News: Banned Businessman is Linked to The Corran Resort

Laugharne Hotel Cost Investors £ Millions

Investors lost around £17 million in The Corran Resort and Spa, East Marsh, Laugharne, Carmarthenshire.  Now, one of the businessmen involved in the resort hotel has been officially linked with financial fraud.

Today, December 19^th 2018, the UK government’s Insolvency Service announced the disqualification of Paul James Manley, who was a director of companies connected with The Corran.

Mr Manley, who has an address in Newquay, Cornwall, has been disqualified from running companies for 12 years, operational from January 1^st 2019.

The Insolvency Service found that he helped one of his clients to defraud creditors of more than £1.65 million.

The ban is not linked with The Corran directly, but with Mr Manley’s County West Commercial Services Ltd and its involvement with Inn Take (UK) Ltd.

The Insolvency Service says: “One of County West Commercial Services’ clients was Inn Take (UK) Ltd, a company which ran pubs on a short-term basis before it went into liquidation in December 2011. Two of its directors, William Dene Lyall and Joseph Harthen, have subsequently been banned from running companies for 8 years and 5 years respectively. On October 27^th 2016, the High Court of Justice ruled in favour of Inn Take’s creditors that parties, including County West Commercial Services, knew about and assisted Inn Take’s intent in defrauding its creditors.”

According to the Insolvency Service, Mr Manley made this admission: “Between 26 April 2010 and 14 February 2011, I caused County West Commercial Services Ltd to be a knowing party to the carrying on of a client’s business with the intent to defraud creditors. As a consequence £1,654,451.53 of client funds were received by a bank account controlled by the company and distributed with no discernible benefit to the client.”

Paul Manley was the company secretary of County West Commercial Services, and one of its two directors, the other being Elzbieta Maria Wernik. The firm, specialising in accounting and auditing activities, is currently being liquidated. Mr Manley is at present a director of two other companies – Simple Skips Ltd and Rigil Corporate Rescue Ltd — both in liquidation. He has 278 former directorships.

The Corran Resort and Spa, formerly known as Hurst House on the Marsh.

At The Corran, Mr Manley was a director of Glendore Real Estate Ltd and Plustocks Management Ltd, companies that replaced Kayboo Ltd and East Marsh Operational Co Ltd, the proprietors and operators respectively of The Corran. He resigned from both successor companies in October 2016. Companies House is now proposing to strike off Glendore Real Estate Ltd.

Plustocks Management continues to operate, under the ownership of James Brown, who controls Corran Resorts Ltd, the latest company set up to own The Corran. The hotel is still open, after HBG Corporate Ltd, the first liquidators when Kayboo failed, allowed a controversial pre-packaged buyback deal for just £150,000.

PDR

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Liquidators Hunt Down Destinations of Corran Cash

Investors’ heavy losses

Liquidators for Kayboo Ltd, the bust company originally set up to develop The Corran Hotel and Spa at Laugharne, Carmarthenshire, have identified 441 unsecured creditors, owed almost £11 million. The total amount lost by investors is reckoned to be around £17 million.

The liquidators’ costly work has been complicated by the financial practices employed by Kayboo.

Robert Dymond and Lisa Hogg, of Sheffield solicitors Wilson Field, reported this summer that there are “various investigation issues that the joint liquidators are currently reviewing, including the pre-packaged sale of the business, the dissemination of funds, potential misselling of the investments, and failure to register the property titles at the Land Registry”.

Investors in The Corran thought they were buying whole hotel rooms or fractions of rooms in a hotel undergoing major expansion, but a proposed development of holiday lodges was refused planning permission and hundreds of investors received nothing at all.

The liquidators say they analysed more than 10 bank accounts of the companies and associated parties. ‘The companies’ refers to Kayboo and sister company East Marsh Operational Co Ltd, which ran the hotel side of the business.

 

“Highly complex and time-consuming task”

“It should be noted that the companies utilised a number of bank accounts that were not held in the companies’ names, which has in turn made the tracing of funds through the companies a highly complex and time-consuming task,” the liquidators reported. “Our analysis revealed numerous intercompany transactions and payments to connected parties and individuals.”

