Victims still wait for disclosure on £33M Ecohouse scheme
by Alex Varley-Winter, TTF’s Head of Media Relations & Investigative Reporting
One of the devastating features of investment scams is that they tend to appeal to their victims’ social conscience.
“They’ll have some renewable energy plant in some third world country that will benefit from your investment,” explained pensions expert Lesley Carline, at a TTF Symposium last week.
Scammers often speak to victims like a friend, in a manner that true professionals cannot emulate. Carline compares their bluster to that of Donald Trump: “When pensions people are talking to members about their retirement options we use very complicated words and we are hamstrung by regulation about what we can and can’t say. If you listen to Donald Trump, he used soundbites, he says what you want to hear, he used short sentences and simple words. You may think the guy’s a plonker but he’s very effective. So is your scammer. They research you, they’re friendly, they’re approachable, it always seems to be quite timely when they contact you.”
“Ecohouse” transparency gap?
As TTF’s head of investigative journalism I took a call last week from an investor who was motivated by this kind of ‘social good’ messaging. He’d put savings into a “social housing scheme supposedly affiliated with the Brazilian Government”. However, the plots of land offered for sale in Brazil, it now appears to him, were registered to a different entity than the one advertised. He had lost all of his investment, as had hundreds of other people.
By the caller’s understanding the investors altogether lost £33M and there had been complaints to regulators about the scheme for months before he had put his money in.
It was called Ecohouse, a scheme that was suspended six years ago, since deemed a fraud by Brazilian authorities. So far, these authorities appear to be hot on this scheme, while UK authorities lag behind: “the Brazilian Government intervened against the scheme because it was fraud. Our Government, or the Solicitors Regulation Authority, they treated it as if it was a collapsed scheme” he said.
By his account, investors’ hopes had briefly alighted on a dogged and ‘brilliant’ Met Police officer, before being held in suspense. Detective Richard Kirk had travelled around the country, interviewing victims.
In June 2017, Kirk wrote to the victims’ group to explain that he had obtained: “copies of all the receipts that Ecohouse held in respect of their expenditure. These will enable me to give a much more detailed report into where and when your funds were dissipated. They also have bank ledgers that give me more information than I have received previously. These show the destination of some of the funds, especially to overseas accounts. This information will potentially save me months of work waiting for information from abroad.”
Investors understandably hoped they were about to get transparency on where their money had gone — but they are still waiting. Kirk moved to a different police force and the case was transferred to another experienced officer. More than three years on an enduring cloud of mystery is hanging over this case, which has not been resolved during the pandemic. Gallingly, my caller was aware of an attempted suicide among the investors.
The victims of this scam were drawn to something called ‘Ecohouse’ because they had a social conscience, and it has now been more than six years since the scheme was shut down. Will they ever find out where their money went?
New powers to 'refuse dodgy transfers' due in April
It may surprise some people to know that a pension provider currently has no power under law to block a transfer of somebody’s life savings into a scheme that they can see may not be safe.
The industry is clawing back some oversight of this, according to Margaret Snowdon, chair of the Pension Scams Industry Group (PSIG), who spoke at an event we hosted last week.
“We tried very hard to get a change through the Pension Schemes Bill“, Snowdon explained, “because one of the great ironies is that trustees and providers can look at a proposed transfer and know that it’s very likely to be a scam and can do nothing about it because there’s a very strong legal guard in the statutory right to transfer. People are able to transfer to a scam.
“We argued to give trustees the power to refuse dodgy transfers and we had cross-party agreement to it but for various reasons the amendment was voted down.
“But what we did manage to do, was, we managed to get the Pensions Minister to agree to introduce regulations that would have the same effect. … By April next year we should have a set of red flags that are written in regulation. If they are seen the transfer does not have a statutory right and can be legitimately refused.
“We are working with DWP now to draft what would be those red and what will be amber flags now as well for the less serious problems. It’s a huge step, an absolutely huge step,” she said.
