Behind the ads: Slovene hotel fails to check out

Behind the ads: Slovene hotel fails to check out

One arena where the unsuspecting investor can quickly lose a lot of money is in unregulated alternative investments, such as artefacts, wine, foreign property or land.

Essentially, anyone can set up an operation trying to make money out of these investments. Very often the more aggressive firms hire salesmen on hefty commission to flog these investments, and they will make exaggerated claims for their potential returns.

A typical pattern is for the marketing operation to focus exclusively on selling one investment scheme over a period of six to nine months and then turn its attention, wholesale, to another investment scheme. In the worst cases, the first investment scheme will then fail or be dissolved, taking the investors’ money with it, with none of the safety net that the Financial Services Authority provides for authorised investments such as unit trusts and pensions. The marketing firm will then move on to a third scheme, while the second is left to flounder, and so on.

One of the trickiest investments to verify completely is foreign property. The law on purchasing property differs very significantly between countries and there is the ever-present risk of currency fluctuations going against you. Unless you know the intended  area of investment very well, it is also unlikely you will be able to fully appreciate the advantages and disadvantages of a particular location.

One Money Observer reader who contacted us has had a difficult time with an investment in a hotel share scheme in Slovenia. In May 2009 Andrew Durrant purchased a share in the Gora Hotel, in the Podljubelj Valley (also known as the St Anna Valley), near Trzic in the Gorenjska region, through the firm Room to Invest, after reading about it in a flyer in another financial magazine.

Under this type of arrangement, investors buy a fraction of a hotel and share in the income the rooms generate. Durrant took up the offer, which was sold to him though a London firm called Capital Alternatives, and invested £3,900, which was near the minimum accepted. The investment guaranteed an income of 9 per cent for the first year, plus a capital return, and also conferred rights to stay in the room for free for a period every year. Durrant thought that at some stage he would like to use it as a base for skiing. The firm was also marketing a hotel in Marrakesh, Morocco.

After sending off his cheque, Durrant heard nothing for 18 months and then tried to contact the firm to query why he had not been sent any statements or income. He was repeatedly told that the cheque was in the post. However, it was only when Money Observer became involved in the summer of 2011 that he eventually received the certificate of ownership he had asked for, and a cheque for £400.

Unbeknownst to Durrant, the company that had owned Room to Invest, called Capital Ideas, had gone into liquidation and Room to Invest and its other assets had been bought out by some of the management in November 2010.

Then, in November 2011, Durrant was surprised to receive another letter from Capital Alternatives saying that Room to Invest had turned out to be a poor investment and the advisers therefore suggested he switch his money into something else – Agri Capital, a scheme investing in farming land in Sierra Leone, which they claimed was paying out 12 to 13 per cent a year.

The letter worried Durrant because it offered to switch his Room to Invest funds across directly, without his involvement, and asked for a further £1,950 to buy three acres of land in this project, largely based on the fact that it had won Best Alternative Investment Product 2011 at the Overseas Property Professional awards.

Durrant contacted Money Observer again, and we contacted the PR firm working for Capital Alternatives to verify the Slovenian hotel’s existence. It didn’t help that the marketing literature sent to Mr Durrant and appearing on the company’s website consists almost entirely of ‘artist’s impressions’ of what the hotel should eventually look like.

Paul Quade, better known for his position as the one-time personal press officer of the late Robert Maxwell, told us that the Gora Hotel is currently being refurbished and, before it closed for refurbishment, occupancy levels were around the 66 per cent mark. We also managed to track down the real estate agency that had sold the hotel to Capital Ideas.

Jacqueline Stuart, the founder of Slovenia Invest, based in Ljubljana, told us that she had acted for a local businessman, Wilhem Romih, when he sold the hotel to Capital Ideas d.o.o., a Slovene company, in 2008. She says she  ‘currently acts for Capital Ideas in collecting the rent from the tenant. The hotel is complete, and open for business with a tenant in situ’. As Durrant says, it would be interesting to know whether there are other investors still waiting for their income cheques.

The more we dug into the case, the more alarmed we became at the number of companies linked by one or more directors which subsequently were dissolved or frequently had their names changed. Many of these companies are registered at Sophia House, 76-80 City Road, London, EC1Y 2BJ, which appears to offer short-term office space.