Those connected parties and individuals are not being named yet because “the investigations may lead to legal action and therefore there is limited disclosure of information in order not to prejudice any subsequent legal action”.

So far, the liquidators have traced £12.39 million of investors’ funds coming in to the numerous bank accounts. The figure excludes payments in by cheque because the cheque originators are not shown on bank statements.

The travels of payments from investors included:

• £2.276 million paid to “a corporate entity connected by way of common shareholders and directors”. That entity is now in a creditors’ voluntary liquidation. A director offered the explanation that ‘payments were paid to the company to facilitate the distribution of investor payments on behalf of the company’.
• Another £1.884 million went to another connected corporate entity, also in creditors’ voluntary liquidation. Kayboo’s liquidators submitted a claim to the corporate entity’s liquidators, only to be presented with a counter-claim for £1.391 million for “legitimate commission agreements” outstanding when Kayboo was folded.
• The liquidators also refer to “commission payments made to numerous other parties”.
• £1.768 million went to a non-connected corporate entity also in creditors’ voluntary liquidation. This liquidator of the non-connected entity said the payments were genuine commissions. After considerable reluctance, this entity’s records were provided, but were “not as comprehensive as anticipated, given the level of transactions with the companies”. The next step was to be an analysis of bank accounts to try and determine if the funds received in were paid out to “any connected parties”.
• A particular individual connected to Kayboo received £649,290. That individual proffered an entitlement to sales commission and said they were still owed around £500,000.

The money gushing to commission agents suggests that little was left to actually build the hotel.

Investors in fractions of hotel rooms were also paying for the administration of the companies set up to manage those fractions. The liquidators found £355,000 paid to one entity for administration of the fractional companies formed to manage leases of rooms in The Corran. This seems generous considering that only THREE leases had been registered when Kayboo’s financial frailty resulted in its failure.

Kayboo, of which Peter William Burnett, County West Secretarial Services Ltd and Keith Michael Stiles are directors, made several other payments, detailed in the liquidators’ report, chiefly to entities “now subject to insolvency proceedings themselves”. The task of obtaining any redress for misled investors seems immense.  Apart from the rapid loss of investors’ monies, the liquidators’ forensic work is expensive, ranging from £500 an hour for directors and insolvency practitioners down  to £130 per hour for secretarial and support work.

 

Hotel bought back for £150,000

In October 2016 Glendore Real Estate Ltd, a company incorporated in February 2016, bought the hotel for £150,000 in a ‘pre-packaged’ deal with the original insolvency practitioners, HBG Corporate Ltd of Preston, Lancashire. The directors of Glendore Real Estate Ltd were Keith Stiles, also a director of Kayboo; Paul Manley; and County West Secretarial Services Ltd, of which Mr Manley was a director, and which was also listed as a director of Kayboo. The original directors of Glendore Real Estate have resigned and the sole director at October 11th 2018 was Mr Michael Nicoletti. Plustocks Ltd, which took over the hotel operations from East Marsh Operational Co Ltd, was dissolved in April 2017.

Investors’ anger at Glendore’s bargain purchase was an important factor in their decision to oppose the decisions being made by HBG, and to secure alternative liquidators who are readier to listen to their concerns.  In their view HBG appeared to be treating the insolvency as the failure of a hotel business, not as the failure of an unregulated investment scheme.

 

Money-losing pensions

Many investors put in money via SIPPs, self-invested personal pensions, or SSASes, small self-administered schemes for directors and companies. One of the names linking The Corran with pension investments is Rowanmoor, of Salisbury, Wiltshire, part of the Embark Group since July 2016. The major shareholder in Embark Group is Richard Wohanka, among whose directorships are Scottish Widows Group and several other companies within the Lloyds Banking Group, and other well-known active and defunct financial services institutions.

The name Rowanmoor has also cropped up in connection with fractional property sales by The Resort Group in the Cape Verde Islands, because the fees they charge have perplexed pension investors who are losing money on their illiquid and often nebulous purchases.

