Insolvency Service
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£3.2m land banking scheme shut down following Insolvency Service investigation

£3.2m land banking scheme shut down following Insolvency Service investigation

News Release issued by the COI News Distribution Service on 26 July 2012

Two related companies that mis-sold land to the public to the tune of £3.2 million and a third connected company that offered carbon credits for investment have been ordered into liquidation by the High Court on grounds of public interest following an investigation by Company Investigations of The Insolvency Service.

Berkeley Warbeck Limited and its successor Dentam Frost Ltd both marketed residential-sized plots of undeveloped land for investment. Another linked company, Sloane Knight Ltd, marketed voluntary carbon credits for sale to the public as an investment.

The sites marketed were at:

Chilton Trinity near Bridgewater, Somerset;Beacon Lane, Lincolnshire;Hatton, Warwickshire;Towcester, Northamptonshire;Woodmancote, Cheltenham; andWest Cheshunt, Greater London.

Dentam Frost Ltd (www.dentamfrost.co.uk) marketed plots at the West Cheshunt site only.

Berkeley Warbeck Limited (www.berkeleywarbeck.co.uk), trading as Berkeley Land (www.berkeleyland.co.uk), claimed to be industry leaders in sourcing developed and undeveloped land for investment. In reality, there was no likelihood of planning permission being granted to add value to the plots of land which were located in the greenbelt and/or subject to restrictions on development.

Nevertheless investors were persuaded to part with some £2.7 million for plots on the basis that planning permission was likely to be granted resulting in a substantial increase in value within two to three years.

The company’s business ceased in March 2011. However, trading started again for a short while afterwards under Dentam Frost Ltd and raised over £500,000 from the public before being closed following Insolvency Service’s investigations.

The Court heard how three individuals, Michael Bohdjalian, Dylan Creaven and Chris Newhouse benefitted from the unscrupulous trading, although they were not formally appointed as directors of either company:.

Mr Bhodjalian and Mr Creaven were paid £539,778 and £365,328 respectively and Mr Newhouse, described as Head of UK Trading, received £163,453. Additionally, there were unexplained cash withdrawals of some £181,295.

Sloane Knight Ltd (www.sloaneknight.co.uk) marketed carbon credits for a few weeks only and was abandoned immediately after investigation of its affairs began. It is unclear how much, if any, money it raised from the public.

Company Investigations Supervisor Chris Mayhew said:

The public needs to be on their guard against the activities of unscrupulous companies which exploit land banking and carbon credit trading as a means to induce investors to buy land or alternative investment products such as carbon credits on the promise of high returns which may never materialise.

In this instance t he land was sold for up to 31 times more than it cost in order to make those behind the companies wealthy, not investors.

This decision sends a clear message that we will continue to clamp down on companies which deliberately mislead the public in this way and potentially ruin lives of honest people, particularly older investors.”

Ends

Notes to Editors

1. Berkeley Warbeck Limited was incorporated on 14 September 2009. The registered office of the company is at 83 Baker Street, Mayfair, London, W1U 6AG. The recorded directors of the company were Ian Richard Taylor (from 14 September 2009 to 19 January 2012) and Westco Directors Ltd (from 14 September 2009 to 19 January 2012). The company had no recorded secretary. The company’s shareholders are shown to be Mr Taylor (£1 share) and Westco Directors Ltd ((£1 share).

The company operated from Lasenby House, 32 Kingly Street, London, W1B 5QQ.

The grounds for winding up the company were trading with a lack of commercial probity by making and benefitting from misleading and unfounded statements; abandonment; failure to file accounts and annual returns and failure to co-operate with the investigation.

2. Dentam Frost Ltd was incorporated on 25 February 2011. The registered office of the company is at 45 Amesbury Avenue, London, SW2 3AE. The sole recorded director of the company was Dean Alexander Benjamin (from 25 February 2011). The company had no recorded secretary. The company’s sole shareholder was shown to be Mr Benjamin (£1 share).

