Property investment companies shut down after £2.85m scam
The property investment company and connected security trustee firm were found to have fraudulently secured £2.85m from clients who trusted funds were protected.
The High Court found that the investment-raising activities of the companies were entirely without substance. At least £2.85m of investors’ funds – raised through the issuing of bonds – disappeared.
The court heard that Minerva Development Group was incorporated in January 2016 but actively traded from 2018 until late 2019, mainly through two websites, offering prospective clients a variety of residential property and student accommodation bonds.
Clients were offered investment returns between 7% and 16.9% per year – above the typical return rates for regulated investment products – and told their investments would be made secure through a ‘Security Trustee’ which would oversee the application and banking of funds.
However, investors started to complain about Minerva Development Group, prompting the Insolvency Service to carry out confidential enquiries.
Investigators discovered that the group had received £2.85m from 70 investors after they paid their funds into a wide range of non-company bank accounts, escrow accounts or onto prepaid cards.
But these accounts were not secure, and the alleged security trustee – first via a company called Glaxicon Limited followed by Cohesion Business Development – provided no protection.
On its website, Cohesion Business Development promoted itself as an experienced financial services provider, and a tax and accounting firm, with more than 30 employees across the world.
But investigators found that the company had never had any official presence at its registered office in Mayfair, London.
Investigators also discovered that investors had complained to the police after claiming they didn’t receive any investment returns and the company failed to correspond with them.
This led to Minerva Development Group’s website being shut down, which prevented further bonds being sold. However, this triggered several ‘recovery’ agents approaching investors promising to recover their investments for an advanced fee.
These recovery agents fabricated their legitimacy and one firm falsely told investors that they had been instructed by the Insolvency Service, misleading clients into believing Minerva Development Group was in the process of going through a liquidation.
Both Minerva Development Group and Cohesion Business Development were not authorised by the financial regulators and failed to cooperate with investigators, who were concerned that the appointed directors in the two companies were likely to be fictitious or hijacked names used to hide their true identities.
David Hill, chief investigator for the Insolvency Service, says: “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.”