January 2021

Shepherd Cox Director IVAs Withdrawn.

Last week the meeting to seek approval from creditors for the Individual Voluntary Arrangements proposed by Lee Bramzell and Nick Carlile was rescheduled to this week.  This week’s meeting has now been cancelled due to the IVAs being withdrawn.  It was clear that the IVAs, as proposed, had failed to gain the support of creditors so the Trustees were not prepared to present them to the court.  Had the proposals been supported by 75% of creditors the bankruptcy petitions currently filed against both men would have been dismissed.  As it stands, the bankruptcy petitions are still in place and are proceeding through the courts.

We have had communications from creditors who have confirmed that the IVA Proposals were unacceptable to them for the reasons we outlined in this earlier article.  They also did not like the fact that the proposals were notified to them on Christmas Eve just before the long Christmas and New Year break thereby reducing the time they had available to consult with their legal advisers.

Not only were the IVA Proposals inadequate in that both Mr Bramzell and Mr Carlile were proposing to retain the bulk of their assets on questionable grounds, but the background explanations of how they came to be in the position of owing £15m and £19.5m respectively to creditors were deficient.  There were important omissions relating to the sale of hotel rooms and their past performances in the hospitality industry.  These are important because creditors were being asked to believe they had the capability to turn their new “son of Shepherd Cox” hotel brand, Festival Hotels Group Ltd, into a highly profitable venture.  If successful, creditors would be issued with 50% of the shares held by Lee Bramzell and Nick Carlile.  The other 50% would be retained by the debtors.  Not a particularly attractive deal for creditors – they receive 50% of the shares which would leave them nursing losses of more than 70% of their money, whilst the people who caused their losses keep shares which, if handed over to creditors, could have been used to reduce those losses.  That hardly seems fair.

The bottom line is that their past performance in the hospitality industry is particularly shocking.  It’s not one that anyone could be proud of so it is unlikely the shares would be worth anything after five years in any case.  There was no creditor protection against a staged ‘pre-pack’ which would leave them with nothing.

If revised IVA proposals are not submitted then the bankruptcy petitions will proceed.  We expect revised IVA Proposals to be produced in an effort to get creditors onboard and stave off personal bankruptcies.  People who paid £16m for hotel rooms in the Shepherd Cox scam have been ignored in the IVA Proposals.

Shepherd Cox Director IVAs Withdrawn.

IFMRRC Scam.

IFMRRC is an acronym for a network of China-based scammers.  IFMRRC claims it is the International Financial Markets Relations Regulation Center.  This organisation claims to be a regulatory body for companies trading in the financial markets.

The scam is in two parts. The first is that scammers establish fake financial trading websites for non-existent companies e.g IB Markets Ltd.  Then IFMRRC announces on the IFMRRC website that the scam trading company has just passed the accreditation process.  This is to deceive potential investors into believing that the fake broker company is genuine.

How do fake financial trading websites make money ?  They con investors into depositing a small amount of cash with them and they give them access to trading software which allows them to trade forex, options, shares etc.  The software is designed to make the investor think they are trading in the market, but the reality is they are not.  The trades do not take place but the software makes it look like the investor is making a very good profit.

The salesman will contact the investor several times to encourage him/her to invest more money because the more money the investor is trading with the more profits they will make. The investor is conned because he/she can already see very good profits. Eventually the investor ends up investing much more money than he/she ever intended.  When the investor finally tells the salesman that they have no more money to invest one of two things happen.  Either the broker’s website suddenly disappears (which is the usual outcome) or the software starts to show losing trades which will ultimately result in the loss of all the invested funds. The intent is that the investor is led to believe that they lost their money through bad trades, but they actually lost all of it the moment they paid it over to the scammers. We have seen scam brokers continue in business for a long time because investors thought they had genuinely lost their money through bad trades.

The IFMRRC scam part is that it exists to give false reassurance to an investor.  Their website states that there is a Compensation Scheme for investors should they lose money to any of the broker firms which have been accredited by them.  This is where the follow-on-fraud kicks in.  IFMRRC knows that every investor who invests with these scam brokers is going to lose their money.  IFMRRC will now inform the victim that they do not have to worry.  The Compensation Scheme will pay out for the investor’s losses.  It is at this point that they will inform the investor that there are just a few costs that have to be covered, maybe an admin fee or local government tax or an escrow release fee.  If the investor pays the fee IFMRRC promises to send the compensation money to the investor.  Of course, IFMRRC will never pay any money to any investor.  It is just another very clever part of the scam.

We note the IFMRRC website referred to above contains a copyright protection statement dated 2011 – 2021.  There are also ‘News’ articles on the website which are dated as far back as 2010.  That’s pretty impressive considering the website was established in September 2017.  Those news items are fake.

The IFMRRC scam is operated by a sophisticated network of Chinese scammers.  Do not be fooled by it.

Festival Hotels Group Appoints New Director

Peter Robert Shakeshaft has been appointed as a director of Festival Hotels Group Ltd.  Here is a list of some of his director appointments.  It isn’t apparent that he has any experience as a hotelier.

