Is this landbanking scheme all it is cracked up to be?
They say you can tell a lot about a man by the company he keeps. I wonder, then, where this leaves Vincent Bithell, a 41-year-old British expat living in upmarket Esplugues de Llobregat on the outskirts of Barcelona.
Bithell moved to Spain in the 1990s, after a spell at the less reputable end of the financial services industry in Britain, and he soon popped up at two Spanish stockbroking firms, Mercantile Securities Consultants and Novak & Goode. There was just one slight problem: neither firm was licensed by Spain’s financial regulator.
In these firms, Bithell had two close associates, Michael Ivor Braff and Steven Derek Crump. Braff had been a salesman at London futures dealer David Coakley Limited, which had the reputation, and the appearance, of a betting shop rather than an investment business.
In 1994, the watchdog Securities & Futures Authority closed it down for numerous offences against investors. Braff was personally fined £10,000. Despite being unlicensed, Braff set up Global Currency Limited, and this cost him two months in jail. On his release, he went straight back to work, opening Porchester Securities, which promised investors yields of 7% a month. This time he was jailed for nine months, after which he decided his future lay in Spain.
Vincent Bithell’s other partner in Spain was Steven Derek Crump. A one-time barman from Essex, Crump was ambitious. In 2003 he set up his own fake broking firm, called Gilberts, and ran it from his father-in-law’s home in Basildon, selling shares in Virtual Vineyards, a wine business, before it even existed as a company.
Last year, justice caught up with Crump. Having warned against Gilberts while it was still raking in cash from unsuspecting investors, I was called as a prosecution witness at his trial at Southend Crown Court. Convicted of fraud, Crump was sentenced to 21 months in jail.
Of course, working with investment cheats does not make Bithell one. But it does mean that any new venture he gets involved in is worth a closer look.
Right now, Vincent Bithell is owner and director of Graystone UK Limited, a company with an address in Broad Street in the heart of the City of London. Less impressively, however, the address turns out to belong to a firm that takes in letters for anyone who pays, and redirects their post and calls to wherever they want in the world.
Bithell says his business is "dedicated to offering the private client opportunities in real estate". What this means is that he sells land with the tale that its value will rocket when the local council grants permission for housing.
And here Bithell runs into a dilemma. If investors are forced to apply together for planning consent, or to sell their plots to one developer, then the whole business has the same legal status as a unit trust and needs a licence from the Financial Services Authority. Bithell has no licence and could be jailed for up to two years if he operates a collective investment scheme without one.
On the other hand, if plot owners are not obliged to act together, developers will go elsewhere because they could be held to ransom by just one or two owners who refuse to sell.
Bithell insists that Graystone is not operating an illegal scheme, so it looks as though anyone who has bought land will be stuck with it. One local council in whose area Bithell is offering land has announced that it will not consider any planning applications before 2024. By then, my guess is that Vincent Bithell will have moved on to pastures new.
A collective investment vehicle (known in the US as a “mutual” or “pooled” fund) and similar to an Oeic and investment trust in that it manages financial securities on behalf of small investors who, by investing, pool their resources giving combined benefits of diversification and economies of scale. Investors buy “units” in the fund that have a proportional exposure to all the assets in the fund, and are bought and sold from the fund manager. The price of units is determined by the value of the assets in the fund and will rise or fall in line with the value of those assets. Like Oeics (but unlike investment trusts) unit trusts and are “open ended” funds, meaning that the size of each fund can vary according to supply and demand of the units form investors. Unit trusts have two prices; the higher “offer” price you pay to invest and the “bid” price, which is the lower price you receive when you sell. The difference between the two prices is commonly known as the bid/offer spread.
A type of derivative often lumped together with options, but slightly different. The original derivative was a future used by farmers to set the price of their produce in advance before they sowed the seeds so that after the harvest, crops would be sold at the pre-agreed price no matter what the movements of the market. So a future is a contract to buy or sell a fixed quantity of a particular commodity, currency or security (share, bond) for delivery at a fixed date in the future for a fixed price. At the end of a futures contract, the holder is obliged to pay or receive the difference between the price set in the contract and the market price on the expiry date, which can generate massive profits or vast losses.
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.