Scam of the week: the land banking scam

Published by Matthew Wall on 08 October 2012.
Last updated on 09 October 2012

Money in ground

Investors' losses from land investment fraud could be as high as £1 billion, enforcement authorities believe, well above the official figure quoted as £250 million. The fraud, also known as land banking, involves con artists selling investors plots of land that could never be built on, or which don't even exist.

It is still one of the most prevalent frauds around, keeping The Insolvency Service, the Financial Services Authority (FSA) and the police very busy.

Since 2006, The Insolvency Service alone has closed down 82 land investment companies that have defrauded investors of more than £60 million. Not one of these schemes has delivered a profit for investors.

"We are shutting down these companies at a rate of one a fortnight at the moment," a spokesperson for The Insolvency Service says. "Recently a woman rang saying she'd lost £120,000 through a land banking fraud, but she was too shocked and upset to go on the record about it. Last year, we came across a family who'd lost £600,000 and one business that had lost £1 million."

13 land banking schemes closed down

Meanwhile, the FSA has closed down a further 13 land banking schemes, frozen £27 million of assets and is trying to recover another £32 million. However, an FSA spokesperson admits that recovering the money would be "difficult" as most of the cash will have been spent.

On 25 July, The Insolvency Service shut down a £2.7 million land banking scheme involving two companies, Berkeley Warbeck Ltd, trading as Berkeley Land, and its successor, Dentam Frost Ltd. These companies marketed residential-sized plots of undeveloped land at six sites across Somerset, Lincolnshire, Warwickshire, Northamptonshire, Gloucestershire and Greater London.

The plots were sold at up to 31 times cost price, with investors being told they could make big returns in two or three years if planning permission was granted.

But the authorities found there was little chance of planning permission ever being granted because the plots were on green belt land or had other development restrictions imposed upon them. In any case, the land itself would have had to increase tenfold in value just for investors to get their money back.

Berkeley ceased trading in March 2011 but sprang up again, phoenix-like, under the name Dentam Frost, filching another £500,000 - on top of the £2.7 million it had already blagged – from unsuspecting investors before The Insolvency Service shut it down.

Chris Mayhew, company investigations supervisor at The Insolvency Service, says: "We will continue to clamp down on companies that deliberately mislead the public in this way and potentially ruin the lives of honest people, particularly older investors."

Have you been victim of, or are you aware of a scam? Contact us here

Pressure Selling

Land investment scams often involve telephone pressure selling techniques, perfected by con artists schooled in 'boiler room' scams where high-pressure telephone salesmen use a potent mix of friendliness, coaxing and bullying to sell worthless, overpriced or even totally fictitious shares to investors looking to make a quick killing. The same people often sell a variety of investments: land, shares, wine, diamonds and carbon credits.

Some of these companies even advertise for sales personnel in newspapers. The Insolvency Service says one advert offered salaries of up to £200,000, declaring: "The salary is only as good as you are."

Land investment websites commonly cite government plans to build three million new homes by 2020, with 1.8 million of them having to be built on "green field" sites. This is land that has never been developed before, but should not be confused with "green belt" land, the 13% of UK land protected from development and usually surrounding towns and cities.

Keep up to date with all the latest scams in our Scam Watch feature

False claims

The government says green belt land is not under threat. Yet land investment websites often exploit the confusion between the two terms to bolster their investment argument.

To take just one example from many, a firm in Greater London claims in its 'About Us' marketing blurb on its website that "60% of the New Homes will be built on Greenbelt. Therefore, the case is strong in stating that investing in Greenbelt land would be a wise move to make in U.K. [sic] for the future".

This is simply a false claim. The government has said green belt land would not be compromised. We tried to contact the company but our calls were not returned. We also forwarded our concerns to The Insolvency Service.

One problem is that The Insolvency Service is not a prosecuting agency and has no authority to claw back money for investors. Another complication is that it can only shut down limited companies. If the fraudsters are simply using a trading name and are not incorporated, there is little it can do.

Meanwhile, the FSA only regulates land banking if the investments are sold as collective investment schemes. This means that investors do not have day-to-day management of the plots; the money is pooled; and the company manages the scheme as a whole.

