Investors lose £200m through land banking

Crooks are using dodgy investment schemes to defraud unwary people.

The City Watchdog is getting tough with illegal land bankers which are fleecing unwary investors with dodgy investment claims. But even as the Financial Services Authority cracks down, crooks are moving on to new scams, according to accountant Grant Thornton, with Olympic ticket fraud expected to grow next year.

This week, after a series of dawn raids on nine premises in Kent and London, five people were arrested, all suspected of being involved in land banking by way of an unauthorised collective investment scheme.

Land banking involves selling investors plots of land on the promise they will soar in value if planning permission is granted. The carrot used is the prospect of a big firm – such as Tesco – being prepared to pay top dollar for the land to build a superstore, for instance.

However, the land sold is often in areas of natural beauty or historical interest, which means it has little chance of being built on because it is unlikely to get planning permission. Anyone who has bought a plot in such circumstances will end up with an worthless white elephant they will probably be unable to sell.

While land banking itself is not illegal, the scams have become a major problem in recent years. Crooks target unsuspecting investors with their promises of the potential for fantastic returns. But in many cases the schemes are just a front for fraud with the land being worthless or, in some cases, not even owned by the fraudsters. Investors have lost £200m through dodgy schemes, the FSA reckons.

Because land banking is not illegal, the FSA can act only when it catches people flogging land through an unauthorised collective investment scheme. But it can refer land bankers to Trading Standards, the Department for Business, Innovation and Skills or even to the police.

Many of the crooks are moving on to other scams, warned David Ingram of Grant Thornton. "The very nature of frauds such as land banking, is that they are constantly reinvented, with the fraudsters devising new scams which play upon current trends and are, as such, quite credible before they are scrutinised."

He said he had recently seen several cases which suggested the culprits were flipping from one style of fraud to another, such as wine investment.

"I believe there will be a big increase in Olympic ticket fraud in the run up to 2012," Ingram warned. "Alternative energy scams are also on the rise, as individuals are encouraged to invest in a particular crop with the promise of significant returns as it can be used for biofuels, government subsidies and to combat rising oil prices."

If you have been contacted by a land banking operation or other unauthorised investment scheme, call the FSA's consumer helpline on 0845 606 1234.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Graduate Recruitment Resourcer

    £20000 per annum + commission: SThree: Sthree have an exciting opportunity for...

    Recruitment Genius: Telesales Executive - OTE £32,000+

    £18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...

    Ashdown Group: Marketing Manager - B2B, Corporate - City, London

    £45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Neil Pavier: Commercial Analyst

    £50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

    Day In a Page

    General Election 2015: The masterminds behind the scenes

    The masterminds behind the election

    How do you get your party leader to embrace a message and then stick to it? By employing these people
    Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

    Machine Gun America

    The amusement park where teenagers go to shoot a huge range of automatic weapons
    The ethics of pet food: Why are we are so selective in how we show animals our love?

    The ethics of pet food

    Why are we are so selective in how we show animals our love?
    How Tansy Davies turned 9/11 into her opera 'Between Worlds'

    How a composer turned 9/11 into her opera 'Between Worlds'

    Tansy Davies makes her operatic debut with a work about the attack on the Twin Towers. Despite the topic, she says it is a life-affirming piece
    11 best bedside tables

    11 best bedside tables

    It could be the first thing you see in the morning, so make it work for you. We find night stands, tables and cabinets to wake up to
    Italy vs England player ratings: Did Andros Townsend's goal see him beat Harry Kane and Wayne Rooney to top marks?

    Italy vs England player ratings

    Did Townsend's goal see him beat Kane and Rooney to top marks?
    Danny Higginbotham: An underdog's tale of making the most of it

    An underdog's tale of making the most of it

    Danny Higginbotham on being let go by Manchester United, annoying Gordon Strachan, utilising his talents to the full at Stoke and plunging into the world of analysis
    Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police

    Steve Bunce: Inside Boxing

    Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police
    No postcode? No vote

    Floating voters

    How living on a houseboat meant I didn't officially 'exist'
    Louis Theroux's affable Englishman routine begins to wear thin

    By Reason of Insanity

    Louis Theroux's affable Englishman routine begins to wear thin
    Power dressing is back – but no shoulderpads!

    Power dressing is back

    But banish all thoughts of Eighties shoulderpads
    Spanish stone-age cave paintings 'under threat' after being re-opened to the public

    Spanish stone-age cave paintings in Altamira 'under threat'

    Caves were re-opened to the public
    'I was the bookies’ favourite to be first to leave the Cabinet'

    Vince Cable interview

    'I was the bookies’ favourite to be first to leave the Cabinet'
    Election 2015: How many of the Government's coalition agreement promises have been kept?

    Promises, promises

    But how many coalition agreement pledges have been kept?
    The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

    The death of a Gaza fisherman

    He built his own reef, and was fatally shot there by an Israeli gunboat