Hotel investment schemes
Cripps have acted for hundreds of investors in hotel investment schemes.
Similar to care home schemes, these schemes investments were marketed to investors by sales agents promising safe and guaranteed high returns (usually in the region of 10% per annum) with a guaranteed buy-back in excess of the purchase price after 5 or 10 years.
All the schemes have failed, many have been found to be fraudulent Ponzi schemes.
As experts in the financial services legislation and professional negligence litigation, Cripps have been able to bring claims on behalf of investors’ against their conveyancing lawyers for damages.
The conveyancers owed obligations to advise the investors on the risks inherent in the schemes these esoteric and speculative hotel schemes including the fraud risk and the risk that the schemes were illegal unregulated collective investment schemes under section 235 of the Financial Services and Markets Act 2002.
None of the investors would have invested in these schemes if the conveyancers had explained the legal risks.
"You would need to get us up off the carpet after this, gobsmacked is the right word. So many thanks are due to the Cripps team that words cannot express the level of gratitude. You are definitely an “A” team."
Private client
Northern Powerhouse Developments
We have acted for hundreds of investors in hotel investment schemes operated by property developers Northern Powerhouse Developments. The developers sold leases of rooms in existing and off-plan hotels.
The scheme was fraudulent and the directors are being investigated by the SFO.
We are bringing claims against our clients’ conveyancing solicitors for failing to advise on the risks particularly in respect to the fraud risk and the unregulated collective investment scheme risk. Many of these cases have successfully settled on confidential terms while others are still progressing.
Merydion Corporation Developments
We are acting for three groups of investors (around 50 in total) who invested in several hotel schemes operated by Merydion.
The schemes promised high annual returns and a guaranteed buy-back. The hotels have all failed and our clients have lost the entirety of their investments.
Many of the claims have settled successfully on confidential terms. The other claims are currently proceeding in the High Court.
The Corran
We acted for a group of (around 20) claimants who invested in an unregulated collective investment scheme, namely a luxury fractional hotel development. The scheme transpired to be a Ponzi fraud causing significant losses. We successfully brought a claim against the solicitors who acted for the investors for failing to advise on the illegal and dubious hallmarks of the scheme. The matter settled successfully on confidential terms.
St Camillus
St Camillus sold leases of rooms in two hotels in Blackpool in return for a high assured rental and a guaranteed buy-back.
The hotels failed and the investors have suffered a complete loss.
We are bringing claims against our clients’ conveyancing solicitors for failing to advise on the risks of these schemes.
El Cupey
We advised a group of 40 claimants in bringing a claim against a well-known firm of solicitors. Our clients invested in a hotel investment project in the Dominican Republic, which transpired to be a fraudulent Ponzi scheme and a precursor to the London Capital Finance scandal. The scheme promised inordinately high returns and was structured in a way that promised interest-free loans and excessively optimistic buyback valuations. However, development of the project never went further than the production of glossy promotional brochures. The scheme has been formally valued at nil..
"They made me feel confident in dealing with an issue that was very much outside my comfort zone and yet were able to make me understand fully exactly what was happening."
Chambers and Partners UK Guide