 

Who owns The Corran now?

The Corran is at present in the hands of Corran Resorts Ltd, a new company dating from November 23^rd 2017 and with a registered address in Riverside Business Park, Swansea.

The owner of Corran Resorts Ltd now, in October 2018, is a Mr James Brown, born in December 1966 and currently 51 years old.

 

PDR

Action Fraud Didn’t Answer the Phone

Investors in The Corran Resort and Spa, Laugharne, have lost almost £20 million due to opaque and unethical business practices, such as buying non-existent property on land the vendor did not own, and they feel their plight is not recognised and is not being investigated.

The Financial Conduct Authority had a look at Kayboo, the former owner of some of the property at the hotel site near Laugharne, but investors tell me they are unaware of any findings. They are in the dark.

I have tried to ask for an investigation myself, but  without success. Dyfed Powys Police seemed a good starting point, but their website has firm instructions to contact Action Fraud.

That’s easier said than done. I wanted to speak to a person who could give me further directions, not complete an online form that might drop into an abyss, and rang 0300 123 2040, the phone number prominently featured on the Action Fraud website. I phoned three times, and each time got a recorded message “we apologise for not being able to answer your call”, followed by swift disconnection.

So I tried online chat, and after six minutes an agent called ‘Shannon’ asked me to state the issue. After a couple of lines of typing, a message flashed up, “Too many characters, try again”. How do you state a complex problem in a Twitter-length message? I split the message in two, and Shannon typed back to say I should ring the telephone number!

Circles, mazes, no way forward. Investors had already told me that Action Fraud didn’t seem concerned.

I’ll try again, but maybe dodgy dealings and fraud are so entrenched in our financial system that there is no realistic hope of rooting them out.

What a sad state of affairs.

PDR

We have reported on The Corran several times, e.g. https://westwalesnewsreview.wordpress.com/2017/03/11/financial-conduct-authority-has-investigated-corran-company/, https://westwalesnewsreview.wordpress.com/2017/02/26/beware-opaque-investments/, https://westwalesnewsreview.wordpress.com/2017/02/19/corrans-tangled-webintentional-misrepresentation/, https://westwalesnewsreview.wordpress.com/2017/01/27/sunk-investments-drown-in-carmarthenshire-marsh/

Financial Conduct Authority has Investigated Corran Company

Down on the marshes at The Corran Resort and Spa, Laugharne, at the development into which investors – including pension savers — poured over £19 million and lost nearly all of it, the hotel management are advertising multiple job vacancies, for a receptionist, therapists, housekeeping supervisor, spa cleaner, and food and beverage team members.

The recruitment boom comes after the Financial Conduct Authority has investigated former owner Kayboo Ltd.

Keith Stiles, a director of the insolvent Kayboo, bought the hotel through his new company Glendore Real Estate Ltd for £150,000 in a pre-pack deal just before Kayboo went into administration.

The administrators, HBG Corporate, took over on October 18^th 2016 but are now seeking creditors’ permission transfer the steaming hot potato to Robert Dymond and Lisa Hogg of Wilson Field Ltd of Sheffield, for a creditors’ voluntary liquidation.

Liquidation has been held up since November, while the Financial Conduct Authority investigated “various matters surrounding the company”. The results of their investigations have not been revealed.

Not that there is much left to liquidate. The administrators say that “For the period 12 November 2016 to 8 March 2017, the Joint Administrators have received £33 of interest into the estate bank account, held for the benefit of the creditors.”

HBG Corporate clocked up £47,975 in fees — £17,000 of which have been paid — and £33,753.31 in disbursements, totalling £81,728.31. Administering a bust company is an expensive business.

For previous history see, for example, here, here, and here. 

Beware Opaque Investments

Too many cooks spoil the broth. Too many companies in the mix may damage your investment.

We are in an era of low returns, but people saving and investing for pensions want – need — to generate more than 1% or 2% a year, and The Corran hotel scheme at Laugharne, ostensibly offering leases of hotel rooms, or of fractions of hotel rooms, appeared to offer just what they required.

