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Six land banking scammers banned as directors for £70 million fraud

By CreditMan Tuesday, April 2, 2013

Baljinder Chohan, a former director of UKLI Ltd, has been handed a 12-year director disqualification order at the High Court in London for his role in a £70 million land-banking scam, following investigations by the Insolvency Service.

Mr Chohan’s disqualification, which starts on 16 April 2013, brings to six the number of directors of UKLI Ltd - a landbanking company which vastly inflated the value of land it sold to people - who have been disqualified for a total of 41 years since the company’s insolvency in 2010.

The disqualifications mean that the directors are all barred from being company directors for the duration of their individual bans.

The investigation found that UKLI was involved in running a land banking scheme which resulted in land being purchased by the company, sub divided into small plots and sold to individual investors. They were typically told the land would be collectively marketed to the relevant local authority for re-zoning, and/or planning permission for housing, and, that this would result in a significant uplift in their investment.

In reality there was no chance of that and when the company went into liquidation, it had a deficiency to creditors of over £70 million.

The director disqualifications started in 2010, when five of the defendants offered undertakings not to act as directors for a total of 29 years. Mr Chohan chose to defend the court action brought by the Insolvency Service, but finally lost the case and was disqualified on 25 March 2013.

The investigations found that Mr Chohan acted as a director of UKLI despite him not being formally appointed. He caused UKLI to advance unsecured loans exceeding £12 million to other businesses owned or controlled by, or connected with him. He also made dividend payments of over £1 million to himself which the company could not afford.

The court concluded that the scheme operated by UKLI was a collective investment scheme, in the manner in which it was in fact promoted and operated, and that Mr Chohan was well aware of this. He also knew that the scheme was not regulated by the FSA as it was required to be by law.

Commenting on the disqualifications, Claire Entwistle Director of Company Investigations said:

“The substantial period of this disqualification reflects the serious nature of this case which has resulted in a substantial loss and financial hardship to many individual investors

The Insolvency Service will continue to take action against those involved in such schemes to protect the public in the future. Potential investors should be aware that if an investment seems too good to be true, it probably is.”