Pete Glancy, of Scottish Widows, called for a futher expansion of the ‘safe environment’ around pensions by using a system similar to that used for Master Trusts. Under his plan a scheme would need a kite mark of trustworthiness before any pension savings could be transferred into it. TTF has produced a white paper outlining how this could work.
Calls for scrutiny on HMRC and Financial Advisers
At our Symposium last week, Snowdon added that PSIG has: “proposed a change to the Finance Act to stop the ludicrous practice of HMRC charging tax penalties on victims. I think it’s one of the worst things … not only do the individual victims have to pay tax but the schemes that took the money in the first place have to pay tax.”
TTF’s founder Andy Agathangelou is also horrified by this practice: “HMRC is profiting from the proceeds of crime”, when they pursue scam victims for tax on pilfered money, he emphasised, pointing out that this behaviour is not remotely in line with HMRC’s charter.
Mills commented on the new red and amber flag system that is projected for April. “We can probably all accept that it’s people’s own money, and if they really, really, want to do something they should be allowed to do it … but nobody really really wants to have that money stolen or to be scammed. … We need to make it so that if it is a very dubious place that that money is to be transferred to then that transfer can be refused or slowed down while further work takes place. … One of the tricks the scammers pull is to give a sense of urgency … If we could find a way to put a month’s delay into that process so that somebody has a chance to take proper advice, that might be a real sense of progress.”
Can politicians probe “secret commissions” to IFAs?
Another striking suggestion from last week’s Sympisium came from Peter O’Donnell, who lost his house to an investment scam in the mid-00’s and has since founded a firm that partly specialises in mis-selling and investment scams, called New South Law.
O’Donnell said that financial advisers do not currently need to be transparent if they have been paid a commission to recommend a particular financial product or investment to clients. He said he is working on the fall-out of such a scheme at the moment. It “took in 1.6 billion euros from more than 6000 investors. … I’ve had people who invested between 25,000 and 750,000. The 750,000 person told me ‘my biggest problem is I don’t know how to tell my wife’. … The driving force for this is secret commissions [to financial advisers who recommended the scheme].
“I would really love for politicians to look into the payment of secret commissions between 20% to 50% … If someone’s recommending an investment and getting so much money, there really should be a way of identifying and stopping that.”
Press Timeline of relevant articles:
25 Nov 2020 – FSCS seeks extra £92m in interim levy by Daniela Esnerova for MoneyMarketing
25 Nov 2020 – Trump Administration Targets Banks Divesting From Fossil Fuels In New Anti-Climate Rule by Sharon Kelly for DeSmogBlog
23 Nov 2020 – Bank of England policymaker warns of ‘pandemic hangovers’, as private sector shrinks – as it happened by Graeme Wearden for the Guardian
16 Nov 2020 – Bank of England ‘failing’ on climate change reform by Philip Aldrick for the Times
16 Nov 2020 – Fed moves closer to joining global peers in climate-change fight by Ann Saphir for Reuters
14 Nov 2020 – Fraudsters will exploit Covid vaccine to con vulnerable, warns National Crime Agency by Charles Hymas for Telegraph
