Two sentenced in first ever ‘land banking’ fraud trial
By Bridging Loan Directory -
Two men have today been sentenced at Isleworth Crown Court in what is thought to be the first ever trial for ‘land banking’ fraud. Omar Eshpari and Stefan Mitchell secured at least £3m from their victims between April 2008 and October 2009.
Luke Dockwray, prosecutor for the CPS central fraud division, said:
“These fraudsters were purporting to sell individual plots of land as good investments. In reality, investors were buying grossly overpriced land, often marked up by at least 1000%. Far from being ripe for development, one site in Halifax was on a 40 degree slope with Tree Preservation Orders and a Japanese Knotweed problem. All the land consisted of undivided plots in fields; only a miracle would produce a development opportunity, let alone a profit.
“Investors were drawn in through a variety of sales techniques, including cold calls and impressive-looking brochures. They were given general historic truths; that the price of land like house prices always goes up. They were fed tales of local housing shortages and were even told there had been development interest from supermarket and hotel chains. There was no such interest and the defendants did nothing to get planning permission or enhance the value of the land, and never intended to. In this way, they were conspiring to defraud potential victims by fraudulently misrepresenting the land as a good investment.
“Some £3 million was secured from investors as part of this bare-faced fraud. Today’s conviction is a reminder that no matter what the nature of the fraud, if you dishonestly set out to part people from their money, you risk prosecution in the criminal courts. I hope it may also be a reminder to the public to be wary of offers of investments made to them in cold calls.”
Investors were offered grossly overpriced freehold plots of land, some of which the defendants had the right to sell, some of which they did not. Plots of land were marketed and sold in Kent, London, Suffolk, Surrey and West Yorkshire. On one site near Folkestone the defendants had been told by their own solicitors that there was no likelihood of getting planning permission but sold it as a “superb development opportunity”.
The prosecution case was that the sites were being sold in plots to numerous investors who were all told that the land was a good investment opportunity. In reality this was a “get rich quick” scheme for the defendants. The investors were left with a small plot of worthless land surrounded by other plots and with no scheme in place to sell it on.
The CPS is working with the City of London Police to secure confiscation orders to deprive the defendants of the proceeds of their crime, and so far as is possible to compensate the investors who have lost their money.
Omar Eshpari and Stefan Mitchell were convicted on five counts of conspiracy to defraud, contrary to the common law. De’rial White was acquitted of five counts of conspiracy to defraud, contrary to the common law. Dean Straker was also acquitted of two counts, with the jury hung on the remaining three.