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March 2021

Gordon Brown Law Firm

Gordon Brown Law Firm 400 300 SOS Team

We are interested in any investments in which Gordon Brown Law Firm was involved.  The firm has been associated with a number of collapsed investments and, although now in liquidation, we believe there may be recovery options available to its clients.  We’re happy to take a look at any paperwork.  Please use the form on our Contact Page [LINK] if you were an investor with Gordon Brown Law Firm.

St Camillus Legal Action

St Camillus Legal Action 300 300 SOS Team

St Camillus Legal Action

We recently advised the St Camillus Sales Agent Group (“SCSAG”), which is masquerading under the title of ‘St Camillus Investor Group’, of a legal action established by a UK solicitor.  The legal action is focused on the lawyers who represented investors, but it also extends to any other party which may have liability to compensate investors.  This includes, amongst others, the sales agents who sold the hotel rooms to investors. Many investors feel the sales agents bear some responsibility for their losses.

We asked the SCSAG to communicate news of the legal action to the investors in its group.  They chose not to respond.  In other words, they withheld information from the very investors they claim to be representing.

It’s an understandable reaction because they must protect the sales agents.  They have to find a way to prevent investors from taking any action against sales agents because it is they who provide SCSAG with investor email addresses. Their solicitor, who claims to be on the side of the investors, is working with the sales agents and has been for some time.  That’s quite a conflict of interest considering investors may have a claim against those sales agents.

In our previous article on St Camillus [LINK] we described how the solicitor and his sales agent partner were asking for £580 from investors without giving any indication of what the money was for or who it would go to.  Fortunately, due to our article, they have been forced to drop that scheme, but we believe investors will be asked for a payment of some kind fairly soon.

There’s another potential conflict of interest for the lawyer/sales agent team which is being ignored.  Investors generally fall into two camps.  Those who want to commit more money to the investment in some way e.g through coming together to buy the assets in administration, and those who do not want to commit any more money and would like to get the highest amount back from the administration. On the one hand we have a group that wants to force down the price they pay for the asset and on the other there is a group that wants to achieve the highest possible price for the asset because that should result in a greater distribution for them.  This solicitor/sales agent team want to buy the assets, but they seem to want non-buying investors to contribute towards establishing a structure with the administrator which could actually work against the interests of the non-buying investors. It’s odd, unnecessarily complex and doesn’t seem to serve any purpose other than generating fees.

In administration, if you want to buy the asset you make an offer. If it is acceptable you pay the money. You can then sort out any deal you like with leaseholders. It’s true to say that the majority of St Camillus investors who have contacted us are those who don’t want to pay any more money and are concerned they will lose out to those who are trying to push the price down.

We have decided to publish an overview of the legal action below so that investors can ask the SCSAG why they weren’t told about it. This is the most comprehensive legal action we have ever been involved in because we feel St Camillus investors are in the same position as Qualiacare investors i.e they are being manipulated.  Unfortunately we came to Qualiacare too late to be able to warn investors.

We can’t go into detail on the legal proposal because that is for the solicitor to present to investors, but we can list the key points.

1. It is a large law firm running the action and the solicitor is very experienced in professional negligence claims, including hotel room scams.  He has experience in prosecuting room scams and this includes to trial.  It is quite rare to find a solicitor who has taken a room scam into the courtroom (and won). The action is ready to start with everything in place.

2. The action is fully-funded i.e investors do not have to make any upfront contribution.  The fee will be payable at the end of the case if it is successful.

3. The action is not a “we expect the claim to settle out of court” scenario.  That would be nice for all investors if it happens that way, but it is best to have everything in place for a full-on court process just in case the opponents opt to take the case to court. We’ve seen investors signing up to a limited action service only to find that the opponent will not settle out of court.  At that point investors are asked to put their hands in their pockets.  This action is fully-funded from start to finish and includes ATE insurance.  The solicitor has covered the requirement for court action all the way through to appeals if necessary.

