A property management company has been wound up in the public interest by the High Court.
Merseyside company, European Property Management Ltd, was found to have deliberately misled potential investors as to the benefits of investing, in order to induce them to purchase shares, following an investigation by the Investigations Directorate of 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 Ltd used Corporate Business Angel Ltd and at least 10 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 in this way. 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 Ltd, 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.
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.
