The full scale of alleged buy-to-let scams is starting to emerge with the collapse of mortgage lending and house prices, according to the Serious Fraud Office.
Detectives are looking at cases involving thousands of investors losing millions of pounds in alleged property frauds in the UK and overseas.
Many investigations are examining off-plan buy-to-let frauds involving hundreds of properties in Leeds, Cardiff, Nottingham, Derby, Liverpool, Hull and London.
Already this month five directors of Gateshead based PPP Ltd (Practical Property Portfolios Ltd) and sister company Napeer (Holdings) Ltd have pleaded guilty to fraudulent trading charges.
Newcastle Crown Court heard the companies were wound up after £65 million of investors’ money was lost. PPP sold 4,000 residential properties to 1,750 investors for £80 million. Sentencing will be in March.
Investors paid in £25,000 fees for property in ‘up and coming’ areas in the northeast with a rent guarantee.
The defendants misled investors in almost every material respect. said the prosecution.
North Yorkshire Police are planning more arrests over an alleged £2m international property fraud involving York-based Challenor Property Developments Ltd after arresting and bailing four people on suspicion of conspiracy to defraud and money laundering offences.
Inquiries concerning Challenor are underway in the USA and Spain.
Liberal Democrat MP Norman Baker is ready to put questions in Parliament about a suspected property scam concerning Midlands-based Ocean View Properties.
Hundreds of UK investors are believed to have lost millions. The company’s latest accounts show debts of more than £100 million.
Investors bought off-plan apartments in Spain and the Dominican Republic for about £70,000 each through Ocean View, but many dissatisfied customers asked for their cash back without success.
The Serious Fraud Office is also investigating SRM Holdings Ltd, which went in to administration last October. The company was owned by Simon Morris, who was rated in The Sunday Times Rich List 2007 as the eighth richest person in the less than 30 years old after accruing a fortune of £69 million.
Dozens of investors who had bought buy-to-let properties through another of Mr Morris’ companies – Morris Properties – claimed they had been misled over the property values and rental returns.
The investigation is ongoing and no one, including Mr Morris has been charged with any offence. Mr Morris has denied all allegations.
In Eire, exclusive properties in Paris, Dubai, Dublin and the Caribbean, are among the £32 million assets of pyramid investment scheme operator Breifne O’Brien bought with money he allegedly swindled from clients, the Irish Commercial Court heard.
Over 15 years, Mr O’Brien allegedly operated a pyramid scheme that channelled money from several investors to fund his personal lifestyle and business interests, including a break with his wife at the world’s Dubai’s seven-star hotel – The Burj.
Last year, the Association of Chief Police Officers reported that fraudsters conned £700 million from mortgage lenders to launder money from drug trafficking and prostitution.
Most of these frauds focused on over-valuing new build flats bought with false documentation, which is why mortgages are in short supply for this type of property.
Photo credits: Jamie Sanford via flickr