By Daniel Hunter
The Financial Services Authority (FSA) has won an important victory in the battle against unauthorised businesses after the High Court declared that James Kenneth Maynard, Countrywide Land Holdings Limited (Countrywide) and Plateau Development & Land Limited (Plateau) operated a collective investment scheme without authorisation and sold plots of land unlawfully to UK consumers. Regional Land and Countrywide were trading names used by Maynard.
His Honour Judge Pelling QC banned Maynard for life from selling land for business purposes in the UK and ordered him and Countrywide to pay £31,896,194 to the FSA, while Plateau, now in liquidation, was instructed to pay £918,975. A bankruptcy order was also made against Maynard, who is now believed to be living in Northern Cyprus.
Another individual, Wasim Minhas, the director of Plateau, has been ordered to pay £75,000 to the regulator.
The FSA has not yet identified any assets that would enable more than a small proportion of these payments to be made, and therefore it is unclear how much will ultimately be returned to investors. The FSA is continuing to make enquiries to trace the funds paid by investors.
Maynard, Countrywide and Plateau sold plots of land across the UK with the promise that investors would make a significant profit when the land obtained planning permission and was sold. Investors were also told by sales staff that Maynard, Countrywide and Plateau would apply for planning permission for the land or that they had corporate buyers lined up to purchase the sites.
In reality there was no intention to seek planning permission or help purchasers sell their land and the plots were in locations unlikely to ever gain planning permission, such as areas of outstanding natural beauty.
The FSA previously obtained injunctions against Maynard and Countrywide in August 2010 that froze assets and prevented them from selling more land to investors. The FSA subsequently discovered that Plateau had been set up to continue the business and, in December 2010, secured a similar injunction.
The FSA does not regulate the sale of land, but land banking may amount to a collective investment - something that does require FSA authorisation. Maynard, Countrywide and Plateau have never been authorised by the FSA so their land sales were unlawful. Furthermore, as their business activities were unauthorised, victims of the scam are not covered by the Financial Services Compensation Scheme.
“We have to be realistic about the low probability of securing meaningful compensation for victims of these scams, but this is still an important victory," Tracy McDermott, acting director of enforcement and financial crime at the FSA, said.
"Proving that a land bank is operating a collective investment scheme - and should therefore be FSA authorised - is very complicated, so every success puts us in a stronger position to tackle other schemes.
"This decision sends a message to other land banks that we will not sit by and let them con investors out of their money. Indeed we have also started court actions against others that we believe have been involved in Maynard’s scheme.
“Anybody investing in land should always have it independently valued to check its worth. Furthermore, if you are ever sold land as an investment with the promise of fabulous returns, and on the basis that someone else will manage it for you as part of a wider site, you should check the firm is authorised by us.”
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