4. The team is already involved in large claims against two of the main law firms who represented investors in the sale of the hotel rooms. Those firms are Gordon Brown Law Firm and Maxwell Alves. That makes life much easier.   

5. The funding arrangement also includes ongoing costs related to investigating the roles played by third parties e.g sales agents, providers of professional services etc, with the aim of identifying additional recovery actions which can be added to the existing legal actions.  This is a valuable feature which it is hoped will lead to greater recoveries for investors.

6. The arrangement includes FREE legal advice to the solicitor’s clients on the administration process and any proposals which are brought forward that affect the clients. 

7. It also includes FREE legal advice to the solicitor’s clients on their leasehold position, how to protect it and how to get the best outcome when a buyer appears on the scene.  This benefits investors who are concerned that the sales agent’s solicitor may not be acting in the best interests of non-buyers. 

8. In effect, the funding proposal removes the need for any participating investor to have to pay the solicitor/sales agent team for any service related to both the insolvency and their leases. 

If anyone would like more information they can contact us via our Contact Page.

If any investor has instructed the solicitor/sales agent team and decides not to use them any longer they can de-instruct them by sending an email advising the solicitor that his services are no longer required. They can ask him to return any money held on account if they have made any payment.

It is always wise to be wary of any investor group which bars investors from joining the group on the grounds that they ask too many questions. Also, any investor group which does not pass on information to group members should be regarded with suspicion. It suggests it has its own agenda which may include diverting attention away from parties which could be prosecuted .

There are already ‘live’ legal actions against two of the law firms involved.  These actions relate to other scam investments.  The law firms are Gordon Brown Law Firm [LINK] and Maxwell Alves [LINK].

St Camillus legal action.

 

Scam Alert

Money Mule Accounts

Money Mule Accounts 300 233 SOS Team

Money mule accounts are bank accounts which the owners allow to be used to collect money obtained by deception.  We are contacted all the time by people who have been tricked into paying into a money mule account.  Money mules are always associated with follow-on-frauds. These are scams targeting investors who have already fallen victim to a scam and who are now receiving unsolicited emails and phone calls promising them that the money can be recovered.

Occasionally, money mule accounts are used in the original scam but this is rare. More often than not the original scammers like to present a veneer of respectability so they will use a dodgy company to receive the money into what they describe as “an escrow account”. The reason is the same – they are putting a middle man in place so that the ultimate recipient(s) of the money are invisible to investors. One of those dodgy escrow companies is Jade State Wealth.

Last week we were notified of another money mule account which is being used in a follow-on-fraud. In this case the FOF was aimed at victims of the Texmoore scam.  The account details are:

VDM Ltd
Sort code: 60-83-71
Account Number: 50373423
The key thing for investors to look out for is the name on the account.  If the name of the account is different to the name of the company you believe you are dealing with then you are being asked to pay into a money mule account. Never pay into a bank account of a person or company you do not know. Never pay into any bank account which uses digital currency.  
A quick check on VDM Ltd at Companies House reveals it is owned by a Lithuanian gentleman who carries on a business described as “unlicensed carrier”.  Well, the business description sounds about right as he carries money from the victim to the scammer.
Justice

Shepherd Cox Brief Update

Shepherd Cox Brief Update 300 200 SOS Team

Shepherd Cox Brief Update.

We have been asked to update investors on the status of the bankruptcy petitions / IVA proposals of the former Shepherd Cox directors.

The first set of IVA Proposals for both directors were withdrawn and as yet no revised IVA Proposals have been presented to creditors. The bankruptcy petition against Nicholas Carlile was adjourned in February and the next hearing is now scheduled for May.  The bankruptcy petition against Lee Bramzell was in court this week. It has also been adjourned with the next hearing scheduled for June.

To view the previous article on Shepherd Cox please click here [LINK].

 

St Camillus Investors

St Camillus Investors 300 300 SOS Team

St Camillus Investors.

