£450k investment scam closed down

Modo Homes Group Ltd, a Liverpool-based company which obtained payment from investors on the basis of false representations, has been wound up in the public interest following an investigation by the Insolvency Service.

The company operated an investment business by claiming it was authorised to offer properties for sale on behalf of lenders disposing of distressed properties. It required investors to pay a reservation fee for a particular property before they could see it.

Modo Homes was incorporated in March 2008, registered and trading from Connect Business Village in Sandhills, north of Liverpool city centre.

The investigation found there was no evidence that any of the investors had been able to progress the property transaction to completion. The company failed to provide any accounting records relating to its trading, which the directors said had been mistakenly thrown into a skip by workmen carrying out some work on their home. The company's bank records show that it had received £454,737.

The company misled investors and failed to provide the service represented by:

  • requiring the payment of the reservation fee before releasing the address details which prevented investors from carrying out proper due diligence checks to verify the details of the investment offer;
  • failing to inform investors that the fee was non-refundable by not providing a copy of the company's terms & conditions until after the fee was paid over;
  • failing to provide invoices and receipts, and failing to answer communications from investors;
  • failing to provide access to properties to surveyors retained by investors;
  • marketing properties without the authorisation of the owner; and
  • collecting multiple reservation fees from different investors for the same property.

Colin Cronin, investigation supervisor at the Insolvency Service, said: "Modo Homes Group Ltd raised money from investors on false representations and then made it very difficult for investors to contact the company to progress the property purchase. These proceedings show that the Insolvency Service will take firm action against companies and directors which operate in this way."

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