Capital Alternatives is the standalone sales and marketing company that markets products on behalf of third parties including Room to Invest and the agriculture scheme Agri Capital, now known as African Land. Capital Alternatives shares two directors – Richard John Lyon Henstock and Renwick Haddow – with Room to Invest and Capital Ideas.

Before it went into administration Capital Ideas had been previously known as Leisure Ventures plc and Hallco 650 plc. The names Monument Property Partners Ltd and Bannerplate Ltd are also associated with it. It was listed on the Alternative Investment Market but delisted in March 2009.

The letter sent to Durrant recommending he switch out of Room to Invest was signed off by Henstock, the former director of Room to Invest. Henstock has had a colourful career in smaller companies quoted on the Alternative Investment Market, including as chief executive of the now defunct Viatrade. Altogether, Henstock has had 34 company director or secretary appointments, including well over a dozen that have failed or been dissolved, such as Eurokey Properties Ltd and Centurion Exploration & Mining.

That’s chicken-feed compared with Haddow, who has had 70 company director or secretary appointments, again with a startlingly high failure rate. His less successful ventures include Capital Ideas plc, Capital Ideas Financial Planning, Charolais Investment Company, Capital Mint, Undervalued Assets, Capital Ideas Investment Management, Arc Property Nominees and Arc Fund Management.

Haddow is also director of another company registered at Sophia House – The Capital Organisation Ltd. David William Waygood, born in November 1950, is also a director of The Capital Organisation Ltd alongside 132 other appointments, of which at least 25 have been dissolved or gone into administration, such as Capital Mint.

And so it goes on –  a tangled web of names that keep cropping up as directors of dozens of smaller companies, many of which had short and chequered histories.

It is not illegal for companies to sell unauthorised investments, but these products are not covered by the Financial Services Authority’s compensation scheme, and the so-called advisers who sell them need have no training. These operations also usually involve quite hard sales tactics and reward those staff well with your money – Capital Alternatives at one stage advertised that it pays its salespeople some 25 per cent commission.     

Capital Alternatives’ hard sell approach has now turned to selling investments in memorabilia. It has referenced data from Fraser’s (a division of Stanley Gibbons, the respected philatelic specialists), that shows the performance of autographs has proven extremely resilient. For example, the price of a signed (undedicated) photograph of Muhammad Ali has increased in value by 442.9 per cent from 1997 to 2008, and is expected to increase even more significantly after his death.

Fraser’s compiles an index (the Fraser’s Rarities Index) of autographs with values that show the average price movement of a number of sportsmen, artists and musicians such as Jim Clarke, George Harrison and Andy Warhol. Over the 10-year period from 1998 to 2008 this index grew from £95,905 to £306,500, an increase of over 200 per cent, the marketing firm said.

Until recently, Capital Alternatives offered what it called ‘MultiAsset Portfolios’, splitting each investment equally among four assets  – gold, fine wine, income-producing property and rare memorabilia. It promised guaranteed returns of 12 per cent over three years, 25 per cent over five years and 60 per cent over 10 years, with ‘no limit on the upside’, claiming that historic performance over five years has been just under 15 per cent a year.

Capital Alternatives also said that those investors who were first in have received payments ranging between 6 and 18 per cent. When we asked about the performance of this portfolio, we were told it is now closed for business.

Many of these investments sound convincing and tell a compelling story. The current big sales drive is for African Land, another brainchild from Robert McKendrick, who has been a director of 20 companies including Trafalgar New Homes plc and London Wall Mining. Rice in Sierra Leone is in short supply and the company says it is introducing Western farming methods which has increased yields per acre. One nice touch to the story is that they have been crushing sea shells to deal with the soil’s acidity, rather than shipping in limestone, which would have been too expensive.

Investors in the land pay a minimum investment of £1,950 for the title to a one-acre field, which includes a £600 cultivation fee. African Land suggests investors will be able to bag capital growth of 50 per cent once the land has been prepared for production and is estimating an annual income of 15 per cent from the harvest. Not long ago, Capital Alternatives was pushing a carbon credit generation scheme in Sierra Leone, leasing plots of one hectare for a term of 45 years, provided by Climate Care Global.

Such alternative investments – fashionable as they are – are completely unregulated. To the uninitiated, for example, the phrase ‘Sippable’ may suggest that an investment has been vetted in some way, but all it actually means is that the asset is not prohibited from being held in a self-invested personal pension by HMRC.

