Brazil Housing Scam Raised £21m From Investors
An offshore housing scheme offering all their money back plus 20% interest in a year raised £21 million turned out a scam that misled hundreds of investors.
The High Court heard the investment opportunity offered in Brazil by Ecohouse Developments Ltd was a scam.
The company printed marketing literature explaining the scheme would raise money for social housing in the South American country.
Investors would stake £23,000 for each housing unit. In return, a year later, they would receive their stake back plus a 20% return.
Ecohouse claimed the land for the housing belonged to the company, that the investment was safe as the government backed the exit strategy and had made the company an approved housing supplier.
A subsequent investigation by the government’s Insolvency Service revealed none of these claims were true, the court was told.
In fact, 350 investors had paid the company around £21 million when it went into liquidation unable to refund customers.
One director, Charles Fraser-Macnamara, agreed a nine-year banning order disqualifying him from running a company.
The other director, Anthony Armstrong-Emery, has not returned to the UK and was disqualified as a director for 14 years by the court.
The judge was also told that the directors failed to keep or deliver accounting records to liquidators.
Because of this, the liquidators could not explain several substantial transactions, including payments to Armstrong-Emery of more than £450,000, foreign payments totalling just over £11 million, credit card payments worth over £1 million and payments to a connected company worth £2.8 million.
Cheryl Lambert, chief investigator for the Insolvency Service, said: “The public thought they were getting a great deal but were unfortunately tricked into investing into a company that provided false and misleading information.
“The evidence against the directors was substantial and while Armstrong-Emery thought he could evade our enquiries as he lived abroad, the court action is testament that we will take robust action against directors who disregard their obligations.”
What is a disqualification order?
A disqualification order means that without specific permission of a court, a disqualified person cannot:
- act as a company director
- take part, directly or indirectly, in the promotion, formation or management of a company or limited liability partnership
- be a receiver of a company’s property