Victim of land banking scam hits out at legal system

This just goes to show Its happening around the world.

A retired teacher from the Isle of Wight who fell victim to land banking scams has gone public to hit out at the legal system. He says it allowed tricksters to keep more than half a million pounds he lost as a result of investing in plots of land, believing salesmen’s claims that sites were ripe for development.

Philip Fryer, 70, bought land at Cheshunt in Hertfordshire, marketed by Complete Building Systems Limited, which also sold plots in Norwich and King’s Lynn.

The company was wound up in the High Court last December, with Insolvency Service investigator Chris Mayhew condemning it as a ‘rogue’ business.

He said: ‘Some investors were falsely told that unless they bought more plots, their existing plots would not be developed and would become recreational plots such as flower beds.’ They would then face bills for maintenance.

But by then, Fryer had already been approached by salesmen from a second company, Gilbert Webb Estates Limited.

It lied about being regulated by the Financial Conduct Authority and told investors they could expect short-term gains of up to 400 per cent. It has also been wound up after a High Court hearing.

The judge Mr Registrar Baister said: ‘There was no genuine prospect of developing the land.’ Mayhew, of the Insolvency Service, added: ‘This was a bare-faced scam on pensioners who have lost out financially and otherwise, unlike those behind the company who peddled near worthless plots of land to the public for investment.’

The Insolvency Service has now won two more court cases, after tracing the land deals back to a pair of Liverpool-based companies, JDG Properties and Tithebarn Trading. The first firm was the actual owner of the land sold by Gilbert Webb Estates, while the second firm encouraged sales by appearing to be an interested property developer.

Both companies were run by Merseyside businessman Jon Farley Elster, who admitted in court that getting planning consent for the Cheshunt land would be like ‘winning the lottery’.

Ordering both his businesses to be shut down, the judge Ms Registrar Barber condemned some of Elster’s evidence as ‘frankly incredible’, adding that he was ‘playing a part in a dishonest scheme which made a short-term gain for him and his companies at the expense of the public’.

One man deeply involved in the scams, Carl Ballard, has been banned from acting as a company director for the next 14 years. Although evidence of fraudulent claims was given in court, the Insolvency Service has no power to prosecute or to order compensation payments.

The Mail on Sunday reported last week that the private firm running the Action Fraud hotline for the Government had collapsed, leaving only a few staff to man telephones and its website. Local police around the country frequently refuse to accept fraud complaints, referring victims to Action Fraud instead.

Fryer is left feeling a frustrated victim facing massive losses. He said: ‘Action Fraud is a joke. It should be called Inertia Fraud.’

After he gave the police a wealth of records, correspondence and bank details about the scams, nothing was done.

‘They could have so easily gone in there and cleaned it up, and possibly got hold of some of our money before it was laundered or sent abroad. There are seven or eight of us [victims] involved in this. It’s probably about £1.5 million or £2 million that’s been stolen from us.

‘I suppose that because of a lack of funding, only a very small proportion of cases are followed up.’

These companys have close links the the other land banking Scam company operating in Asia for more info click here.

First reported by the website.

One comment

  1. land Banking Scam Now in Australia.
    Property development can be a dirty business, particularly when it comes to land-banking, which is the speciality of Australia’s largest developers.

    Land-banking involves the speculative buying of large parcels of land that are currently unsuitable for development in the hope of future development potential. But hope alone is not a business strategy. How can land banking be so routinely successful for developers in Australia?

    One argument is that successful land-banking comes from political favours in terms of rezoning and public provision of infrastructure. These favours provide substantial value gains to landowners at no cost to themselves. While in certain cases this account appears to have some merit, there has been no systematic evidence that rezoning favours the politically connected.

    Until now.

    My new working paper, co-authored with Professor Paul Frijters, can be download here. In it we report a systematic and controlled study of the role of relationship networks in land rezoning decisions in Queensland.

    The basic result is this: How well-connected you are determines how successful you will be in getting your land rezoned for higher value uses. In Queensland $410million worth of additional development rights were given to mates in just our sample of decisions.

    In the study we use sample of planning decisions and landowners involving a total area of 12,676Ha, made by one State authority, the Urban Land Development Authority (ULDA), which took planning powers away from local councils with the intention to increase the scale and speed of development in the rezoned areas. Throughout its time the ULDA was no stranger to accusations of bias, with the Local Government Association of Queensland arguing the government is “playing politics and favouring developers.”

    In order to establish how well-connected both rezoned and non-rezoned landowners were, we trawled through a wide range of data on political donations, lobbyists and their clients, industry groups memberships, politicians and their former employers, relationships of ULDA board members, and landowner’s corporate records, in order to construct a relationship network.

    We also compiled historical sales data to estimate that this series of rezoning decisions increased the value of the rezoned land by $710 million.

    Our main finding however, is that well-connected landowners owned 75% of the rezoned land, but only 12% of comparable land immediately outside the rezoning boundaries, indicating that these decisions were primarily driven by the relationship networks of the landowners, rather than any technical assessment of efficient and appropriate locations for urban expansion.

    Political favours in the property industry were found to be much more about being part of the entrenched well-connected political class, whose tight-knit mutual relationships support implicit favouritism, than about visible activities such as making political donations.

    These well-connected landowners made $410 million in profit from the rezoning decision, at the expense of the public at large who had the option to instead sell those additional development rights. The data tells the story that connected property developers bought land unsuitable for development on the urban fringe, then successfully lobbied State politicians and bureaucrats through their relationship networks to rezone areas where they had bought properties, wrong-footing both councils and other property developers. This process of influence took 7 years on average.

    Scaling up our results suggests that the ‘back-scratching’ rezoning game has probably cost the general public many billions of dollars in Queensland in the last few decades.

    We propose a number of technical solutions to this great game of political favouritism in land rezoning. The size of the gains to rezoning can be diminished by increasing land taxes. Development rights could instead be sold to land owners, perhaps through local auction processes, or the value gains recovered through a betterment tax. Even a local democratic system for voting on new areas for urban expansion would counterbalance vested interests with the interests of the public more broadly.

    One unfortunate lesson however, is that the same relationship networks that allow favouritism to thrive in rezoning decisions will obstruct any systematic reform of rezoning processes.

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