Fraudulent property company shut down after misleading small investors

A developer that misled small investors with bonds promising returns of more than 10% has been wound up by the High Court. Exmount Construction raised £1.1m for property ventures but with no record of any purchases was found to be “a scam”. Instead, the Insolvency Service found the bulk of funds, some £800,000, was withdrawn by the directors or paid to third parties. It said the company gave false and misleading information to small investors, including promising fixed returns of 9.12% for three-year bonds and 10.35% on five-year bonds. Judge Briggs, speaking during the winding-up hearing, concluded that the company “had traded in an objectionable manner”. Edna Okhiria, chief investigator at the Insolvency Service, said: “Exmount Construction induced investors by providing false and misleading statements in sales and marketing material to part with substantial sums of money to invest in property bonds with the promise of generous returns. “In reality, this was a scam and we urge potential investors to carry out rigorous due diligence to ensure they use their funds on legitimate investments.” The official receiver will now consider whether to take action against the company directors as a result of their conduct. The FCA has recently clamped down on mini-bonds targeting retail investors with the lure of high returns for risky property ventures. In the past few years, a number of companies have collapsed and been shut down in a similar fashion. One of the most high-profile, Magna Group, spent £20m without securing a single scheme. In another case, investors who backed BTR developer the High Street Group’s £100m bond are facing losing their money after the company went into administration at the end of last year. To send feedback, e-mail emma.rosser@eg.co.uk or tweet @EmmaARosser or @EGPropertyNews