This case study provides an example of overseas property fraud and property investment scams.
The defendants were co-directors of a company called Independent Property Consultants Limited (IPC).
IPC sold overseas property developments to investors. There were a number of developments in Bulgaria, and later in Cape Verde.
The investors were just ordinary people, who wanted to buy a second home abroad. Some people wanted to make a financial gain on their investment by buying a property with the intention of selling it at a profit. Others wanted to buy an overseas property as an investment with the intention of renting it out to others. There were others who wanted to fulfil their dream of buying a holiday home abroad.
The defendants obtained money from these people. Some of them invested their life savings with the defendants. Others re-mortgaged their own homes to raise the money to invest with the defendants. The defendants told them the money they had given them was for their investment in the property they wanted to buy. But they didn’t put the funds they got from these people into the property they thought they had bought. They kept some of the money for themselves, perpetrating overseas property fraud.
Overseas Property Development Scheme
In relation to the developments in Bulgaria, one defendant deceived their customers as to what he had done with their money. He provided them with wholly false and deliberately dishonest explanations for the lack of progress on the developments. Having pocketed their customer’s money, he then went on to ask them for further investment using equally dishonest representations.
In relation to the development in Cape Verde, both defendants misled their customers as to the true position of the ownership of the land on which the development was to be built. As a consequence, investors paid a large sum of their own money to the defendants believing their investment would be used to fund the building of their property they thought they had bought from the defendants. The true position was that their investment went to buy the land.
The evidence shows a pattern of investors in IPC paying over substantial sums to the defendants, and receiving nothing in return. There were four developments in Bulgaria with which we are concerned.
No one in the first Bulgarian development at South Beach received a property. The investors gave the defendant over €66,000 of their own money. This development provided an early example of what was to happen time and time again. IPC provided its investors with excuse after excuse as to why they could not complete on their purchase. On this occasion, IPC told its customers that the development wasn’t being built to a satisfactory standard. They then moved the customers to another development only to repeat the same process.
Aspi Holidays Ltd (Aspi) was the developer at the second site in Bulgaria, which was called Regina Mare. IPC didn’t pay Aspi any of the money they received from prospective purchasers of the properties at the development. Indeed, because IPC didn’t transfer the payments they had received from their customers, only one was able to buy a property and that was only because she went out to Bulgaria to meet the builder. IPC didn’t use the money she gave them to buy her property. They spent it. In other words, one investor got her apartment because IPC spent money given to them by another or other investors. IPC then set about making excuses as to why the other investors in the development could not proceed with their purchases. Those who lost out were encouraged to transfer to other Bulgarian developments where, despite their further investment and reassurances from one director, they still received nothing.
Only customers who went straight to the Bulgarian builders were sometimes able to rectify the position and complete their purchase. IPC told customers that one of the builders in Bulgaria, had stolen the money but that they would honour the payments they made to them in order to secure properties in further developments at Todoroff 1-3 and the Princess. In fact, the evidence demonstrates that building never started at Todoroff. This was so even though 26 investors had parted with about £65,000 and over €750,000. This included money investors paid to IPC because they had told them that the rough construction instalments were due. These funds became payable when the roof was on the development.
Property Investment Scam
IPC made similar claims at the final development in Bulgaria, which was called Princess. Along with those investors transferred from other developments, another 15 customers invested over £230,000 and over €124,000. None of them received a property and the build never came close to completion. Customers were deliberately deceived as to the progress of the development. They were even asked to invest yet further funds in furniture packs in the mistaken belief that this suggested their properties were nearing completion.
Most strikingly of all, those people who invested in the Cape Verde development, which was called Sal Vista, were told by both defendants that IPC owned the land on which the development was to be built. They were told building would start in April 2007. Customers believed that their money would be used to fund the building of the development.
The evidence is clear that people’s investments in this development were not applied to it in just the same way as had happened in Bulgaria. All the money paid by the investors was spent on buying the land. None of it was used to fund the building of the development. One might think that, as an investor, this was something one might want to know. In fact, these people told the police that they would not have invested their hard earned money had they known that IPC did not own the land, which did not happen until the 1st of April 2008, long after their investments in 2005, 2006 and 2007.
Yet again customers were misled as to the reason for the delays in the progress of the build. The defendants made wholly false and deliberately misleading representations, including false assertions that the development had started, in order to obtain yet more money and exacerbate the property investment scam.
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