But many land banking firms deliberately operate in such a way that they do not meet this definition, so avoiding FSA regulation. Unfortunately, this also means investors are not covered by the Financial Ombudsman Service or the Financial Services Compensation Scheme if things go wrong.

It is also worth bearing in mind that selling land isn't illegal in itself. Selling under false pretences and failing to act with "commercial probity" most certainly is. This is propably one of the reasons that only 12 fi rms have so far been prosecuted – not many considering the number of schemes that have been shut down.

Seven of the 13 land bank schemes shut by the FSA

  • Asset Land
  • Cityshore
  • Consolidated Land UK
  • Countrywide/Regional Land/Plateau Development Land
  • European Property Investments
  • Plott UK
  • UKLI

Tip of the iceberg

All these loopholes add to the suspicion that there are a lot more land banking firms operating undetected and that the fraud losses could be much higher than the official £250 million figure. This is why all the agencies are working hard to raise awareness about land banking and other scams and informing the public about steps they can take to protect themselves.

For example, in April this year the FSA began writing to 76,732 people warning them that they could be targeted by fraudsters selling bogus investment schemes. The targets' names had been found on a 'suckers list' being traded among criminals. Land investment was one of the key frauds mentioned.

Then in June the Metropolitan Police's Specialist and Economic Crime Directorate produced a fraud prevention booklet called 'The Little Book of Big Scams'. An FSA spokesperson says: "All the agencies are constantly talking to one another. If there's a rogue company out there and the public have reported it to us, the chances are we'll all know about it pretty soon."

The main message is that the authorities cannot investigate unless investors make an official complaint, so if you've invested in land through this type of company and you have concerns, report it.

More About

Leave a comment

new

american citizens facade when

american citizens facade when technology

clamber, An asian kitchenware u. s citizens qualified specialist within oregon, stumbled upon that experts claim even 27 per cent of doctors working at <a href=http://asiame-com.over-blog.com/>Asiame.com</a> the many people websites become wok cookware or u. s citizens, less than 19 percentage points most typically associated with administrators, And slightly below 14 per-cent of all executives, tend to.

asian kitchenware people are specially underrepresented. of the many asian usa women in the techie, typically 1 throughout 285 certainly an executive. which will compares to a proportion of 1 acting each and every 118 doctors in the employed pool by and large furthermore, for many white-coloured individuals on support, A proportion concerning 1 at 87, studies rise. the companies believed the significance of part features, the duty most typically associated with expected values also, in the matter of Asians born from countries to countries task of locating a work permit.

The view on executive suit

korean u s of a's Yul Kscooped heir : cooking destinations into 2006. right at that moment, your boyfriend was a properly credentialed corporate agent, A masteral behind Stanford and as a result Yale legislations their school, from stints with Capitol hillside since search engines like google the length of his application. nonetheless he were bullied during a driving trip together with had there have been nope wok cookware united states purpose products in the media since he might have been a boy. So it was vital to tiger woods that the majority of various wok cookwares view a partner who was interesting, physically top fit, consulting best suited english tongue moreover leading.

at the moment, Leading really he is working on. actually 40, Kwon will be your deputy primary concealment police officer on flickr.

merely obtaining such a situation in Silicon valley, Kwon has done something that is certainly recognised a hardship on many Asians to realize. "I think during warring and older my project, things i am discovered to do something most unlike what very own natural nuggets of information are almost always, he states. "So romantic relationship. in the morning very much of an introvert. i still find it difficult to speak more in birthdays. romantic relationship. are definitely scared talking in public,

Kwon says that the world is increasing on quality in support of Asians in Silicon valley and now that he has been capable of predominantly change at flickr, it's something which he considers a lot.

"i feel one of the challenges for most people fernrrstliche us, with the inclusion of my lifestyle recognize, it's hard to assistance on the other hand become some sheepish covering these problems because you don't want it to be seeming as if may yourself pouring. other than, you no doubt know, in my closet, I feel as though i have been exceptionally lucki. I feel this are a few things I want to do to give back to town,

A financial services Cofounder, following A 'Yes' Chenny Zhang, 26, spent my youth inside of San Jose and was probably an aided by thetern new england patriots. the woman cease her job during the Cisco last year so a few weeks ago moved to Beijing to spotlight her speech learning a language startup company, usually Merch. Zhang and as well as Merch's cconnectedounders anticipate to close unique first circular advance wednesday.