A glossy brochure or an upmarket website provides no indication of the quality of a firm or the investments it sells, and besides, like the salesman’s exorbitant commission, ultimately it will be investors who pay for this promotional fluff.

Alternative investments are usually physical and, that being the case, our advice is to locate them and see for yourself what exactly you are considering buying.

Don't be snared by pushy commission-hungry salesmen

Caveat emptor, or buyer beware, is a warning that is particularly applicable to investment schemes such as those promoted by Capital Alternatives. As companies specialising in alternative investments are not regulated, it is often difficult or impossible to ascertain the quality of assets you are buying. You are taking it all on the basis of a brochure or phone call from a commission-hungry salesman.

If such companies are limited and fail, investors have almost no recourse. In theory if you are owed more than £750 you can demand the winding up of a company, but in practice if the situation has got to that stage, then it is rare to find any money remaining.

The warning signs

• If an investment firm sells only illiquid assets, then there is nothing with which to compare the price and the firm can therefore value the assets as it likes.
• This also means historical performance can be fabricated as there’s no reference to compare it with.
• Be wary if the adviser gives you excuses as to why the assets cannot be visited.
• Check the firm’s Companies House entry, which will often reveal any name changes.
• Look out for poor grammar. It is surprising how often scam communications are written in children’s standard English.
• Has the firm sent you an article from a magazine that recommends the company or its investments? If so, check whether the magazine is published by the same or an associated company.
 • You should also look at the investment websites and who initiates online chats about its products.

And as always

• If it looks too good to be true, it almost certainly will be.
• Check whether or not the adviser is FSA-authorised on its register at www.fsa.gov.uk.


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Comments

Is this just a criminal gang scamming?

My friend invested £54,000 in Room To Invest. He was then told it had failed and was asked for more money to switch to African property. I suggested he say no. The Capital Alternatives team stopped answering letters, and phone calls. And Sophia House is just a PO Box. So when I called round no-one was there. Get money back! You must be kidding. Apparently this was the ninth bust and shift company for Haddow/Henstock duo in a row. All exactly the same. Seems we're up to 12 from above. Tell me anyone ... is my friend likely to see any of his money back ever? Has anyone ... ever. Or is this just a criminal gang scamming people? And what's SFO doing about it? And isn't this the sort of thing that the FCA should be looking at?

Capital Alternatives / Alternative Confidential / Premier Alter

The below is from the Premier Alternatives website, this is the same people that were behind room to invest, Capital Alternatives, Alternative Confidential etc, apparently they pay good commissions for getting clients on board and in addition they also use Alternative Confidential to obtain leads whilst pretending to be a consumer champion. The same names crop up Renwick Haddow, Chris Rathbone, Marcia, Jay Rutland etc.... to my knowledge nothing they have ever offered or are currntly offering have ever paid a return and if any knows differentlty id be intersted to know if it was a aPonzi or not?

We are one of the leading providers of alternative investment products. We have a large number of sales agents globally selling our products which continues to expand. We therefore constantly strive to introduce leading-edge products to allow our clients to offer their investors new and exciting investment opportunities.

All our products offer credible alternatives to an under-performing traditional investment sector and includes award-winners and government supported projects. In addition many of our products are suitable for inclusion in the pension portfolios of the clients of our agents. We provide back office support, marketing and white label services. Additionally we provide sales and product training support as required.

Premier Alternatives pay market-leading commissions and pay commissions weekly.

We are here to ensure that you succeed and are proactive in ensuring you maximise sales in this highly competitive and often confusing market place. As one of the leading providers of alternative investments we have a track record of returns with market-leading products.

The alternative asset market is rapidly growing beyond being a niche market as investors look for alternatives to traditional assets, for diversification and for growth and income.

Capital Alternatives

I can shed further light on that of above as i too have investigated further into the links between Capital Alternatives and indeed the numerous other failed companies, they all seem to be based at Sohia House, City Road and the web now goes as far as to include Jay Rutland into the mix. MY main concern is that they are using a company called Alternative Confidential as a lead generation company portraying a role of the conumser champion yet really obtaining valuable data and personal recordss. On top of that there is Capital Secretarial which is run and owned by Renwick Haddow wife Marcia. Ill let you know what my ivnetsigations bring up on Mr Robert Mckendrick.