The company operated from Lasenby House, 32 Kingly Street, London, W1B 5QQ.

The grounds for winding up the company were trading with a lack of commercial probity by making and benefitting from misleading and unfounded statements; abandonment; failure to deliver up accounting records; failure to file annual returns and lack of corporate transparency.

3. Sloane Knight Ltd was incorporated on 21 March 2011. The registered office of the company is at 33 Cavendish Square, Mayfair, London, W1G OPW. The recorded directors of the company were Adeyemi Jaiyesimi (from 21 March 2011) and Dave Dalkeith Curtis Myton (from 16 May 2011).. The company had no recorded secretary. The company’s sole shareholder was shown to be Mr Jaiyesimi (£1 share).

The company operated from 33 Cavendish Square, London, W1G OPW.

The grounds for winding up the company were trading with a lack of commercial probity by making misleading and unfounded statements; abandonment; failure to co-operate with the investigation and to deliver up accounting records and failure to file what would have been its second annual return.

4. The petitions to wind up the companies were presented in the High Court on 17 June 2012 under the provisions of section 124A of the Insolvency Act 1986 following confidential enquiries by Company Investigations under section 447 of the Companies Act 1985, as amended. The petitions were unopposed.

5. In ordering the companies into liquidation on grounds of public interest on 25 July 2012 Ms Registrar Derrett gave a detailed judgment in which she said:

“Berkeley Warbeck Limited and Dentam Frost Ltd essentially dealt In the familiar ‘land banking’ schemes by which plots of land were sold to members of the public at inflated prices, using misleading representations as to the company itself, the likelihood of the land being developed and the likely return to the consumer. The third company Sloane Knight Ltd was concerned in the sale of voluntary carbon credits. Again, misleading statements were made, both as to the background of the company and the likelihood of a return on the investment. None of the companies continue to trade and they appear to have been abandoned by those behind them. The link between the companies is principally the same individuals, a Mr Michael Bohdjalian and a Mr Dylan Creaven, who appear to have received substantial funds from both Berkeley and Dentam. In his witness statement the investigator Mr Peacock adduces that the bank statements for Berkeley show a series of payments to these two gentlemen and also to others including a Mr Ike Chambers and a Mr Chris Newhouse. Mr Bohdjalian and Mr Craven received at least £809,329 between them and of particular note are the expenses paid which appear principally to relate to personal expenses. Mr Peacock has set out in paragraph 341 a list of these expenses including flights to Sardinia, a home in Geneva, two watches, two bottles of champagne, and two Alfred Dunhill three piece suits. Similarly the bank statements for Dentam show payments to these two gentlemen and to other parties suggesting a certain lifestyle. No bank statements were obtainable for Sloane so it has not been possible to establish whether those same persons received payments from that company, but Berkeley arranged serviced office accommodation for Sloane and the agreement relating to the same was signed by a Miss Emma Hepburn on behalf of Sloane. She was also concerned in the business of Berkeley and received payments from Dentam. The principal ground for winding up Berkeley is the lack of commercial probity. The evidence shows that Berkeley marketed small plots of land at six sites, five of which it owned. Between October 2009 and March 2011 it appears to have generated sales of something in the region of £2.7 million. I am satisfied that the land was sold at inflated prices. The evidence shows that misleading statements were made to consumers and in my judgement this was to induce them to purchase plots. Counsel Mr Mullen has set out the evidence to me and I do not need to recite it here. I am satisfied on this evidence that the manner in which the company operated was to mislead and on any basis it shows a lack of commercial probity. The company’s website suggests that land without planning permission costs about one tenth of the cost of land with planning permission. It omits to mention that the land has been ‘marked up’ by the company so that consumers pay between 20 and 31 times more than the company itself paid. A ten-fold increase in the value of the land would still leave the consumer with a substantial loss. The abandonment of the company is the second allegation. It appears that the directors of the company resigned on 19 th January 2012. The evidence shows that the company has vacated its registered office, its website no longer operates and its bank account closed in March 2011. The third ground is the lack of co-operation with the investigation. The registered directors of the company did not engage with the investigation or supply records and I am satisfied this third ground is established. The final allegation is the failure to meet filing requirements as the accounts due on 14 th June 2011 and the annual return due on 7 th December 2011 have not been filed at Companies House. In relation to the winding up of Dentam, we have similar allegations, namely the lack of commercial probity. Dentam marketed one site, the West Cheshunt site, using misleading statements. The land it seems was purchased from major house builders, Taylor Wimpey and Persimmon Homes. They have confirmed that the land had been sold as there was no realistic prospect of planning permission being granted in the foreseeable future and that they had not given their permission for their names to be used. The local authority confirmed that it is unlikely that the land will receive planning permission. The company’s bank statements show the receipt of over £514,000 between March 2011 and July 2011, the majority of which was received from investors. In this case the website stated that that it was an industry leader in sourcing developed and undeveloped land, which I find surprising given that it was incorporated only in March 2011. It represented that land can increase in value 5-8 times if planning permission for residential development is granted, when the plots were being sold for many times their market value so that a customer was unlikely to break even. I am satisfied that the evidence shows that the company was clearly trading with a complete lack of commercial probity. As to the abandonment ground, I understand the company has vacated its registered office and the sole registered director, Mr Benjamin, stated he had nothing to do with the company and thought it had ceased trading. I am satisfied that there is ample evidence to establish abandonment. There has been a failure to deliver up records and also a failure to meet filing requirements. The final company Sloane traded in a somewhat different market, marketing voluntary carbon credits, again using misleading statements. The sales scripts obtained by the investigation show that the company was held out as a ‘leading emissions trading firm’, although there was no evidence to support this. The voluntary carbon credits offered by the company were conflated with certified carbon credits, which would satisfy the Kyoto Protocol. The evidence demonstrates that unsupported representations were made as to an increase in demand for such credits and an advantageous price available as a result of an agreement with Rodsand Wind Farm. I am satisfied that the brochure produced by the company also made similar statements, referring to the increase in value of EUA carbon credits, which are not in fact offered by the company. I am satisfied that the allegation of trading with a lack of commercial probity is made out. We have the same allegation with regard to abandonment. The company has no presence at its registered office and its website is not operational. Again there has been failure to co-operate with the investigation, failure to deliver up records and failure to meet filing requirements. I am therefore satisfied on the evidence presented to the Court that it is entirely appropriate for me to order the winding up of these companies on the public interest grounds sought and I do so order”.

6. Company Investigations, part of the Insolvency Service, carries out confidential enquiries on behalf of the Secretary of State for Business, Innovation & Skills (BIS).

7. A carbon credit is a certificate or permit which represents the right to emit one tonne of carbon dioxide and can be traded for money. The Financial Services Authority’s consumer information on carbon credit trading and what to consider before investing can be found at:

www.fsa.gov.uk/consumerinformation/scamsandswindles/investment_scams/carbon_credit

8. The Insolvency Service has recently warned that older people are being targeted in investment scams – see News Release issued on 15 June 2012.

9. The Insolvency Service administers the insolvency regime investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. The Service also authorises and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice.

10. All public enquiries concerning the affairs of the company should be made to: The Official Receiver, Public Interest Unit , 21 Bloomsbury Street, London, WC1B 3QW. Telephone: 0207 637 1110 Email: piu.or@insolvency.gsi.gov.uk

11. Media Enquiries should be directed to Kathryn Montague, Media Relations Manager, Telephone 020 7674 6910 or Ade Daramy, Press Officer on 020 7596 6187 or ade.daramy@insolvency.gsi.gov.uk

Contacts:

Ade Daramy
Phone: 020 7596 6187
ade.daramy@insolvency.gsi.gov.uk

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