One of the sales agents who sold rooms in a number of hotels and care homes to investors is now contacting investors in the St Camillus hotels.  He claims to own rooms in a number of properties and it is quite possible that he does.  One of the questions that needs to be answered is whether he actually paid any money for those rooms or whether he accepted rooms in lieu of commission payments.  We quite often see sales agents accepting rooms in lieu of payment as a means of encouraging them to sell more rooms and avoid personal tax.  Sales agents in scam room sale operations are typically paid between 10% – 15% commission which is more than four times the levels charged by mainstream estate agents.

Some of the St Camillus investors have forwarded unsolicited emails they received which originated from this salesman.  The email was asking investors to pay £580 for Phase 1 of his proposed action. It wasn’t clear who the money would be paid to or even what it was actually for because there is no need for a solicitor to be involved at this stage.  Creditors can register their own voting preference on the Proof Of Debt form. People don’t pay someone to go and cast their vote on polling day and they don’t need to pay a lawyer to do it in an administration case.

The email describes Phase 1 as being “Appoint Kevin [Kevin Brown of ELS Advisory Ltd] to be liquidator with the aim of transferring the freehold into a trust for the benefit of the leaseholders subject to paying off any trade creditors and HMRC.  If this amount is reasonable and can be shared amongst investors, then we can pass on to Phase 2.  To do so Kevin will need to find out who the creditors are and how much they are owed.” It’s pretty obvious that Kevin will need to do that.  What isn’t obvious is why investors have to commit to paying £580 before the existing administrator publishes the full creditor list which it has to do on or before 9th March. Why are investors being rushed into paying money again like they were in Qualiacare ?  According to the email Kevin had been on a Zoom meeting with investors explaining the proposal.

This strategy of claiming to investors that insolvency practitioners will transfer freeholds into a trust for NIL value has been tried by this team before.  So far it has failed in all of the cases that the saleman’s team has been involved in.

What we do not understand is why the salesman, his law firm partner and his insolvency partner did not tell the St Camillus investors that for the first hotel which went into administration in January, the value of the claims of the ‘non-investor’ creditors was more than £500,000 and there are 25 investors in that hotel.  We don’t see those 25 investors stumping up £20k each to pay off non-investor creditors when £500k is far more than the hotel is actually worth. Hopefully none of the St Camillus investors have fallen for this ‘you must pay now’ demand and they have held on to their money.

Today we received notification that a second St Camillus hotel in administration has reported that non-investor creditors amount to more than £275,000.  None of the St Camillus investors are going to pay that kind of sum to buy out other creditors for what is a very poor hotel. It is one of the worst hotels we have ever seen in these hotel room scams. It is a terraced property in a back-street of Blackpool, the rooms are tiny and the furniture (what there is of it) is from the 1970s. The strategy outlined by the sales agent’s team has fallen apart in the space of just two days.

The email goes on. After Phase 1 they would move onto Phase 2 which was “to carry out the transfer of freeholds and if it is discovered that the directors have committed any criminal offence go after all their assets and pay to us creditors any recoveries“.  That’s a case of telling investors what they want to hear to get their £580. The proposal does not mention who will fund the criminal prosecution.  Private criminal proceedings are horrendously expensive and are not going to be undertaken by administrators. It would have to be funded by investors and they won’t do it.

The initial payment for Phase 2 was estimated at the same level or double that of Phase 1. There is no way that Phase 2 funds would come anywhere near covering the cost of a private criminal prosecution.  This team used exactly the same approach in the Qualiacare case.  We have already had correspondence with the law firm over the Qualiacare situation. What bothers us is that investors are being told what they want to hear and that this is being used to get them to pay money over without any idea of how they could possibly realistically benefit and achieve a better outcome.

The Qualiacare companies are subject to restrictions imposed by The Financial Conduct Authority (“FCA”) which intervened to protect investors. This sales agent and his solicitor have taken almost £60,000 from Qualiacare investors and it is questionable what benefit those investors may actually get for their money. The FCA is the guardian in that case.  It will not allow investor positions to be eroded because the FCA is in place to protect investors.

