High Court orders unscrupulous property investment companies into liquidation

Five connected companies involved in dubious property investment schemes, operated both here and in Spain, have this week been ordered into liquidation in the High Court following a Government investigation.

The investigation by Company Investigations (“CI”) of the Insolvency Service found that Property Legal Services (London) Limited, Property Legal Services (2007) Limited, Overseas Legal Services Ltd, Enjoy Property Ltd and United Holdings & Investment Limited were all linked in the operation of three distinct business activities: a fractional investment scheme, a scheme involving the transfer of off-plan properties in Spain and more recently a scheme involving the same day transfer of property in the UK (see notes 8 to 10 below).

All of the companies were associated with a Mr Clive Ballard and in the case of PLS (London) Limited and PLS (2007) Limited a Mr Michael Alexandra (also known as Michael Mendoza).

The investigation has identified 25 victims of the scheme who together have lost in excess of £288,000.

Commenting on the case Company Investigations Supervisor Chris Mayhew said:

“We have strong enforcement powers and will not hesitate to use them as here where the companies were found to have operated complicated and dubious property schemes in a thoroughly unscrupulous way destroying the property investment dreams of those people unfortunate enough to have invested. More recently significant residential property transactions were entered into where material facts which could have influenced the mortgage lender’s willingness to lend were not disclosed to the lenders”.

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Note

1. Property Legal Services (London) Limited was incorporated on 27 February 2004. The registered office of the company was at 1 Meadow View, Marlow Bottom, Buckinghamshire, SL7 3PA. The recorded directors of the company were Mr Clive Leonard Ballard (from 27 February 2004 to 1 January 2007) and Mr Michael Alexander (from 31 December 2006). The secretary of the company was Business Innovations 2000 Limited (from 27 February 2004).
2. Property Legal Services (2007) Limited was incorporated on 12 January 2007. The registered office of the company was at 1 Meadow View, Marlow Bottom, Marlow, Buckinghamshire, SL7 3PA. The sole recorded director of the company throughout was Mr Michael Alexander. The secretary of the company was Mr Clive Ballard (from 12 January 2007 to 2 April 2007).
3. Overseas Legal Services Ltd was incorporated on 14 February 2007. The registered office of the company was at 27 Old Gloucester Street, London, WC1N 3XX. The sole recorded director of the company throughout was Mr Clive Ballard. The secretary of the company throughout was Business Innovations 2000 Limited.
4. Enjoy Property Ltd was incorporated on 21 November 2006. The registered office of the company was at 130 Woodhouse Road, Finchley, London, N12 ORP. The sole recorded director of the company throughout was Mr Clive Ballard. The secretary of the company throughout was Business Innovations 2000 Limited.
5. United Holdings & Investments Limited was incorporated on 23 January 2002. The registered office of the company was at 1 Meadow View, Marlow Bottom, Buckinghamshire, SL7 3PA. The sole director of the company throughout was Mr Clive Ballard. The secretary of the company throughout was Business Innovations 2000 Limited.

6. The petitions to wind up the companies in the public interest were presented on 3 November 2010 under the provisions of section 124A of the Insolvency Act 1986. The grounds for winding up the companies were their involvement in schemes which were conducted with a serious lack of commercial probity; failure to maintain proper accounting records or file accounts; and failure to co-operate with the investigation. The action taken was unopposed, the companies having been dissolved.

7. On 16 March 2011 the Court ordered the restoration of the companies to the Register of Companies and that they be wound up on grounds of public interest by virtue of which the Official Receiver is now the liquidator of the companies.

8. The fractional investment scheme involved members of the public being offered property investments in the UK and Spain. The scheme was carried on by PLS (London) Limited and PLS (2007) Limited. Potential investors were offered

(a) the opportunity to purchase a minority share in a rented property within a portfolio; a share in the future growth of the property and a 9 per cent annual return on investment.

(b) that investors’ money would be safeguarded by being held in a solicitor’s client account until security was in place; that cautions would be registered against titles to the properties and that shares would be allotted to investors in the management companies of the relevant properties.

It appears that no cautions were registered against the properties; that monies were paid into a solicitor’s client account and then paid out to PLS (London) Limited or directly to the company before any “security” had been put into place. At least two of the properties within the scheme were sold and at Mr Ballard’s direction the proceeds were paid into the account of Overseas Legal Services Ltd and largely dissipated for his benefit. The investment scheme failed in 2007. The investigation has identified 25 victims of the scheme who together have lost in excess of £288,000.

9. The off plan properties scheme involved people who had paid deposits to purchase “off-plan” property in Spain being induced to sell the same to Mr Ballard or companies in his “Profit by Property” group. Under the scheme:

(a) people who had paid a deposit agreed to transfer the property for a specified sum to Mr Ballard’s company which agreed to provide the balance of funds needed to make the property available for rental. There were further provisions for the respective share the parties would have in the equity of the property and the payment of interest to the transferor.

(b) an “additional level of security” to safeguard the transferor was to be provided by having equivalent property equity held in the UK.

It appears that no such security was actually put in place. Insofar as the investigation has been able to establish transferors have suffered losses in the region of 750,000 Euros.

10. The same day property transactions involved PLS (London) Limited and PLS (2007) Limited purchasing properties in the UK and selling them on at apparently inflated values on the same day. The features of the 26 transactions identified by the investigation are:

(a) the sale of the property would be financed by a mortgage in excess of the amount paid for the property by the companies.

(b) Mr Alexander (a former solicitor) appears to have been responsible for the conveyance work.

(c) the gross profits arising from the 26 transactions (being the difference between the purchase and sale price) amounted to £859,600. The net profits, after deduction of incentives, were £408,745.

(d) forgery of signatures.

It appears to the investigation that there may be a further 150-200 similar property transactions involving related parties.

11. In ordering the companies into liquidation Registrar Derrett said she was:

“satisfied on the uncontested evidence that substantial monies were received from members of the public and that adequate protections were not put in place despite the representations made otherwise. The link between the companies is Mr Ballard and his wife Clare Harrington also known as Clare Lewin. The documents relating to the fractional investment scheme and the same day property transactions involved solicitors and accountants in particular, a solicitor Beatrice Lebow and an accountant Iris Korobuk and there is evidence that the signatures of both of these ladies have been forged in various documents. There is evidence of 90 instances of forgery. Mr Alexander has informed the investigation that he forged signatures on 50 documents and that Mr Ballard drafted the letters of that nature. Also that 32 letters on which Ms Lebow’s signature appears were forged by Mr Ballard or his wife Ms Lewin. The evidence involving the same day transactions also demonstrates other individuals were involved in the scheme including a property dealer called Mr Frank Kantor and that incentive payments were made. I am satisfied the evidence demonstrates the considerable lack of co-operation with the investigation in particular from Mr Ballard. Some documents have been provided by Mr Alexander but essentially there has been limited co-operation by him with the investigation. On the basis of the evidence it has in my judgment been demonstrated that certainly three of the companies operated without any commercial probity and adopted unscrupulous business practices which led to the public suffering significant losses. One can’t determine the whole extent of the losses due to the lack of co-operation and lack of records and it is not clear what role two companies had in this but they are linked and in my view It is entirely appropriate for all of the companies to be placed into liquidation on grounds of public interest.