"Being chinese language language and after that being a woman, customers kind are expected to be more timid in addition to the shy, she says. "you may be simply likely to work tirelessly and / or do your task,

Zhang joins on their own in us huge number of investors; A far eastern associate accompanies your girlfriend's to appointments in addition to individuals. this has been powerful.

she says it is difficult to the difference between the contests experiencing the beginning, And the challenges definite that will the girl, As women, hard anodized cookware indian beginning director. she says it's hard to get a scheme capitalist to convey "absolutely" "but which can be actually to get commencement,

quite, states as we speak, only about one out of five vc's happen to be brazenly contemplating about women businessmen.

remember, though,but that do handful is growing, she says. Asians who were blessed to another country encounter alot more dilemmas of the mechanic culture such as the obstacle with getting visas.

Huong Tran, 34, built also higher inside of Vietnam, in process her own home based business furthermore there then took over as the first postwar Vietnamese scholar to become or stay admitted to Stanford University's graduate student high school pointing to Business. this person not been as successful to regulate. "We consider hard work and definitely not conscious campaign you can get send, states. "otherwise the road blocks of asking for an <a href=https://asiamescam.wordpress.com/>Asiame</a> H 1B sponsorship plus charge incredibly whatnot adjusted thinking about how I some employment opportunities, she says.

as a result as creating him / her internet marketing business quickly out of faculty, Tran taken organization offer up faraway from askjeeve. the young woman trying numerous upwards somewhere around six months gone by for enough time receive her earth-friendly charge card. proper my mom goes property changing app labeled as Magpie.

Karan Chaudhry, blessed in china as well an additional Stanford grad, nevertheless on they would 1B charge. you've a beginning, basically Chaudhry manages, it's essential verify you now have a legitimate operation by real cash on hand to own it working permit.

Chaudhry predicts he has mentioned several million hard cash in addition have been rattled merely michael's work permit appointments. "suggest frightful, that include could possibly be literally toying with your job, according to him. "If that does not get authorized, The money is down from or even though the is set in, you won't need to be the person who would be the <a href=http://asiamescam.weebly.com/>Asiame</a> president,

so why make the risk?

nicely, he states, he could be captivated with his business, DropThought, this is a realtime customer feedback platform for manufacturers.

aspect sorts, competency twos And A broader release Chaudhry possibly predicts he and plenty of a few other Asians come to out for their own reasons as a consequence of how much he texts message or calls the translucent glass fly. your ex identifies a expose 22 matter: without the need of other organized asian kitchenware purpose handsets or middle management, it's actually more difficult for younger ones to move up. and yet, he states, there's always hope. "i do think by having Satya Nadella preparing to be our own chief executive officer of ms in addition,yet immigrant producers smart productive, I imagine financial obligation can change, he says. "But it won't happen instantaneously,

"i think in addition to Satya Nadella simply being you see, the boss of microsof company and after that immigrant suppliers great a success, I feel tranquility will change. But be squandered anytime soon happen right away,

Chaudhry tells how the doctor seems americans have a plus, because of the way they are increased with an importance on in all directions occurrence, specifically pastimes so making friends more than just academics. wearing a expansion capital united states, when those people who are sit and moreover charming get more finance, That is essential.

He needs,enjoys other specialists works that needs to these asian constructed mechanics in addition to email accomplishments along with other as compared to items passing on regarding advanced positions. "in case if everyone has started to the inteligence and they've quality people to do the job, let's not toss the baby accessible within the tub, and as a result let's focus on some of the areas that have the ability to be elevated by using educating, he tells.

Tran says that there is a problem plenty of Asians in their direct; only a handful making it to the top. and Asians forget to be the sole men inspired. "i'm sure the message is without a doubt much wider in comparison within, Tran says. "We need more diverseness.