Firms behind Capital of Culture scam wound up

Liverpool-based European Property Management, which misled potential investors about the benefits of investing to induce them to buy shares, has been wound up in the High Court following an investigation by the Insolvency Service.

The company was formed to secure and manage residential properties in European Capitals of Culture as they were announced.

The investigation discovered that European Property Management used Corporate Business Angel and at least ten other entities, all of which were unauthorised by the Financial Services Authority, to cold-call potential investors, making misleading and exaggerated claims as to the benefits of investing. Shares were offered to investors in two distinct tranches; a Private Placement Offer around March 2006 and an Entitlement Offer early in 2007.

The Insolvency Service's investigation also led to the winding-up in the High Court, of Corporate Business Angel, which was based in the Derby area.

The companies' methods raised a total of £853,395 from private investors in the UK. From the sums raised, the company paid out commissions of £529,945 to the unauthorised entities, which amounted to 65% of funds raised, and as a consequence less than 30% of shareholders' funds was used for purposes set out in the Company's Information Memorandum.

Investigators found that the companies targeted inappropriate investors: one case involved an 86-year-old man who had no previous experience of purchasing shares.

Commenting on the case, investigator Scott Crighton, said: "The sale of the company's shares involved the use of high-pressure telephone selling methods aimed at unsophisticated investors so that those targeted did not have the option of getting independent advice as to the truth of the claims being made. Companies using these methods are conducting serious misconduct which undermines public confidence in business.

"The action we have taken sends a clear message; companies that set out to mislead and defraud the public will be shut down.

"Everyone should be wary of get rich quick schemes and the old adage applies: if it seems too good to be true, then it probably is."

European Property Management was incorporated on 1 March 2006 and has its current Registered Office at 48-52, Penny Lane, Liverpool, L18 1DG. The company traded from Westpoint House, 6 Grammar School Lane, Wirral, Cheshire, CH48 8AY.

Corporate Business Angel was incorporated on 18 December 2006 and has its current registered office at Lucre House, 106-108 Ashbourne Road, Derby, DE22 3AG.

The petitions were presented under s124A of the Insolvency Act 1986 on 11 February 2010 and the Winding-up Orders were made on 11 May 2010. The Official Receiver was previously appointed as provisional liquidator of European Property Management on 11 February 2010.

Your Comments

And none of the investors get any money back? Closing the company down doesn’t really solve the problem does it? Do the Directors go to court, prison?

By Angelinacancan

After reading the headline I thought this article was announcing the closure of Liverpool Vision and The Mersey Partnership.

By Cameron

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