Directors banned for 26 years over £2.2m landbanking scam

The directors of two companies which both traded as Option Four Group have been banned for a total of 26 years for operating a "worthless" landbanking scam.

Related topics:  Finance News
Rozi Jones
15th March 2017
shutterstock_140867215.jpg
"In all our years of dealing with land banking scams we have not seen a single piece of land that has been sold in this way actually go on to obtain planning permission."

The companies marketed and sold plots of land belonging to another company on a former World War II airfield in Devon.

The companies’ salespeople, website and brochures suggested to customers that there was a reasonable prospect of planning permission for housing and/or commercial development being granted, giving a substantial investment return. In fact, the local authority plan for the area would not allow such development at the site.

An investigation by The Insolvency Service uncovered that between December 2010 to December 2011, members of the public paid sums totaling £2,209,296.

The investigations found that the land was sold at markups that were "so substantial" that the companies were able to retain as commission in excess of 85% of the sales proceeds.

The companies only ceased trading when a freezing order was brought against them, together with the company that owned the land, in December 2011 by the then Financial Services Authority, which had received a number of complaints from members of the public.

Anthony Hannon, Official Receiver in the Public Interest Unit, said: "While land can be a viable investment, it should have been clear to the directors from the local authority’s published plan that there was no likelihood of planning permission being granted at the location, and so there was no viable exit strategy for the so called investments.

"As with all the other land banking companies that the Official Receiver has dealt with over many years, these companies have brought misery to unsuspecting members of the public, who were persuaded to part with their savings in exchange for virtually worthless plots of land.

"The company was run entirely for the benefit of the directors and salespeople, at substantial cost to the investors who had been misled and have lost their money in what was never a realistic investment. In all our years of dealing with land banking scams we have not seen a single piece of land that has been sold in this way actually go on to obtain planning permission.

"The lengthy periods of disqualification in this case show that this kind of behaviour will not be tolerated by the Insolvency Service."

More like this
Latest from Property Reporter
Latest from Protection Reporter
CLOSE
Subscribe
to our newsletter

Join a community of over 30,000 intermediaries and keep up-to-date with industry news and upcoming events via our newsletter.