Venture capital firm misled investors to tune of £9.3m

MANCHESTER-based Newbury Venture Capital has been wound up in the High Court after it was found to have made false and misleading claims to 482 investors who sank £9.3m into residential properties.

The company, in conjunction with the associated companies Hometrader Group and Hometrader (North West) Ltd, operated property investment schemes, including one known as the “Privilege Club”.

After payment of a fee its members were told they were entitled to access a website listing properties for sale ostensibly at discounted prices.

The properties were owned or sourced by the companies. Privilege Club members would pay a deposit of 25% of the purchase price with the balance of 75% to be financed by a buy-to-let mortgage.

After purchase, the 25% deposit was intended to be returned to the investor as a discount on the purchase price.

A separate joint venture scheme operated by Newbury allowed investors to invest in property (owned by one of the companies or the companies’ director) with the intention that the property would be renovated and sold, with the profits to be shared between Newbury Venture Capital Ltd and the investor.
 
The court heard and accepted that the companies and the investment schemes had operated under the broad Hometrader brand and that consequently it had not been possible to disentangle their trading activities.

Confusion was compounded by the companies’ failure to maintain accounting records capable of explaining what funds had been received from which investors and how they had been used.

From the incomplete records which were produced, it appeared that at least 482 investors had invested £9.3m in the joint venture scheme and that there had been at least 228 members of the Privilege Club who had paid membership fees of up to £5,000 each.

The investigation by the insolvency service found that joint venture investors were propmised a profit on their investment of 20-50% within 26 weeks or, if the property was not sold within this timescale, a refund of the initial investment plus £2,500.

No evidence was produced by the companies to show that any investors in any of the schemes had made profits and all investors contacted by the investigators had, in fact, suffered losses having been unable to obtain a refund of their initial investment.

Joint venture investors were told that they would have security in the form of a legal charge over the properties purchased, whereas many of the investors were given no such security.
 
The investors were led to believe that they would be the only ones in relation to each specific joint venture property but the companies received investment funds from multiple investors in relation to the same properties.

Colin Cronin, investigation supervisor, said: “In ordering Newbury Venture Capital into liquidation the court found that the company had operated with both a lack of transparency and a lack of commercial probity, had adopted misleading sales practices and failed to keep proper accounting records.

“When the company was challenged to show examples of investors who had made profits on their investments no such evidence was forthcoming.

“These winding-up proceedings show that The Insolvency Service will take firm action against companies which are found to be operating against the public interest.”

Newbury Venture Capital was incorporated on March 17  2010. The company’s registered office is at Woodhead House, 44-46 Market Street, Hyde, Cheshire.
The company traded from 71-73 Long Street, Middleton, Greater Manchester.

According to Companies House the directors are managing director Brendan Anthony Kiely, 49, director Daniel Joseph Kiely, 73, and Barbara Kahan, 84.