"As so often is the case, if an investment scheme appears to be too good to be true, it probably is."
Essex and London Properties claimed to purchase properties with the intention of selling them on at a profit or getting rental income for investors.
Potential investors were approached directly or via intermediary platforms, who received 35% of the invested amounts and offered partnerships in a limited partnership scheme.
Investors were offered an 8% annual return paid quarterly if the money was held for three years or 12% if the money was held for one year.
Over an 18-month period, more than 800 people invested in the company anywhere between £5,000 to over £100,000. Essex Police calculates that to date, £18.9m has been obtained from creditors and investors.
In reality, ELP only purchased a single property for £147,000, but told investors it had purchased numerous properties that had rapidly increased in value and falsified Land Registry documents to show the firm owned more property than it did.
Investors made payments through a number of escrow agencies and the Insolvency Service found that existing investors received their interest payments, not from any meaningful return on their investment but from payments made by new investors. The company was in essence operating a Ponzi scheme.
During the investigation, investors were approached by various recovery room businesses offering to recover the amounts, possibly in excess of the initial sums invested, in exchange of an advance fee. One business falsely claimed to be authorised by the chief executive of the Insolvency Service.
In January 2018, the company placed itself into voluntary liquidation, claiming to have debts of over £11 million, and was wound up by the High Court in September.
David Hill, chief investigator for the Insolvency Service, said: "The company persuaded members of the public to part with substantial sums of money to invest in property. Only one property was purchased and the money raised from the public in reality was used to benefit those running the company.
"As so often is the case, if an investment scheme appears to be too good to be true, it probably is. There is an ongoing investigation into those individuals controlling Essex and London Properties Limited by Essex Police, who are liaising with the Crown Prosecution Service with a view to prosecuting a number of suspects."