Rowanmoor Trustees Ltd, trustee of The Rowanmoor Pensions Self-Invested Personal Pension Scheme, approved investments in The Corran for pension clients. One of those clients showed me a copy of his ‘Agreement for Sale of Membership of a Company’. Not ‘for sale of a lease’, note.

The agreement was between the ‘Founder Member’, Kayboo Ltd, the company owning some of the property shown in marketing materials for the scheme, and Rowanmoor Trustees Ltd.

Kayboo “wishes to procure the admission of the Purchaser (the pension client) to membership of the Company…”  The ‘Company’ is Hurst House Fractional K Ltd, one of the fractional ownership companies set up to hold the leases. Hurst House is the former name of The Corran.

“The Company has/shall enter into a 999 year lease (“the Term”) granted in accordance with the laws of England and Wales… The Lease entitles the Company to 365 days usage of the Property in each year,” said the agreement.

Further on, the document says “The Company has entered into a lease agreement with the Founder Member.”

Well, that did not apply in most cases because only three leases had been completed when Kayboo and its sister company, hotel management company East Marsh Operational, went into administration in October 2016, four years after the first ‘leases’ were sold to well over 400 investors who paid in some £19.21 million. Around £2.52 million of that was returned to investors – their own capital, not rents from the hotel, according to abbreviated accounts presented to anxious investors in summer 2016.

The complexity of the scheme is clear from the agreement, which describes roles for the ‘Founder Member’ (Kayboo Ltd), the ‘Company’ (in this case Hurst House Fractional K Ltd), the ‘Purchaser’ (the pension client, represented by Rowanmoor Trustees Ltd), and also the ‘Manager’ (East Marsh Operational Company Ltd, supposed to hold a sub-lease from Hurst House Fractional K Ltd).

Rowanmoor Trustees took care to curtail their own liability. The document states that “In the event that the Purchaser is required to provide warranties under the Sub Lease that the liability of Rowanmoor Trustees Ltd shall in all respects be limited to the assets of the Rowanmoor Pensions self invested person pension for the Scheme Member”.

So apart from a risk to its reputation, Rowanmoor Trustees Ltd – Kayboo’s counter party in the agreement – removed liability risk from itself.

Rowanmoor used to market itself as the UK’s largest independent small self-administered scheme provider, but in July 2016 was bought by Embark Group in a private cash transaction. Rowanmoor’s managing director Ian Hammond chose to retire.

A problem for any investor in such an opaque transaction is that no participant will intend to work for nothing. Everyone will seek a slice of the pie, making the advertised returns – varied between sales agents, but around 10% a year for ten years and 12% annually for the next five, and repurchase at 125% of the sale price in years five to 14 and 150% in year 15, even less likely to materialise.

For reasons that are hard to fathom, the administrators – Harbour Business Group – sold The Corran to Glendore Real Estate Ltd, a company of which Keith Stiles, a director of the failed Kayboo, was in January 2017 the sole director. The price? £150,000 – when investors had piled in over £19 million.

The scandal also raises questions about the due diligence – or lack of it – undertaken by pensions providers.

Corran’s Tangled Web:Intentional Misrepresentation?

The strange story of some £16.7 million of lost investments in The Corran Resort and Spa, Laugharne, becomes ever more troubling. Investor Ian Dixon discovered that Kayboo, in administration since October 2016, sold 166 fractions of hotel ‘suites’ on land then owned by EHF Hospitality Ltd and which contained no hotel accommodation.

EHF Hospitality’s property at East House Farm is now with Secured Bridging Finance, the mortgagor. Secured Bridging Finance’s Alan Lister contacted West Wales News Review with the following information:

“Our company, Secured Bridging Finance Ltd (via our company’s wholly owned subsidiary company) owns Barns 3, 4, 5, 6, and 7, East House Farm. From time to time Mr Peter Burnett [director of Kayboo Ltd, East Marsh Operational Company Ltd, Pennaf Premier Group Worldwide Ltd and several other companies] enquired about purchasing our barns, but he failed to follow through.