09 Nov 2020 – Ombudsman inundated with complaints about loans by Katherine Griffiths for the Times
09 Nov 2020 – Spike in personal pension cases at ombudsman by Rachel Mortimer for FT Adviser
09 Nov 2020 – Regulator: Climate risk ‘looms even larger’ than pandemic by Avery Ellfeldt for ClimateWire (U.S.)
08 Nov 2020 – How financial services watchdog has reacted to UK consumer worries in Covid by Hilary Osborne for Guardian
08 Nov 2020 – Five predictions for banking regulation in a Biden presidency by Jon Hill for Law 360
05 Nov 2020 – Martin Lewis warns of ‘epidemic of scams’ after ICU nurse loses £8,000 by Scott Edwards for Wales Online
05 Nov 2020 –FCA bans adviser trio jailed for sex offences by Rachel Mortimer for FT Adviser
03 Nov 2020 – ‘We haven’t received a penny’: Business interruption insurance row intensifies as owners fear payout delays, by Elizabeth Anderson for iNews
03 Nov 2020 – Aviva’s shares fiasco highlights weakness of the city watchdog by Patrick Hosking for the Times
02 Nov 2020 – Banks have done little to help the country through the pandemic, so why is the government rewarding them? by Simon Youel for the Independent
29 Oct 2020 – Calls to sack Malta financial regulator CEO by Cristian Angeloni for International Adviser
27 Oct 2020 – U.S. group urges Biden to use financial regulation to control climate change by Valerie Volcovici for Reuters
27 Oct 2020 – ‘Impact startups’ continue to raise funding during the pandemic despite difficulties faced by the wider tech startup sector by Sebastian Klovig Skelton for Computer Weekly
26 Oct 2020 – Why there must be thorough probe of claims made by Bank Signature Forgery Campaign – Greg Wright for the Yorkshire Post
26 Oct 2020 – Critics demand action over ‘flawed’ British Banking Resolution Service by James Hurley for the Times
24 Oct 2020 – Banks look to debt collectors to recover bounce back loans by Nicholas Megaw, Stephen Morris and Daniel Thomas for the FT
23 Oct 2020 – Bank Signature Forgery (film) by Nicholas Wilson for Corruption UK
22 Oct 2020 – UK fraud agency suffers string of senior departures by Kate Beioley for the FT
22 Oct 2020 – HSBC froze £1.5bn of customers’ cash in ‘dormant accounts’ – report by Kalyeena Makortoff & Juliette Garside for the Guardian
22 Oct 2020 – Work harder to find fraud, watchdog tells auditors by James Hurley for the Times
17 Oct 2020 – MPs pursue claims bank signatures were faked on court papers by Rupert Jones for the Guardian
16 Oct 2020 – We need universal digital ad transparency now by Laura Edelson, Erika Franklin Fowler and Jason Chuang for TechCrunch
15 Oct 2020 – Rising COVID-19 Rates Send NatWest Misselling Trial To Video by Bonnie Eslinger for Law 360
15 Oct 2020 – MPs Push Agencies to Act on Forged Signature Claims by Law360
13 Oct 2020 – Mark Carney says banks should link executive pay to Paris climate goals by Kalyeena Makortoff for the Guardian
12 Oct 2020 ‘It is time to reboot the competition regime for the modern, digital age’ by David Wighton, The Times
12 Oct 2020 – Gina Miller blasts FCA complaints scheme changes ‘unfair, immoral and illegal’ by Cristian Angeloni for Portfolio Adviser
12 Oct 2020 – MPs call for input on Pension Schemes Bill by James Phillips for Professional Pensions
10 Oct 2020 – Give pension trustees power to fight scammers, say MPs by Kenza Bryan for the Times
08 Oct 2020 – Freedom to transfer pensions should be stripped where scams are suspected, industry experts urge by Jessica Beard for the Telegraph
08 Oct 2020 – Planned pensions shake-up passes first Commons hurdle by Law 360
08 Oct 2020 – WPC chairman says transfer rules ‘must be changed’ by Amy Austin for FT Adviser
07 Oct 2020 – Tech giants share blame for pension scams, MPs told by Law 360
06 Oct 2020 – FCA opens 85 cases over pension scam concerns by Amy Austin for FT Adviser
03 Oct 2020 – Record number of savers fall victim to investment fraud as scam adverts stay on Google by Andrew Ellson for The Times
02 Oct 2020 – A New Theory of Soil by Alex Varley-Winter for SustainAct
