Fraudulent Investment Schemes - SFO Investigations

1st February 2019 Business Crime

Fraud is a dishonest act which is carried with the intention of making a gain for yourself or to cause a loss to another. Under Fraud Act 2006, there are three ways in which a fraud can be committed:-

  • Fraud by false representation
  • Fraud by failing to disclose information
  • Fraud by abuse of position

Fraudulent Investment Schemes

Promises are made to investors assuring them that they will make money on their investment, often at a very quick rate. Fraudsters are now targeting investors is through property development. This can include an investor buying a property off plan or asking that more than a 10% deposit be paid to secure a property and then the property is never actually built.

The Serious Fraud Office (SFO) has recently announced that it is opening investigations into suspected fraud against three failed property developments. The schemes in question are Angelgate in Manchester and the New Chinatown and North Point Pall Mall developments in Liverpool. The SFO announced that raids had taken place at several addresses but it has not been confirmed as to whether any arrests were made.

The multi-million pound property developments on each site were sold to investors off plan. These were mainly overseas investors from China and Hong Kong. The companies who were behind the developments subsequently went into administration or were liquidated. The SFO is now encouraging investors to report their experience in an attempt to obtain further information as to the extent of the investor’s knowledge about the individuals and companies involved and their expected returns on the properties.

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Peter Grogan is a Partner and Head of Department located in Manchester in our Business Crime, Regulation & Driving Offences department

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