It isn’t known whether Mr Shakeshaft was invited to become a director by Lee Bramzell or whether it was enforced.  If enforced, there is only one party with the power to do that, Luqa Ltd.  This makes one wonder what the next move will be and whether it has any implications for Lee Bramzell, his IVA proposal and any potential pre-pack arrangement.  It certainly makes a pre-pack easier to achieve if Mr Shakeshaft is Luqa’s man.

We haven’t looked into Mr Shakeshaft in detail, but it appears the Financial Services Authority was interested in him in the past and he has had some questionable acquaintances.

Link to one of several newspaper articles  –  This Is Money.

Let’s hope he isn’t intending to employ some of his previous salesmen to sell Festival Hotels to the masses.  To view our previous article please click here

Festival Hotels Group Appoints New Director.

Chinese Withholding Tax

We have received details of another share scam.  This time it is being perpetrated by two organisations which are presented as separate, but are part of the same scam team.

We could have called this article Fortress Corporate Escrow Services, or Global Registration and Transfer Corporation, because those are the fake companies involved in this scam, but it is more important to draw attention to ‘Chinese Withholding Tax’ because this withholding tax ploy comes up repeatedly in fake share scams.

Fake share scams are based around an ‘off market, pre-launch offer’ for investors to acquire shares in well known companies at bargain prices.  The story is usually that the share price is going to rocket once news gets out or once the company floats, but investors can get in quick and make a killing.  The only people making a killing are the scammers.

We have seen shares offered in Alipay, Tesla, Google, Spotify and other big name brands.  The sale is often confirmed by sending the investor an elaborate fake share certificate so that they believe they genuinely own shares in these companies.  The truth is that they don’t own any shares and their money has been stolen.  The perpetrators of these kinds of share scams are often based in Hong Kong and China, but not exclusively.  Some are based in Dubai and Eastern Europe.  They use money mule bank accounts in the countries in which the investor is based because they know the investor might smell a rat if they have to send money to a bank account in Ukraine or Hong Kong.

However, the scam does not end there.  Phase two is when they contact the investor again to give them the news that their non-existent shares have been sold for a very large profit.  The only snag is that they tell the investor he/she cannot receive the money until he/she has paid the Chinese Withholding Tax.  We are regularly contacted by people who have paid the tax and are surprised when they don’t receive their “profits”.  Quite often the scammers will go back to the well a third time and say that there is another fee to pay which they forgot to tell the investor about.

The Chinese Withholding Tax scam always carries a statement from the scammers that the tax cannot be deducted from the profits. That is generally an investor’s first response i.e “if you are holding $250,000 for me please pay the tax out of the money you hold”.  The scammers know that’s their weak spot but they cover that with some excuse as to why it can’t be paid out of the profits.

In this latest scam Fortress Escrow Corporate Services is the seller of the fake shares.  Global Registration and Transfer Corporation is the company attempting to steal the alleged tax payment.  The websites are remarkably similar which is not surprising considering it’s the same bunch of scammers.

One of the money mule bank accounts they are using is in the UK.  Here are the details:

Lloyds Bank PLC

BIC/SWIFT : LOYDGB21118

IBAN : GB10LOYD30937647359660

The bottom line is that companies claiming to have sold shares at a large profit whilst asking for payment towards Chinese Withholding Tax are scams.

We have reason to believe that the Fortress Escrow Corporate Services, and Global Registration and Transfer Corporation, share scam is linked to the Oakbrook Capital follow-on-fraud.  We wrote an article on Oakbrook Capital in November 2020.  We contacted the UK Police and they acted very quickly to close down the bank account associated with that scam.

Shepherd Cox IVA Proposals

In our previous article here we gave an overview of the Shepherd Cox Directors’ IVA Proposals.  In this article we had intended to analyse some of the statements made by the Directors, but we have decided to keep most of those for another day.  Instead, we will just highlight that there are legal actions involving three of the hotels in the Festival Hotels Group portfolio which have not been mentioned in the IVAs.  These are issues which should be put to the Trustees for clarification at the meetings on 12th January.  We also draw attention to the paragraph we found which confirms our suspicion that creditors could end up with nothing from the IVA.

THE GET-OUT CLAUSE.

Here is the clause which provides the escape route for the Directors.

“For the sake of clarity, in the event of the failure of FHG [ Festival Hotels Group Ltd ] for any reason within the duration of the Arrangement, or should the declarations of dividends by FHG otherwise become impossible for any reason outside of my control, this will not be deemed an automatic default or failure of the Arrangement”.

SOS Comment:  “….in the event of failure of FHG for any reason……this will not be deemed an automatic default or failure of the Arrangement”.  That leaves the pathway clear for a pre-pack insolvency of FHG, the consequence of which is that the IVA would be allowed to continue despite there being no dividends to creditors and no share value at the end.  The shares would be worthless and all assets would have been put beyond the reach of creditors.  It also means that creditors would not be able to revert back to having a claim over any of the genuine assets which would have been available in bankruptcy.

We knew there would be a get-out clause in there somewhere. 

To view a later article on the withdrawal of the IVA Proposals please click here.

To view a later article on the appointment of a new director to Festival Hotels Group please click here.