“Our barns appear from the diagram in your article to be included in the fractional ownership scheme. We were not aware that our barns were included.

“While the five barns continue in our company’s ownership we would not have agreed, had we been asked, to their being included in any such scheme.

“We are concerned that our barns – and perhaps our company – may have been intentionally misrepresented as being under the control of the promoters of the scheme.”

EHF Hospitality’s sole current director is Matthew Roberts, who was declared bankrupt in September 2014. Companies House proposes to strike off EHF Hospitality, which has not submitted any accounts since the year to February 28^th 2011. Former directors of EHF Hospitality are County West Secretarial Services Ltd (February 4^th 2010 to September 23^rd 2013) and Paul Manley, of Newquay, Cornwall, for a single day, February 4^th 2010.

Paul Manley was, from February 29^th 2016 to October 11^th 2016, a director of Glendore Real Estate Ltd, which currently owns The Corran, and of the hotel operating company Plustocks Management Ltd (to October 13^th). These two companies have replaced Kayboo Ltd, which owned the hotel, and East Marsh Operational Ltd, which ran it. East Marsh Operational Ltd is, like Kayboo, in administration.

Kayboo and East Marsh Operational Company director Keith Stiles remains a director of Glendore Real Estate and of Plustocks Management.

So round and round we go. Round and round.

Ian Dixon also reports that Kayboo sold 133 fractions of suites on land owned by Paul Manley, and that Malthouse Farm, the intended third phase of The Corran’s expansion, was not owned by Kayboo or by Kayboo director Peter Burnett, contrary to a statement made on the application for planning permission (which Carmarthenshire County Council rejected because of flooding and environmental risks, and which was also rejected on appeal).

Investors thought they were buying 999-year leases on land, and property on it, in many cases for their pensions.

But most of them were buying nothing at all.

The depressing story is far from finished.

Over-ambitious investment promises fail at Laugharne’s Corran Resort

When bank base rate is 0.25%, investments offering up to 15% a year, and an uplift in capital, look too good to be true.

In the case of the Corran Resort and Spa near Laugharne, Carmarthenshire, the promised returns were too hot, and have evaporated into the air above Carmarthen Bay.

Kayboo Ltd, the company owning the freehold of the resort property — currently a 21-room hotel with a spa – was forced into administration on October 18^th.  Creditors were kicking up a fuss because, they claimed, they had not received the advertised returns, and they could not withdraw their capital.

Comments from unhappy investors  on the website ‘question.com’ include:

“I invested in a glitzy hotel scheme called Corran Resort and Spa. The hotel is still operating in Wales and hundreds of investors have put money in that scheme. I have been asking for buy back of my investment for more than a month but no reply from them.”

“It is not clear to me where all the funds of the investors went.”

“They were paying quarterly till Q3 2015. Then they stopped and I understand they stopped for everyone.”

During the final quarter of 2015, the Corran had to digest Carmarthenshire County Council’s decision to refuse a planning application (reference W/31936) for 200 lodges, a swimming pool and additional restaurant, because of the proposed location in a flood plan, and fears of significant ecological damage. Kayboo said it had a deal agreed with the US-based resorts, hotels and self-catering multinational Wyndham Worldwide to partner it in the lodges venture – but no permission, no well-heeled partner either, and disappointment for Kayboo’s directors Keith Stiles and Peter Burnett.

West Wales News Review’s previous concerns about the investment model were aired here in December 2015,

Investments in the Corran are still being advertised, for example on buytoletinvest.com and quantaxinternational.com. Buytoletinvest.com advertises annual returns of 10% net from years 1 to 10, and 15% between years 11 and 15, with assured resale at 125% of the original investment after year 5, rising to 150%. The promotion claims “Customers can also sell their property on the open market, typically for far greater capital returns.”

Buyers were offered fractions of a room, such as one-twenty-sixth of a ‘boutique suite’ for £18,000 in 2015, as well as whole suites, but the formula relied on high occupancy at very high room rates, such as £340 a night for dinner, bed and breakfast in a top-notch suite at a weekend.

