How to look out for scammers and what legal action should you seek?

For the majority of overseas investors to UK companies, hopefully the investments have proven to be lucrative and or provided you with the ability to meet home office conditions. A small percentage of you however are falling victim to very unscrupulous people.

Here is one case we wish to example were we have assisted an investor and an innocent customer with.

The investor was advised that in order to help him comply with immigration visa rules, he could invest in a business opportunity and become a director and Tier 2 employee of a UK limited company. He would also obtain shares for his investment.  The investment was substantial and had been paid to the directors personal bank account on the directors request. Over a period of time, suspicions arose that the monies invested were not being used for the company. However the investor had no access to company bank accounts and so could not confirm his suspicions and he was kept being promised his shares will be transferred to him. A friend of the investor entered an agreement with the company to sell his goods. The goods were sold but the sale monies were not given back to the customer, but kept by the company . The director offered instead a repayment plan to the customer. No sale monies were ever returned. At this point the investor realised all his suspicions must be real.

The only way forward was to legally reclaim what the investor and customer had lost. The director of the business however placed the company into liquidation. The director thought this would stop any claim for the investment monies or sale proceeds. Normally creditors of a company have to stand in line for anything a company in liquidation can offer them back. Usually there is no monies to offer creditors and they lose everything.

However with our experienced help and legal advices, the claimants have been able to pierce the corporate veil and go after the director personally for the monies owed. This is a very difficult argument to make before a High Court judge. With a lot of time, patience and explanation of what documents and witness evidence was needed, we issued a world wide freezing injunction on the director in his personal capacity and also a full claim for all the monies owed and invested. A High Court judge accepted the directors personal assets should be frozen world wide and judgement against the director in his personal capacity was also granted.

This has been a great relief to the investor and customer. Our ability to give them hope and strength to see this through has been appreciated. Rather than lose everything to an unscrupulous director, they have been able to stop this director from using the corporate structure from evading his liabilities.

We urge any potential investor to instruct lawyers from the beginning to do proper due diligence on who they are investing in and who with. When you are investing hundreds of thousands of pounds or millions of pounds, it is worth having lawyers do everything to advise and protect you before investment is made.

It will not always be possible to bring such an effective claim against a director who has been unscrupulous as detailed above and therefore we urge prevention is a better solution rather than reaction to a loss.

We do carry out due diligence work for overseas investors and would be happy to hear from you if you wish to have more information on your target investment.

We have listed commercial proceedings if you would like to know details of procedures for such litigation.

1, Appoint a solicitor — provide your solicitor with timelines, documents and evidence of the case.

2, Draft and send the letters (pre-litigation) to defendant before making a claim.

3, Decide whether to initiate court proceedings (Issue the Claim), aslo considering whether it needs to make special applications before litigation, such as property freezing orders and property disclosure orders etc.

4, Prepare the prosecution file including claim application form, civil lawsuit (Particulars of Claim)

5, First appearance in court and prepare documents for court hearing.

6, Final Hearing and Judgment

If you do find yourself in a similar situation with an investment you have made as exampled above, please do contact us and we shall be happy to help.