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Investment firm shut down after promising 16% returns

Investment firm shut down after promising 16% returns

A property investment company which "fraudulently" raised millions by promising investors returns of between 7 and 16.9 per cent a year has been wound up by the courts. 

Minerva Development Group Limited and connected security trustee firm Cohesion Business Development Limited were shut down by the High Court after at least £2.85m of investor funds "disappeared".

Between 2018 and 2019 the company targeted prospective investors online with a variety of residential property and student accommodation bonds. 

Investigators at the Insolvency Service found Minerva Development had received £2.85m paid by 70 investors into a range of non-company bank accounts, escrow accounts or onto pre-paid cards.

Clients were promised returns on their investments of between 7 and 16.9 per cent and told their funds would be processed through a security trustee. 

But in reality the funds were not protected and it emerged the alleged security trustee Cohesion Business Development had no presence at its registered office in Mayfair, London.

Promises of high returns are synonymous with a number of failed bond providers, such as the 8 per cent promised by scandal-embroiled London Capital & Finance.

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, this was nothing but a scheme and 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.

"The courts recognised the severity of the companies’ misconduct and closed them down to protect any further investors coming to harm. We urge potential investors to carry out rigorous due diligence to ensure they use their funds on legitimate investments." 

The issue was escalated to the police when clients failed to receive any returns from their investments and Minerva Development stopped all correspondence. 

Neither of the two companies were authorised by the financial regulator and, according to the Insolvency Service, had failed to cooperate with its investigators.

The service said the appointed directors in the two companies were likely to be "fictitious or hijacked names" used to hide their true identities.

rachel.mortimer@ft.com 

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