Kayboo’s most recent annual accounts, for the year to March 31^st 2015, show tangible assets of £14.5 million, up from £11.5 million the year before, and net assets of £867,092, more than double the year before. £1.572 million had to be paid to creditors within one year, and £14.167 million more after that — an excessively heavy obligation, especially if the physical assets had been optimistically valued.

The message? Mega returns might occasionally materialise, but they don’t come without mammoth risks.

PDR

Glitzy Investment Scheme Sells Rooms In Laugharne’s Corran Resort….. But Is It Too Good To Last?

So, plans for 200 ‘lodges’ on East Marsh, Laugharne, have been rejected by Carmarthenshire’s planning committee (webcast, December 3rd).

The development, a major expansion of The Corran Resort and Spa, looked very tempting to Cllrs Anthony Jones (Labour, Llandybie) and Kevin Madge (Labour, Garnant) and, citing the potential economic benefits, they both urged the committee to approve the plans, against the recommendation of planning officers.

But the majority of members heeded the warnings about flood risk and environmental damage, and turned the application down.

The Corran lies in a C2 flood risk area. ‘C2’ means it lacks any significant flood defence infrastructure.

The hotel, owned by Keith Stiles and Peter Burnett, looks very smart and comfortable, to judge from the promotional material, and Cllr Madge was highly impressed when he attended a function there. The lodges, plus a swimming pool and a restaurant, would surely be super-stylish, but they would be in a high-risk flood area and would also affect an important Site of Special Scientific Interest, Laugharne-Pendine Burrows, where the Golden Plover overwinters. The development would also have changed the landscape of the Taf and Tywi Estuary Registered Historic Landscape of Outstanding Historic Interest.

Mr Stiles and Mr Burnett announced in May that Wyndham Worldwide, a US-based multinational company with annual revenues of around $5 billion, and already big in the UK holiday self-catering business with multiple brands such as Cottages 4 U, would partner them in the lodges venture.

It would have been interesting to see whether the lodges village would have relied on a financial model which is in place for the existing hotel. Rooms in The Corran Resort and Spa are sold to investors through intermediaries, thereby providing funds for expansion. Property investment firms currently selling space in The Corran include Emerging Developments  SL of Marbella, Spain, which is offering one twenty-sixth of a boutique suite for £18,000 (valuing the full suite pro-rata at £468,000), and is promoting the enticing potential returns from one package as 10% annually for ten years, 12% for the following five years, repurchase at 125% of the sale price in years five to 14, and at 150% in year 15.

The Villa Company is another property investment firm selling fractions of rooms in The Corran, from £18,000 and with returns up to 12%. “Invest with just £18,000 and receive on average £2,300 per year,” says an advert. “After 15 years the developer will buy back the property. Speak to one of our advisors now  to learn more or book a viewing trip to The Corran.”

Selling investments in rooms and part-rooms, whether in hotels, care homes, or student accommodation, has become big business, fuelled by low returns elsewhere and now by the 3 percentage points stamp duty surcharge on conventional buy-to-let properties, announced by chancellor George Osborne last month in the Autumn Spending Review.

Big business – but risky. Investments in rooms and part-rooms – including investments placed in a self-invested personal pension (SIPP) — are not covered by the Financial Services Compensation Scheme, and should be targeted at experienced, affluent investors who can, in theory, afford to suffer a loss.

The Corran is luxurious and pretty pricey by local standards – it has to be, to pay the returns expected by investors. A top-of-the-range suite is £225 per night for bed and breakfast mid week, £340 per night for dinner, bed and breakfast at a weekend. A double room is £175 a night for a mid-week B&B, £290 at the weekend with the addition of dinner.  A snip for an oligarch – and the presence of a helipad signals that The Corran works to appeal to international guests.

Now that the 200 lodges have been rejected, a question comes to mind: without a stream of new property to sell to investors, how easy will it be for The Corran to deliver the projected returns to those who have already invested?

On a wider scale, are the advertised returns from investments in hotel rooms really possible over the long term?

PDR