24 June 2015
Two Companies Liquidated for over £11.9m Pension Investment Fraud
Two companies in North West England have been liquidated following the discovery and shutdown of their fraudulent pension investment schemes.
The Insolvency Service investigated KJK Investments Ltd and G Loans Ltd and found that they operated what is commonly known as a “pension liberation” scheme. Their clients were encouraged to obtain a loan from G Loans Ltd on the condition that they used their existing pension funds to purchase shares in KJK Investments Ltd.
Investors were led to believe that their investment would increase in value by 6% each year, and that the returns would be sufficient to repay their loan from the proceeds of their pension upon retirement. Over two and a half years, KJK Investments Ltd received £11.9million worth of investments from 209 clients.
The investigation discovered that KJK Investments Ltd was not the commercial lender it claimed to be. A significant portion of the funds invested by the clients were actually lent by KJK Investments on uncommercial terms to G Loans.
This was the only means by which G Loans was able to provide loans to clients. This means that the loans that clients were receiving were actually funded from their own pension funds invested in KJK Investments.
The loans provided by both companies were on terms that allowed interest to be accrued rather than paid. This meant G Loans was not in a position to repay its loans to KJK Investments, and therefore KJK Investments couldn’t pay dividends to clients who had invested. Any remaining funds that were invested in KJK Investments were used to make loans to other associated companies, and pay substantial commissions, fees and salaries to those involved in the companies.
The High Court was satisfied that both companies acted with a lack of commercial integrity in the way in which they marketed the scheme to clients and that the scheme itself was lacking in any property commercial basis. There was no realistic prospect of the clients ever getting back the funds they had invested in KJK Investments Ltd.
Insolvency Service investigation supervisor, Colin Cronin, warned consumers to be cautious with any scheme offering them an easy way of accessing their pensions.
”Pension liberation is being widely promoted as an easy way of gaining early access to pension savings, particularly given the recent changes in pension legislation,“ he said.
”Any schemes offering such benefits should be viewed with caution and independent financial advice should always be sought before entering into such a scheme.”
If you have invested with KJK Investments please contact Slater and Gordon’s expert specialist litigation solicitors.
We can help you to explore any possibility of recovering your lost investment or make a claim for compensation with the Financial Ombudsman Service or Financial Services Compensation Scheme. Call us on freephone 0800 223 0705 or contact us online and we will call you.