INSOLVENCY SERVICE
News Release (Ins/Coms/11) issued by COI News Distribution Service
on 20 May 2009
A group of London
companies controlled by the now bankrupt Mr Spencer Michael (see
note 1 below) that promised to help investors become instant
millionaires has been wound up in the High Court on grounds of
public interest following an investigation by Companies
Investigation Branch (CIB).
Potential investors were invited to attend free "Secrets 2
Success" seminars advertised with the line "no risk, no
effort" and were encouraged to join with "little or no
money" an "Instant Millionaire Programme." They
were told they could learn more about becoming a property
millionaire by attending further seminars described as
"Negotiate 2 Win" at a cost of £1,000, the "No
Money Down" course at a cost of £2,000 and the "Freedom
2 Fortune" course at a cost of £4,000.
Some people who attended these seminars then went on to borrow
money, sometimes on their credit cards, and employed the services
of the companies in order to invest in buy-to-let property.
Investors were told that Mr Michael was a specialist in the
"buy to let" market with an estimated personal portfolio
of £11 million. They were promised he would locate suitable
properties for investment that were in the course of construction
and by buying in bulk from the developers could negotiate
significant discounts.
CIB's investigation discovered that the companies were being
operated by Mr Michael as effectively one entity and with a
complete lack of commercial probity. In particular there were:
- Inadequate records kept.
- Clients' money was paid into Mr Michael's personal
accounts to fund his own property dealings.
- Clients' deposits were not returned for purchases that did
not proceed.
- Failure to account for rents due to clients
- Misleading advertisements
- Misrepresentations as to the property discounts obtainable
- Insolvency and breaches of Consumer Credit protection
At least 30 investors were found to be owed nearly £1.6 million.
In ordering the companies into liquidation Mr Registrar Jacques
stated the evidence made out a clear case that it was just and
equitable to wind up the companies in the public interest.
Notes to Editors:
1. Mr Michael (the director and shareholder of the companies) was
made bankrupt on 29 March 2007. This left the companies without
any control other than the Official Receiver, as Mr Michael's
trustee, who applied to the Court for directions. Mr Michael then
claimed that, just prior to his bankruptcy, he had appointed a new
director of the companies, Ms Marcela Frolikova, who then opposed
the winding up.
2. Property Investors Courses Limited was incorporated on 17
September 2003. The registered office is at Allen House, 1
Westmead Road, Sutton, Surrey, SM1 4LA. The recorded directors are
Mr Spencer Michael (from 17 September 2003), Ms Marcela Frolikova
(from 20 March 2007) and Mr Danny Gray (from 2 July 2007). The
secretary is Ms Marcela Frolikova (from 2 July 2007).
3. Spencer Michael Consultancy Limited was incorporated on 7
January 2004. The registered office is at Allen House, 1 Westmead
Road, Sutton, Surrey, SM1 4LA. The recorded directors are Mr
Spencer Michael (from 7 January 2004), Ms Marcela Frolikova (from
20 March 2007) and Mr Danny Gray (from 2 July 2007). The secretary
is Ms Marcela Frolikova (from 2 July 2007).
4. A Company Voluntary Arrangement was agreed with creditors on 9
November 2005 but failed shortly afterwards when Mr Michael did
not adhere to the terms of the proposal and paid only £5,000 to
the supervisor of the arrangement.
5. Platinum Management & Marketing Limited was incorporated
on 15 May 2003. The registered office is at Allen House, 1
Westmead Road, Sutton, Surrey, SM1 4LA. The recorded directors are
Mr Spencer Michael, (from 15 May 2003), Ms Marcela Frolikova (from
20 March 2007) and Mr Danny Gray (from 2 July 2007). The secretary
is Ms Marcela Frolikova (from 2 July 2007).
6. St Paul's Property Developments Limited was incorporated
on 21 July 2004. The registered office is at Allen House, 1
Westmead Road, Sutton, Surrey, SM1 4LA. The recorded directors
are Mr Spencer Michael (from 21 July 2004), Ms Marcela Frolikova
(from 20 March 2007) and Mr Danny Gray (from 2 July 2007). The
secretary is Ms Marcela Frolikova (from 2 July 2007).