11 Sep 2020 – The Hut Group facing fresh questions over governance after it reveals one of country’s best-known private equity barons to oversee pay policy by Lucy White for the Daily Mail
10 Sep 2020 London Capital and Finance investors relieved after court ruling opens route to compensation claims by Ben Chapman for the Independent
08 Sep 2020 – Change in law needed to stop scams, says Timms, by Amy Austin for FT Adviser
05 Sep 2020 Crime Agency under fire over bank signature forgery by Andy Verity for BBC
24 Aug 2020 – Financial Conduct Authority rushes to minimise compensation for its failings by James Hurley for The Times
04 Aug 2020 – Have your say: Will the WPC’s inquiry into the impact of pension freedoms be too overshadowed by Covid-19 impacts? by Professional Pensions
03 Aug 2020 – ‘“I’m 39, have lost my job and am in debt – can I unlock my £18k pension?” … DON’T do it!’‘ by Steve Webb for This is Money
01 Aug 2020 – ‘I lost £2.3m after I was conned into transferring my pension’ by Jessica Beard for the Telegraph
31 Jul 2020 ‘Common sense’ prevails as pension freedom withdrawals fall 17% — But drop is expected to be ‘a short-term blip’ by Robbie Lawther for International Adviser
31 Jul 2020 – HMRC figures show plunging pension freedom withdrawals by Hope William-Smith for Professional Adviser
28 Jul 2020 – MPs launch inquiry into pension scams by Tom Kelly for Daily Mail ; UK Pension Scams Under Scrutiny After 2015 Relaxation in Rules by Reuters & MPs launch wide-ranging pension scams probe by Justin Cash for MoneyMarketing
24 Jul 2020 – US business groups seek steps to stamp out online fraud by Leonie Barrie for Just Style
21 Jul 2020 Londongrad Calling: Is Europe’s Laundromat the ‘New Normal’? by Mark Conrad
17 Jul 2020 – Year ‘dominated’ by FCA shortcomings as 205 complaints made, by Rachel Mortimer for FT Adviser
29 Jun 2020 – MPs Pushed to Launch Pension Scam Inquiry by Amy Austin for FT Adviser & Lawmakers Urged To Open Inquiry Into Pension Scams by Martin Croucher for Law 360
14 May 2020 – Under Rising Pressure on Climate, JP Morgan Rejects Shareholders’ Calls to Disclose Carbon Footprint by Alex Varley-WInter for DeSmog
11 May 2020 – FCA urged to build public trust in independent reviews by Rachel Mortimer for FT Adviser
30 Apr 2020 – FCA was warned three years ago about mini-bond firm Blackmore Bond, which collapsed with £45m of savers’ money by Ben Chapman for the Independent
15 Apr 2020 – Met police lose two thirds of finance officers as fraud soars by Ben Ellery for the Times
25 Mar 2020 – Care Home Wants NatWest Docs in Misselling Fight by Law360
20 Mar 2020 – Connaught review delayed as Covid-19 concerns loom by Rachel Mortimer in FT Adviser
07 Jan 2020 – It’s time to keep your pensions promise, Boris! The PM pledged to help these victims of a huge scam FOUR years ago – and they’re still waiting by Tom Kelly for the Daily Mail.
29 Dec 2019 – ‘Lambs to the slaughter – tens of thousands of savers have lost up to £10billion in rogue pensions schemes sanctioned by the government… and now the taxman is threatening VICTIMS with fines’, by Tom Kelly for the Daily Mail
15 Aug 2019 – Victims hit by Connaught’s collapse blast City watchdog for ‘whitewashing’ independent review by Lucy White for Daily Mail
05 Jul 2019 Government-owned bank ‘forging signatures’ in repossession cases by Andy Verity for BBC
18 Jun 2019 – “I came home to find my house had been stolen!” by Angela Ellis-Jones for the Daily Mail
20 Jun 2019 – FCA orders review of its handling of Connaught collapse by Rachel Mortimer for FT Adviser
29 Mar 2019 – MPs call for inquiry into alleged forgery of signatures by Andy Verity for BBC
15 Feb 2017 – RBS accused of fraud & forgery by customers and ex-employee by Andrew Hosken for The World Tonight BBC Radio 4
22 Dec 2016 – Solicitors suspended for roles in collapsed Brazilian investment scheme by Nick Hilborne for Legal Futures
23 Sep 2016 – Which? makes scams super-complaint by Adam French for Which?