Property gang fleeced £65m from investors

Jan 16 2009 by Hilary Clixby, The Journal

FIVE former company directors have admitted their part in an elaborate North East-based property scam which defrauded investors out of millions.

John Potts, Peter Gosling, Natalie Laverick, Eric Armstrong and Peter Graham were arrested after a four-year investigation into the now wound-up Practical Property Portfolio business based on Gateshead’s Team Valley Trading Estate.

The Serious Fraud Office last night said their offences over a two-year period involved an estimated £80m of investors’ money.

All five of those charged had faced a four-month trial at Newcastle Crown Court charged with conspiracy to defraud potential and actual investors between January 2001 and March 2003 when PPP was closed down.

But after extensive legal discussions, 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. 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 – mainly in Newcastle’s West End, Gateshead and Sunderland – had not been renovated or tenanted and were sometimes derelict or even burnt-out shells.

Many investors are understood to have 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 is understood to have attracted more than 2,000 investors, many of whom lost significant sums – some in six figures and some of whom lost their life savings.

At the time the company was wound up, investor claims totalled £16m – but a spokesman for the Serious Fraud Office said last night it was estimated at the time the liquidator intervened there was almost £65m worth of investors’ funds providing no genuine return.

PPP and its spin-off firms are said to have used adverts, brochures and a slick sales pitch to persuade investors to part with their money. The company and its associated companies were closed down by the former Department for Trade and Industry after a High Court petition in Leeds.

The prosecutions were brought by the SFO, who carried out the four-year investigation in conjunction with Northumbria Police Economic Crime Unit.

The conspiracy count relates to defrauding both potential and actual investors in the buy-to-let property schemes operated and managed by Practical Portfolio Ltd, PPP Ltd and Napeer Holdings Ltd, together referred to as PPP.

It involves causing or permitting false or misleading statements to be made about the quality and location of property sourced or purchased by PPP for sale to investors and the carrying out of and completion of refurbishment work on property sold.

A spokesman for the SFO said last night: “John Potts, Peter Gosling, Natalie Laverick, Peter Graham and Eric Armstrong have all pleaded guilty to fraud offences.

“They relate to their activities as directors of the PPP property investment companies. The offences all took place between 2001 and 2003 and involved an estimated £80m of investor monies.

“Investor claims totalled £16m when the company was wound up in 2003. However, it is thought that this figure is unrepresentative of the real total loss.

“It is estimated that at the time the liquidator intervened, there was almost £65m worth of investors’ funds providing no genuine return.”

Potts, Gosling, Laverick, Armstrong and Graham are due to be sentenced at a date yet to be set in March. Bail was renewed in each case.