7. St Paul's Property Company Limited was incorporated on 22
July 2004. The registered office is at Allen House, 1 Westmead
Road, Sutton, Surrey, SM1 4LA. The recorded directors are Mr
Spencer Michael (from 22 July 2004), Ms Marcela Frolikova (from 20
March 2007) and Mr Danny Gray (from 2 July 2007). The secretary is
Ms Marcela Frolikova (from 2 July 2007).
8. Emerald Investment Group Limited was incorporated on 21 July
2004. The registered office is at Allen House, 1 Westmead Road,
Sutton, Surrey, SM1 4LA. The recorded directors are Mr Spencer
Michael (from 21 July 2004), Ms Marcela Frolikova (from 20 March
2007) and Mr Danny Gray (from 2 July 2007). The secretary is Ms
Marcela Frolikova (from 2 July 2007).
9. PIC (UK) Limited was incorporated on 2 December 2003. The
registered office is at Allen House, 1 Westmead Road, Sutton,
Surrey, SM1 4LA. The recorded directors are Mr Spencer Michael
(from 2 December 2003), Mr Alan Paul Finch (from 13 September
2005), Ms Marcela Frolikova (from 20 March 2007) and Mr Danny Gray
(from 2 July 2007). The secretary is Ms Marcela Frolikova (from 2
July 2007).
10. A further company, St Paul's Property Group Limited, was
ordered into liquidation in the High Court on a creditor's
petition on 10 November 2005. The registered office is at 30
Finsbury Square, London, EC2P 2PY. The sole recorded director is
Mr Spencer Michael (from 21 July 2004). No successor was appointed
secretary following the resignation of the nominee secretary on 21
July 2005.
11. The petitions in the public interest to wind up the foregoing
seven companies were presented in the High Court on 7 November
2006 under the provisions of section 124A of the Insolvency Act
1986 following confidential enquiries carried out by Companies
Investigation Branch (CIB) under the provisions of section 447 of
the Companies Act 1985, as amended. Since then a number of
matters have deferred the hearing of the petitions until 29 April
2009 when the seven companies were all ordered into liquidation.
12. The companies opposed the winding action throughout. Delay in
their filing evidence necessitated obtaining an unless order on 4
April 2007 requiring them to do so failing which they would be
debarred from filing any evidence opposing the winding up.
13. On 25 October 2007 the Court ruled as a preliminary issue
that Ms Frolikova had not been validly appointed. Ms Frolikova
appealed to the Court of Appeal. Her appeal was dismissed on 14
July 2008. Ms Frolikova's application to set aside the Court
of Appeal's order was dismissed on 22 January 2009.
14. In the meantime on 7 July 2008 an interim Bankruptcy
Restriction Order was made against Mr Michael by virtue of which
he is presently prevented from being concerned directly or
indirectly in the management of a company without leave of the
Court. The interim Order will remain in place until either, the
determination of the application for the Bankruptcy Restrictions
Order, or the acceptance of a Bankruptcy Restrictions Undertaking,
or the Court discharges the interim Order. The next hearing of
that matter will be in the High Court on 14 May 2009.
15. Since the winding up action commenced, two of the companies
(Emerald Investment Group Limited and PIC (UK) Limited), whilst
said to be opposing the winding up, were nevertheless dissolved
through the voluntary striking off procedure. The Secretary of
State sought and obtained orders restoring both companies to the
register of companies and to wind up on grounds of public interest
together with the other five companies. By virtue of the winding
up orders the Official Receiver is liquidator of the seven companies.
16. Following the Court of Appeal's dismissal of Ms
Frolikova's appeal on 22 January 2009 she has indicated
through solicitors that she will be filing a complaint to the
European Court of Human Rights.
17. The companies affairs were aired on BBC Watchdog broadcast on
22 March 2005 and a BBC documentary called Underground Britain,
broadcast on 15 September 2005.
18. Companies Investigation Branch, part of the Insolvency
Service, carries out confidential enquiries on behalf of the
Secretary of State for Business, Enterprise & Regulatory
Reform (BERR).
19. 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.
20. All public enquiries concerning the affairs of the companies
should be made to: The Official Receiver, Public Interest Unit
London, 21 Bloomsbury Street, London, WC1B 3SS, Tel No: 0207 637
1110. Email: piu.or@insolvency.gsi.gov.uk. Further information
about the work of The Insolvency Service is available from http://www.insolvency.gov.uk