Clients were offered investment returns of between 7% and 16.9% per annum and told their investments would be made secure through a ‘Security Trustee’ which would oversee the application and banking of funds.
Minerva Development Group Ltd and Cohesion Business Development Ltd were wound up in the public interest in September after the High Court found that the investment-raising activities of the companies were “entirely without substance.”
The Insolvency Service, which took action against the companies, says that at least £2.85m of investors’ funds, raised through the issuing of bonds, has disappeared.
The orders were made before Insolvency and Companies Court Judge Prentis and the Official Receiver has been appointed as liquidator.
The court heard that Minerva Development Group actively traded from 2018 until late 2019, mainly through two websites.
The websites offered prospective clients a variety of residential property and student accommodation bonds.
Investors then started to complain about Minerva Development Group and the Insolvency Service carried out enquiries.
Investigators found that Minerva Development Group received £2.85m from 70 investors after they paid their funds into a range of non-company bank accounts, escrow accounts or onto pre-paid cards.
But the accounts were not secure, and the alleged security trustee – first via a company called Glaxicon Limited followed by Cohesion Business Development – provided no protection.
On its website, Cohesion Business Development promoted itself as an ‘experienced financial services provider’, and a tax and accounting firm, with over 30 employees located across the world.
Investigators, however, found that Cohesion Business Development never had any official presence at its registered office in Mayfair, London.
Investors complained to the police after they said they did not receive any investment returns and the company failed to correspond with them.
This led to Minerva Development Group’s website being shut down which prevented further bonds being sold. The Insolvency Service said the closure then triggered several ‘recovery’ agents approaching investors promising to recover their investments for a fee.
These recovery agents fabricated their legitimacy and one firm falsely told investors that they had been instructed by the Insolvency Service, misleading clients into believing Minerva Development Group was in the process of going through a liquidation.
Both Minerva Development Group and Cohesion Business Development were not authorised by the financial regulators and failed to cooperate with investigators, who were concerned that the appointed directors in the two companies were likely to be fictitious or hijacked names used to hide their true identities.
David Hill, chief investigator for the Insolvency Service, said: “Minerva Development Group persuaded clients to part with substantial sums of money to invest in property bonds with the promise of extremely generous returns. In reality, our investigations found that no funds were invested into bonds but instead used to benefit those running Minerva Development Group and a connected company, Cohesion Business Development.”