Capital Alternatives / Alternative Confidential

Capital Alternatives are run by Renwich Haddow former director of Room to Invest and he has rebradned this company as a consumer champion called Alternative Confidential, imaginitive i know!!!!! be careful very carful.

Capital Alternatives or Alternative Confidential

Are these two linked as if so Alternative Confidential which appears to me to be liker a consumer Champion was once called "Room to invest" the scam that result in a director being struck off and very little left for the investor. Surprised me how they are now the good guys... any one had any experience?

Danger: green investment from Capital Carbon Credits - Investiga

For proof that high-end investment schemes are a magnet for serious criminals, look no further than Mark Ayres.

Before he got involved in a dodgy "green" investment scheme, he did time for conspiracy to murder.

He used to be known as Mark Heaver and got 13 years for paying hit men to kill a rival in a Merseyside turf war between boxing promoters.

That was in 1995, when the judge in the case described the crime as of the "utmost gravity".

After he got out of jail Heavers changed his name to Mark Ayres and founded a company that was paid by the government to deport illegal immigrants.

His International Trading Agency (Overseas Escorts) Limited went into liquidation leaving huge unpaid debts, having paid just £370 towards a tax liability of £427,000, according to the Insolvency Service. In November 2010 Ayres was banned from being a company director for six years, which doesn't seem to have made much of a difference.

http://blogs.mirror.co.uk/investigations/2013/03/danger-green-investment...

Capital Alternatives

Some joke replies probably from their sales vultures.I'd sue their ass at the first opportunity.

Capital Alternatives - African - Agricultural Land Investment

Hello everyone at Money Observer.

Thank you all for providing the info. about Capital Alternatives' 'investment opportunity' in Africa - and thank heaven for the internet providing me with the gateway to access your website.

Following an unsolicited telephone conversation with one of Capital Alternatives' salesmen - today I received their information pack outlining their Award Winning (OPP Awards - 2011 Best Alternative Investment Product) promising a target yield of 15% per annum.

Thanks to the information in your article, I am looking forward to his inevitable follow-up call.

Thank you again, please keep up the good work.

Capital Carbon Credits Ltd

It looks like I was a little bit hasty in announcing the demise of Capital Carbon Credits Ltd. It has changed its name to Reforestation Projects Ltd.

Capital Carbon Credits

It may have changed it's name (although they have not informed me of this) but are we any nearer to seeing a return on our investment in Carbon Credits in Sierra Leone, I have not heard a thing since August 2012, or have I been duped and lost the lot?

Concerned Investors

Has anyone noticed that all references to Capital Carbon Credits Ltd and the carbon projects in Brazil, Sierra Leone and Australia have vanished from the Capital Alternatives website ?

Now we also see that Capital Carbon Credits Ltd has been removed from the Companies House website. No Application to Strike Off and no consultation period. Just removed. That suggests a law enforcement agency is probably involved.

The article above refers to the African Land rice project and the fact that they will sell you a lease for £1,950 per acre. We took a good look at Sierra Leone and we know that a long-term lease on one acre of good quality farmland is .......... wait for it.............£5 per acre per year (and that is top whack). Some land is available at £1.50 per acre. Oh, but that can't be good quality farmland I hear you say. Sorry - yes it is - and it can be independently verified as such by at least two independent sources.

Has anybody actually seen the head lease which is supposed to be in place between African Land and the landowner ? No, of course not. They don't want you to see what they paid for the land. Investors are sub-lessees so they have every right to know what the head lease says. Has anybody actually received a copy of the Land Registry entry which confirms that they genuinely own a sub-lease ? No, of course not. That silly certificate that they like to give out has been drawn up on a computer in the UK and has no legal validity in Sierra Leone.

Oh yes - there has been some activity on the ground. Just enough to make the project look credible. It's not difficult when you've been paid £1,950 for something that's worth £5.

Don't forget - some of these people are the same ones who were involved in Room to Invest and we know how that ended up. This time we have enough evidence to nail the people involved.

We believe that action is now being taken against Capital Carbon Credits Ltd and possibly some of the other companies. We have a full analysis of all of the projects marketed by Capital Alternatives Ltd which will be made available to people who have invested in their projects. We intend to prosecute and are looking for people who want to take action to recover their money. The email address is superanalyst@gmx.com - don't let them get away with it.

