Practical Property Portfolio - Fraud Hearing

Gateshead firm's bosses conned investors in property scam
By Matt McKenzie (Sundaysun.co.uk)

Five company directors funded a lavish lifestyle by ripping off investors during a multimillion-pound property scam, a court heard today. John Potts, Peter Gosling, Natalie Laverick, Eric Armstrong and Peter Graham conned investors out of an estimated £80m.

The five did not just feather their own nests they also ensured the loyalty of staff at Gateshead-based Practical Property Portfolio with plush offices, large salaries and generous bonuses.
Nicholas Dean QC, prosecuting, told Newcastle Crown Court: "The prosecution are not suggesting that these defendants set up the investment scheme as a fraud from the start. The scheme became a fraud for one main reason - the defendants, and particularly Potts, were both greedy and careless."

"Their greed meant that the scheme became a fraud and could only be continued as a fraud."
"Greed, driven by Potts, meant that income became the focus of PPP’s business at the expense of prudent acquisition, refurbishment and management of property."
"The extravagant use of investors’ funds extended to most aspects of administration of PPP particularly in the form of excessive wages, bonuses and commissions paid to staff."
"The defendants bought loyalty and hard work from employees and also achieved a willingness amongst some employees to turn a "blind eye" to the shortcomings of the scheme."
"Above all the defendants rewarded themselves very generously."

The defendants had faced a four-month trial at Newcastle Crown Court charged with conspiracy to defraud between January 2001 and March 2003 when PPP was closed down.
However, last month Potts, 60, of Silksworth Hall Drive, Sunderland; Gosling, 57, of Rothbury Gardens, Lobley Hill; and Laverick, 28, also of Silksworth Hall Drive, admitted the conspiracy charge.

Graham, 62, of Topcliffe, Sunderland, admitted three counts of fraudulent trading and Armstrong, 55, of Moorside North, Fenham, Newcastle, two fraudulent trading counts.
Today they returned to Newcastle Crown Court for the start of a three-day sentencing hearing.
The court was told that during the period of the conspiracy, investors were persuaded by false and misleading information to invest in the company which bought houses and flats - many in run-down areas - for refurbishment.

But scores of investors were to discover properties - across the North East, Yorkshire and Lancashire - had not been renovated or tenanted and were sometimes derelict or even burnt-out shells.
"The vast majority of investors never saw the property they were allocated and relied upon the literature and what they were shown by salesmen - it is clear we say that the salesmen only showed potential investors properties that would create a favourable impression," said Mr Dean.
Mr Dean said that Potts "oozed warmth and confidence'' in order to seal a deal with a potential investor.

One investor, Margaret Patrick, had bought a property in Gower Street, Sunderland, for £25,000. She was later to discover when visiting it with her husband Philip, that it was burnt out following a gas explosion and the rest of the houses on the road had also been bought by PPP.
"Mr and Mrs Patrick visited 20 Gower Road on September 29, 2002 - they found a burnt out derelict shell of a house in a street of burnt out derelict shells," said the prosecutor.

The video the Patricks made of their visit to the abandoned street - showing graffiti of "The Gazza Strip" (sic) sprayed on a wall - was played to the court today. Another investor, chartered accountant Brian Fox, who lost around £500,000 in the scam, even took senior managers from the now-collapsed HBOS Group to a meeting with PPP to consider investments.
"He attended (a meeting) with a representative of the Bank of Scotland, who were considering investing with Mr Fox - a glimpse too of how banks became involved in the acquisition of "toxic" assets," said Mr Dean.

Many investors learnt of the scam only when the Department of Trade intervened, because they lived outside the North East or even abroad and had never seen the properties concerned.
The company attracted around 1,750 investors, many of whom lost significant sums - including Mr Fox who was conned out of £500,000 and others who lost their life savings.
At the time the company was wound up, investor claims totalled £16m. However, PPP had claimed that its portfolio of 3,211 properties was worth £80m - meaning each property was worth around £25,000, which equalled the cost of a single investment.
PPP and its spin-off firms used adverts in national newspapers, brochures and a slick sales pitch to persuade investors to part with their money.

The court heard that PPP had been set up in the late 1990s and its offices were based at the Team Valley Trading Estate in Gateshead. Alan Trevitt, who was an early investor in setting up the company before leaving prior to the fraud starting, told investigators of how Potts operated.
He describes Potts as "having total control over the running of the company and he made all the decisions," said Mr Dean.

"Gosling did everything he was told including acting as Potts’ chauffeur when Potts wanted to impress clients." "Trevitt thought Gosling was a pleasant but weak individual who did exactly as he was told by John Potts." The former Department of Trade and Industry closed down PPP and its associated companies after a High Court petition. The prosecutions were brought by the Serious Fraud Office, who carried out a four-year investigation in conjunction with Northumbria Police’s economic crime unit.

The hearing was adjourned until tomorrow.

Fake Villa Scam In Turkey

Irishman questioned in £10 million "property scam"

AN IRISHMAN has been questioned in a £10 million ‘fake villa scam’ which is believed to have duped dozens of British and Irish families in Didim and Bodrum. Kevin O’Kane was taken in by police in Didim and taken to Bodrum yesterday for questioning about falsely marketing 41 villas at Golden Beach Villas, at Imbat Bay, in Altinkum.

Police in Bodrum are investigating claims that as many as up to 80 families may have been swındled based on promises of luxury villas in Bodrum and Altinkum which O’Kane and his business partner Kubilay Atmaca were not entitled to sell. O’Kane has been released on police bail while the inquiry continues. He has had his passport confiscated.When he appeared before a court in Bodrum yesterday as part of the criminal investigation, O’Kane said; “I have been advertising the villas in Altinkum and Bodrum at international real estate and tourist fairs. “I also purchased a villa and have not received the deed yet. I too have been treated unjustly and have no idea about sales involving fake deeds.” His passport has been confiscated while enquiries continue.

Victims, including Tom Barry, from Northern Ireland, have spoken of handing over £75,000 each for the three-bed luxury villas. In one case, three members of one family paid a total of £225,000 for three villas only to find later that they did not actually own them. At least eight Irish citizens applied to police headquarters and the prosecutor's office, and the Northern Ireland Police have launched an investigation after receiving 80 complaints on this issue. Özlem Arslanparçası, the lawyer representing eight Irish citizens who purchased villas in Golden Beach Holiday Resort said the number of the defrauded people is increasing each day.
Police are still searching for 38-year-old Atmaca, a taxi driver two years ago but now in the construction business, and his 40-year-old wife Hande Bakkal.

They are also accused of selling villas with fake deeds, but have managed to evade police capture.

Courtesy of Altinkum Voices Newspaper