Fraud by developer against a new build

mamz001

Hello All,


Hoping someone can give me some advice the context is a bit long so please bear with me.

I put down a deposit for a new build flat near the end of last year; it was a 40% deposit upon exchange which was done Dec 2016. The works were meant to start Feb 2017 but never did due to some existing issue. However in May 2017, my solicitor told me the developer has stopped responding and no works has started the developer's solicitor told my solicitor that the developer has stopped responding to them too. My solicitor advised that I am a victim of money laundering at the beginning of June.

I found out about all this early June, since then I have come across 10 other victims who have all paid a 60% deposit amount. All funds were transferred to the developer's solicitor by our solicitor, the developer's solicitor released all the funds to his client, my solicitor has reported the developer's solicitor to the SRA, as that is against the accounting law, they should have never released all the funds to the developer especially when no works has commenced.
The developer is nowhere to be found and may have fled the country with the money, since I found out about this fraud, myself and the 10 other victims have appointed a litigation solicitor (Harry). Harry managed to track down that the developer's bank is with Barclays and asked Barclays for a statement for all the transaction made in that account. Barclays confirmed the account is closed but they can help answer Harry's question if he gives all our names to the bank, Harry did this yesterday.

My question is, is there a chance Barclays can compensate us since the fraudulent money was all transferred to one of their accounts? Harry has asked them the question too if Barclays can compensate, but I thought let me try to investigate a bit myself. Any help greatly appreciated at this difficult time and happy to answer any questions.

AdrianC

mamz001 wrote: »

I put down a deposit for a new build flat near the end of last year; it was a 40% deposit upon exchange which was done Dec 2016. The works were meant to start Feb 2017 but never did due to some existing issue. However in May 2017, my solicitor told me the developer has stopped responding and no works has started the developer's solicitor told my solicitor that the developer has stopped responding to them too.

I presume you know the name of the limited company you paid your deposit to? You need to find out exactly what the legal situation is. If administrators have been appointed, then you are a creditor alongside other creditors, and you need to work with them.

My solicitor advised that I am a victim of money laundering at the beginning of June.

I doubt that's what he really said. Chinese whispers don't help.

I found out about all this early June, since then I have come across 10 other victims who have all paid a 60% deposit amount.

You said 40% a minute ago.

The developer is nowhere to be found and may have fled the country with the money

Did you pay your deposit to the developer as an individual, or to a limited company?

My question is, is there a chance Barclays can compensate us since the fraudulent money was all transferred to one of their accounts?

Very unlikely. You voluntarily paid a substantial %age deposit for a property that was still no more than a drawing and planning permission. That is a very risky and unwise thing to do, and absolutely not something in the normal run of property purchasing. A holding deposit, yes. A 10% deposit at exchange, close to completion, yes. A substantial %age off-plan? No...

If the developer personally has defrauded you, then that's a criminal matter.
If the developer company have simply failed, with no criminal intent to defraud, then that's part of the risk you took in paying such a large deposit so early.

davidmcn

On what basis do you think Barclays would be liable? It seems they've just done what they've been told to, it's none of their business what your contracts say.

mamz001

AdrianC wrote: »

I presume you know the name of the limited company you paid your deposit to? You need to find out exactly what the legal situation is. If administrators have been appointed, then you are a creditor alongside other creditors, and you need to work with them.



I doubt that's what he really said. Chinese whispers don't help.



You said 40% a minute ago.



Did you pay your deposit to the developer as an individual, or to a limited company?



Very unlikely. You voluntarily paid a substantial %age deposit for a property that was still no more than a drawing and planning permission. That is a very risky and unwise thing to do, and absolutely not something in the normal run of property purchasing. A holding deposit, yes. A 10% deposit at exchange, close to completion, yes. A substantial %age off-plan? No...

If the developer personally has defrauded you, then that's a criminal matter.
If the developer company have simply failed, with no criminal intent to defraud, then that's part of the risk you took in paying such a large deposit so early.

Thanks for the quick reply.

I have done everything by the books, paid an initial 10% deposit after asking my solicitor if this is the norm, he said yes. Then paid the remaining 30% upon exchange, again my solicitor did all the checks etc that a conveyancing solicitor would, however it has come to light that the developer never owned the building, which he was going to redevelop into new flats. Looks like my solicitor may have not done all the relevant checks.

I got a letter from the money laundering officer from my solicitors saying that I am a victim of fraud. The developer's solicitor told them this too, I have it in writing so not Chinese whispers.

The director of the company has just disappeared and it has come to light the company has no assets, so going into administration won't make a difference. Initially there was a letter claiming they have assets, which was done by the developer's solicitor but it has come to light they have no assets, it was all a lie.

Yes I paid 40% deposit as I negotiated it, but most of the other victims have paid 60%.

I paid all my deposit to my solicitor, just like how you pay it when purchasing a house. All the other victims did it the same way too. My solicitor then sent the payment to the developer's solicitor who then sent the money all across to the developer. It looks like the developer's solicitor may have been involved with all this too.

The only reason I asked if Barclays will compensate is because they responded to my current litigation solicitor saying “We can process the scam as expeditiously as possible?”, hence I was wondering if that means compensation or if anyone has been through something similar like this.

AdrianC

mamz001 wrote: »

The director of the company has just disappeared and it has come to light the company has no assets, so going into administration won't make a difference. Initially there was a letter claiming they have assets, which was done by the developer's solicitor but it has come to light they have no assets, it was all a lie.

So you are owed money by the legal entity your contract was with - the limited company.
Think of that limited company as a person on his death bed with no money... When the company is wound up, it ceases to exist. It dies.

There may be a criminal case against the director of the company. If you can find him.

Guest101

AdrianC wrote: »

So you are owed money by the legal entity your contract was with - the limited company.
Think of that limited company as a person on his death bed with no money... When the company is wound up, it ceases to exist. It dies.

There may be a criminal case against the director of the company. If you can find him.

Possibly owed money by his solicitor too.

G_M

This does not sound like money laundering. Where was the 'dirty' money, and how was is cleaned?

Fraud - perhaps.
Breach of Contract - almost certainly.

Frankly I think your best chance of success is action taken against the developer's solicitor. This has the advantge that you know who/where he is, and presumably he has funds and/or professional indemnity insurance with which to compensate.

But it depends towhat extent he is responsible for the client money he held (or rather, released).

mamz001

There may be a criminal case against the director of the company. If you can find him.[/QUOTE]

Yes I have a detective on the case for that, but I am pretty sure he has fled the country.

mamz001

Guest101 wrote: »

Possibly owed money by his solicitor too.

Yes both my solicitors and the developer's solicitors have professional indemnity insurance and are registered against the SRA, Harry has advised we may have to take the route of claiming via the indemnity insurance.

AdrianC

mamz001 wrote: »

There may be a criminal case against the director of the company. If you can find him.

Yes I have a detective on the case for that, but I am pretty sure he has fled the country.

This is the 21st century. People can be found beyond these shores.

mamz001

It was all our hard earned money, but I am not sure where it is now. By the sounds of it, it looks like the developer transferred all the funds from his Barclays account to maybe some abroad account etc, Harry is currently looking into tracking down this information.