club Class membership, ranging from £7,000 to £15,000. Consumers were put under immense pressure in meetings lasting up to six hours to exchange timeshares, which they were told were essentially worthless.
The Insolvency Service said: “These companies were set up to dupe consumers, who in some cases had already suffered from unfair timeshare deals, by using slick patter for what was in reality the selling of an illusion. There was nothing investors could gain from paying to these companies.”
Carbon credit scam firms run out of fuel
The FSA says it has records on 54 carbon credit scam companies. What they sell is overpriced by up to 100 times and must fall in value rather than soar.
During the summer, Tullett Brown was shut down in the public interest after ripping £3.3 million from investors. Tullett Brown used top price London lawyers to threaten national newspapers which wanted to expose it.
But – phoenix-like – Foxstone Carr Limited, emerged from its ashes.
Based at Tullett Brown's London address, its website was registered to Tullett Brown. It employed Tullett Brown sellers who used the same cold-calling methods. It took over £400,000 from customers, claiming the investment was a “no brainer” with “guaranteed returns”.
Foxstone Carr has now also been shut down in the public interest by the High Court.
The court heard: “The company fleeced the public with their bogus guarantees about investment opportunities and returns.”
And the judge said: “The principal allegation relates to the selling techniques and representations made to consumers. It is contended customers were misled as to the likely return on their investment and the period over which that return might be realised and they were led generally to believe they were buying an asset that was appropriate for investment. In fact it is contended that the credits were sold for an inflated price such that an unnatural increase in value would be needed for the consumer to break even.”
He continued: “Some might say this was simply a bad bargain. However, the missing information customers aren’t told is the considerable difficulty they face in disposing of the carbon credits. The usual cold calling methods are used to sell and to give the impression that the credits are likely to go up in value and can be traded easily. In fact this is not the case. Information has been obtained that the older the credit the less desirable they are and therefore the less valuable the credit becomes over time. This information is concealed from consumers.”
Other carbon credit firms were also shut down. These include Global Neutral, in provisional liquidation until a court hearing decides on January 2013 and Global Carbon Broking. These companies are not related.
Please have a happy new year and a scam free 2013!