The FCA intervention in Qualiacare occurred because they allege that the Qualiacare investments were unregulated collective investment schemes. We would argue that the St Camillus hotel room schemes are also unregulated collective investment schemes (“UCIS”). UCIS are covered under S235 of FSMA 2000 [LINK].

Under the regulations it is unlawful for any party to be involved in the formation, promotion, sale or operation of a UCIS and they can be prosecuted to compensate investors for their losses. This notice from the FCA website confirms that a range of different parties can be included in a prosecution [LINK].  This prosecution included the founders, consultants, a solicitor and a sales agent company called Regency Capital Ltd.  Sales agents can be held liable to compensate investors. That is a very important fact that has not been mentioned by the law firm to its clients in both St Camillus and Qualiacare.

In view of this, and the fact that the FCA allege that the Qualiacare investments were a UCIS, this raises an interesting point in respect of  whether the law firm should have declared a conflict of interest.  Did it advise investor clients that the introducer of investors to the law firm was both its client and a sales agent, and that as the FCA had claimed the investment was a UCIS this meant that their introducer client could be a potential source of compensation for its investor clients ?  We doubt that it did because this sales agent has been bringing in a lot of business for the law firm.  An estimated 230 clients in Qualiacare alone. Why has the law firm not advised its investor clients of how the FCA’s allegations might enable them to benefit from a UCIS prosecution and who the potential targets could be ?  What’s more, some of the “investor co-ordinators” in the law firms’ structure are also both clients and sales agents, but they are made to look like genuine investors. They are also potential sources of compensation under a UCIS claim. This is, in our view, an important material consideration which should have been declared to the law firms’ investor clients. We have asked the law firm to comment on this situation and to inform their clients immediately. We believe its clients should be asking for a full refund and if they don’t get it they should go online and report the matter to the Solicitors Regulation Authority.

The same is likely to be true of the St Camillus investment and we have a solicitor looking into it.

We also questioned the law firm over the use of ordinary investors as “investor co-ordinators” and sending out invitations to other investors they do not know.  This is a very worrying development because it is in essence a sales agent and solicitor using members of the public to recruit business for them.

Unsolicited letters were sent to investors from these “co-ordinators” inviting those investors, who were unknown to them at the time, to join this law firms’ legal action.  The investor co-ordinators were effectively being used as introducers to the law firm.  This kind of activity is covered under the claims management regulations [LINK].  We have asked the law firm if their actions may have exposed ordinary people to a potential FCA investigation.  If there is any likelihood of that being the case we advised them that they must immediately inform those investors who may be affected.  It is clear to us that the main sales agent is certainly acting as an introducer to the law firm and is captured under these regulations, but ordinary members of the public should never have been drawn into being used in such a way. If they are captured under the CMC regulations it was extremely irresponsible and indefensible of the law firm and its agent to have put them in that position.

We believe there may be a pattern emerging which is where a sales agent takes control of investor actions using a friendly law firm. The law firm chooses not to inform its clients of what is most likely their best recovery option i.e an action against the parties involved in a UCIS investment.

There is a simple solution for investors which does not involve them paying into the sales agent and lawyer scheme. It is:

1. Make an offer to the administrator to buy the freehold.

2. Bring investors together to join in the ownership.

That’s all that has to be done. There’s no need for investors to buy out trade creditors or start a series of payments to a law firm. There’s no reason why an offer would not be accepted and it is likely to be a much cheaper option for investors.

Investors are being told by the sales agent that lots of investors have signed up with the law firm. That is the sales agent reverting to his standard sales technique of frightening investors into believing that if they don’t sign up then they will miss out.  It’s what all salesmen do and investors should not be fooled by it.

To view our previous article on Qualiacare please click here [LINK].

Any investor who has received an approach by the sales agent and his law firm partner, whether it was in connection with St Camillus, Qualiacare, Carlauren or NPD, should report it to the Supervision Hub of the UK’s Financial Conduct [LINK] to seek reassurance that the approach was lawful.

To view a more recent update on the St Camillus case please click here [LINK].

 

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