Anyone who also invested in Capital Mining, Plantation Asset Management (Palm Oil in Sierra Leone) and Oilbarrel (all offered through Capital Alternatives) is welcome too. Sorry to say that we aren't fans of those either.

If you switched out of any of their projects into other projects then let us know. This is a standard method used to avoid paying refunds.

Carbon credits and the Slovene Hotel

I would advise that if there were two barge poles, they should be put end to end and this investment should not be touched from that distance as well. These are highly speculative investments, and the agents get their commission whether the investments work out or not. So in theory this is good, but only if all the conditions come out OK, which rarely happens. I have lost money on this, and no matter what the hard sell says, never throw good money after bad. You will not even get the word 'sorry' when this fails.
Similarly there is the rice scheme in Sierra Leone, which is an absolute con in my view. The locals are not stupid, on the contrary quite on the ball. Rice is not grown in the area because of alkalinity/acidity problems. Crushing a few sea shells to neutralise the effect may work for a year or two, but what happens after that? The price of sea shells will soar, or they will have to be imported, making production costs go up and up and up.

Investment in Sierra Leone Rice Cultivation Land

Thank you for your timely article. I have been receiving phone calls from the a UK-based company promoting land investment in the Sierra Leone. They also provided a link to a video showing the company African Land (Agri Capital) taking investors around Sierra Leone. It is most convincing. However, the fact that this is an unregulated alternative investment should play a bigger part in deciding whether or not to invest here. Moreover, the use of the Sophia House office address (yet again) is in its own way, a red flag.

African Land

I've been receiving calls asking me to invest in land for rice cultivation in Sierra Leone. Video by African Land of Sierra Leone very convincing. About to cave in and send money, glad I saw this site online. Thanks, it's made me think again. I don't think it's out and out a scam, but the fact that it's an unregulated alternative investment should play a bigger part in my decision. Reading this page has given me a more balanced approach to this investment.

Manager is Citola but Owner is Capital Carbon Credits Ltd

Look carefully at who you have contracted with. It isn't Citola. It is Capital Carbon Credits Ltd.
One of the men in the Australian Carbon Credits video is Mr Chris Macnee of Citola (UK). Why not call him and ask him about their relationship with Capital Alternatives and Capital Carbon Credits ? His number is on the website. You might be surprised by what you are told.
One of the other men in the video is Mr Mark Eyres of Capital Carbon Credits Ltd. Try tracking him down. CCC has no office and does not even have a telephone number (all enquiries go to a Capital Alternatives number).
Why not call your broker at Capital Alternatives and ask what they know about Mr Mark Eyres......... or should it be Mark Ayres ? Type 'Mark Ayres Basingstoke' into Google and see what comes up. Looks like the same guy in the Australian Carbon Credits video to me....
Capital Alternatives know a lot more about Mr Eyres/Ayres than they are telling their investors.....

The manager of this is Citola

The manager of this is Citola an Australian based forestry specialist. From my research they are one of the first companies in Australia to be granted ROE status which allows them to manage these carbon schemes in Australia under the Carbon Farming Initiative. Considering the price of carbon has been set by the government at $23 per tonne and this price is guaranteed with a floor price as well this looks an attractive investment. I have purchased 2 hectares.

Capital Alternatives - Ausralian Carbon Credit Scheme

Hi all, Capital Alternatives contaced me asking me to invest in a carbon credit scheme in Australia. It involves the investor getting a 15 year licence on 1/2 hectare lots (£9,000 each) of land cleared before 1996. The land,which is suposed to be part of the Carbon Farning Initiative in Australia, is to be planted by their partner and there are supposedly 3 ways to profit from the scheme. 1. Sell the carbon credits allocated to each hectare (700 credits) forward - not recommended by them, 2. Agree to sell the credits to the Government in 2014 - supposedly a 30% guaranteed return. The Government will then sell them on to the companies who require them to offset their credit deficits - this is the option they are recommending, and 3. Hold on to the credits and decide yourself when to sell them anytime during the 15 year lease of the land - again, not recemmended. Does anyone know anything about this scheme? I would appreciate any and all comments.

Regards

Eugene

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