A property investment firm has been wound up after misappropriating at least £2.85 million of investors’ money, it has been revealed.
The case centres around Minerva Development Group Limited (Minerva), a company incorporated in January 2016 to offer prospective clients a “variety of residential property and student accommodation bonds”.
According to the Insolvency Service, who led the investigation, Minerva advertised typical returns of between seven and 16.9 per cent per annum – significantly higher than average historical return rates for regulated investment products.
The group also guaranteed that investments would be assured through a “Security Trustee” known as Cohesion Business Development, whose main role was to oversee the application and banking of funds.
However, worrying reports from investors complaining about a lack of returns and communication triggered a full investigation into Minerva and its investment activities.
It emerged that the group had taken over £2.85 million from 70 investors, who paid the funds into non-company bank accounts, such as escrow accounts or onto pre-paid cards.
The Insolvency Service said these accounts were not secure, and the alleged “Security Trustee” did nothing to protect the investors’ funds.
And despite the “Security Trustee” presenting itself as an “experienced financial services provider and a tax and accounting firm with over 30 employees located across the world”, investigators found that Cohesion Business Development had no physical presence at its London address.
The report also notes that both Minerva Development Group and Cohesion Business Development were “not authorised by financial regulators” and “failed to cooperate with investigators”.
Commenting on the investigation, David Hill, Chief Investigator for the Insolvency Service, said: “Minerva Development Group persuaded clients to part with substantial sums of money to invest in property bonds with the promise of extremely generous returns. In reality, this was nothing but a scheme and our investigations found that no funds were invested into bonds but instead used to benefit those running Minerva Development Group and a connected company, Cohesion Business Development.
“The courts recognised the severity of the companies’ misconduct and closed them down to protect any further investors coming to harm. We urge potential investors to carry out rigorous due diligence to ensure they use their funds on legitimate investments.”
Seamus Smyth, Partner at Carter Lemon Camerons LLP, said: “Sorry to be blunt, but this case shows with painful clarity that a fool and his money are soon parted. The number of obvious warning signs which were missed or ignored is very worrying when the investors were about to invest on average £40,000.
“Take advice before transacting: if each investor here had paid a modest fee for legal advice in advance, most of the blown £2.85 million would not have been lost.”
If you have been a victim of investment fraud and require legal advice, please get in touch with our expert team today.