Buy to Let Investment Fraud Sentencing

House scam bosses are sentenced

Five Gateshead company directors who conned property investors out of almost £80m have been sentenced. John Potts, Peter Gosling, Natalie Laverick, Eric Armstrong and Peter Graham ran Practical Property Portfolio (PPP), which was closed down in 2004. Investors were told their properties would be refurbished and rented out but much of the work was not done. The five admitted fraud charges - four were jailed and one defendant was given a 21-month suspended sentence.

The five had faced a four-month trial charged with conspiracy to defraud between January 2001 and March 2003. However, last month Potts 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. Potts was jailed for five years; Gosling was jailed for three years and both Armstrong and Graham were jailed for two years.

Brazen fraud

Laverick was given a 21-month prison sentence suspended for two years for offering to give evidence against the others. The court heard PPP had been set up in the late 1990s and its offices were based at the Team Valley Trading Estate. The hearing heard that investors were asked to put money into derelict properties, but they were just left unoccupied. Judge Guy Whitburn QC said: "Where did the money go? The nature of what has been termed a pyramid scheme is that it may disappear into a black hole.

"It is abundantly clear - Potts in particular, Gosling to a lesser extent, and the others - led an extraordinary lifestyle.

"It was in particular a brazen fraud."

Courtesy of the BBC

Madofff's arm to be sold.

Arm of Madoff's firm set to be sold to Castor Pollux

NEW YORK (Reuters) - The market-making arm of jailed swindler Bernard Madoff's firm is set to be sold to Castor Pollux, a Boston financial company, for $500,000 plus future payments of up to $15 million, according to a statement by a court-appointed trustee.

Madoff, 70, pleaded guilty on March 12 to running the biggest investment fraud in Wall Street's history, which prosecutors have said involved as much as $65 billion. His Bernard L. Madoff Investment Securities LLC had a market-making business and an investment advisory business. The fraud took place in the investment arm but the entire operation is still under investigation.
Now, unless a better bid emerges in an auction that is being overseen by a bankruptcy judge, the market-making business will be sold to Castor Pollux, the designated "stalking horse" in the bidding process.

Under the current bid, Castor Pollux would buy the infrastructure and intellectual property of the business. The sale would exclude cash and securities related to the business. Castor Pollux would pay $500,000 right away, then make payments of up to $15 million based on certain criteria through 2012, according to the statement by the court-appointed trustee. The court-appointed trustee Irving Picard, a New York lawyer, noted the difficulty of selling the division.
"We have faced many challenges in this process," he said in a statement. "The initial proceeds reflect that the business has not been operational since December 12 and that significant capital is required to restart operations."

Picard is working with the Securities Investor Protection Corp (SIPC) to recover as much of Madoff's assets as possible to sell or collect money to give to his defrauded customers.
The trustee said this week that so far he has located just more than $1 billion. SIPC was established by Congress in 1970 to maintain a reserve for investors of failed brokerages.

Courtesy of Reuters