NPD/MBI Investmen

lianghsin328

That was actually what happened to me. For the first two years I did get my 10% interest but the entire scheme collapsed just this year. The NPD went into administration and it is a 100% confirmed fraud business. The room that I bought was registered in my name indeed but I am not sure I will be able to recover the capitals by resale of it. You are right, taking any legal actions would just be throwing good money after bad but we as a group just don't want to let those crooks walk free with all of our hard earned money.

Aretnap

lianghsin328 wrote: »

The room that I bought was registered in my name indeed but I am not sure I will be able to recover the capitals by resale of it

Almost certainly not - you would need to find someone willing to pay what you paid for it without the guaranteed 10% return, and quite possibly when the rest of the hotel is lockef up and derelict. And even if someone wanted to buy the whole hotel as a going concern the market rate for it is likely to be less than the investors collectively paid for their rooms... and the complications of having to deal with dozens of individual room owners make it an unattractive proposition compared with just buying a normal. Basically anyone who expresses an interest in buying your room for anything like what you paid for it is likely to be another scammer.

You are right, taking any legal actions would just be throwing good money after bad but we as a group just don't want to let those crooks walk free with all of our hard earned money.

It's too late - they already have.

Sueing the company will not hurt the people behind it - it's already in administration so whatever money is left in the company (probably not much) is already going to go to creditors like you (once the administrators have taken their cut) and not to the shareholders.

Sueing the directors and shareholders will not hurt them either - they are protected by limited liability and are not responsible for the company's debt to you. Unless you can prove some quite egregiously bad conduct on their behalf, over and above running a failed investment scheme which was based on over optimistic solutions about valuations and the viability of the underlying business. And even if you could prove it you might well find that they have no assets you can seize anyway - just very rich wives.

sendu

AnotherJoe wrote: »

I suspect the fraud part of the scam hasnt kicked in yet. If he's made money, that would mean he has got his original investment back. Has he?

I've asked him for details and am waiting to hear back.

But does it make a difference if it's a legitimate hotel? Aretnap's post suggests the issue is a bad property incapable of making good returns. My father's hotel is near the river Thames in sight of the houses of parliament. If the room is popular and people pay lots of money to sleep in it, is there a reason it won't keep making good money indefinitely?

Wildsound

lianghsin328 wrote: »

The room that I bought was registered in my name indeed

I'd say it wasn't registered because it probably never even existed in the first place. If I write a fancy looking certificate with a gold sticker on it saying you're a Doctor, it doesn't make you a Doctor.

lianghsin328 wrote: »

but I am not sure I will be able to recover the capitals by resale of it.

Hard to resell something that never existed in the first place.

As others have said, follow the relevant channels and expect nothing to happen. If something comes out of it, then that will be a bonus. Be thankful that you got part of your money back, some people don't get anything.

I'm sorry for your loss. Let's hope it's a learning experience for you and an eyeopener for others yet to fall foul of anything similar.

Zanderman

sendu wrote: »

I've asked him for details and am waiting to hear back.

But does it make a difference if it's a legitimate hotel? Aretnap's post suggests the issue is a bad property incapable of making good returns. My father's hotel is near the river Thames in sight of the houses of parliament. If the room is popular and people pay lots of money to sleep in it, is there a reason it won't keep making good money indefinitely?

Have you read the threads and news reports about the NPD scam? The hotels are real, sure (at least some of them are). But that doesn't mean the investor actually owns a room in one.

I could suggest you buy a parking space on my neighbour's drive. And I can pay you divvies on its use. For a year or two. But then I'd tell you there were cashflow problems and then I'd go bust. And you'd say, the drive was real, I can sell it! But my neighbour would say - I've never heard of you, get orf my land - because no, you never bought it, it wasn't mine to sell.

Just because the hotel's within sight of Parliament doesn't make the investment real. Indeed I'd argue someone using that as a selling point is more likely to be a scammer.

sendu

Zanderman wrote: »

Have you read the threads and news reports about the NPD scam? The hotels are real, sure (at least some of them are). But that doesn't mean the investor actually owns a room in one.

I haven't read the details, no. Google just bring up this thread.

So in the scam, the hotel exists, but the owners/managers of the hotel know nothing about you, the investor? The scammer just claims you own a room and gives you some of your own money back as fake earnings, then stops doing that after a while?

Not the case with my father's investment. He invested when they were developing the property, and now he can walk in to the hotel and stay in the room for free because he's an owner, and that was part of the deal.

eskbanker

lianghsin328 wrote: »

it is a 100% confirmed fraud business

You'll have links to the outcomes of the prosecution(s) then?

Aretnap

sendu wrote: »

Aretnap's post suggests the issue is a bad property incapable of making good returns. My father's hotel is near the river Thames in sight of the houses of parliament. If the room is popular and people pay lots of money to sleep in it, is there a reason it won't keep making good money indefinitely?

The problem with most of these schemes is not so much that the underlying asset is inherently worthless. Store First sold perfectly nice storage units to investors and Park First sold spaces in perfectly nice airport car parks (at least, as nice as a bit of cheap tarmac under a flightpath can be) - in both cases the investors still lost their shirts. The problem is rather that it's not capable of making returns at the level promised to the investor - even if it's a very nice hotel with a view of Parliament, there is still a finite number of people who want to stay in it, a finite price they will pay and running costs to factor in.

The basic business model is to buy, say, a 100 room hotel for, say £5 million, sell the rooms to punters for say £100K each, persuading the punters that they are getting a great deal by paying them, say, £10K per year for the first couple of years, until you have sold all the rooms (and no longer need to keep the investors onside) You are left with a clear profit of £3 million even if you never take a single booking. Running an actual hotel with paying guests etc is incidental to the business model. Then you siphon the money out of the company using various legal and semi-legal methods, so that when investors start asking for their money back (there is usually some sort of promise to buy back the rooms after 5 years or so) the company has nothing left in the coffers and goes into administration. At this point the hotel itself may well have some remaining value (probably about £5 million) but there is no practical way that investors can realise that value because there is no company to run the business of the hotel, and the realities of dealing with 100 individual room owners, most of whom still probably have unrealistic ideas about what their room is worth and what returns they should be getting, make it unattractive for a legitimate hotel company to take it on as a going concern.

There may be some outright scam operations out there where the underlying asset simply doesn't even exist, but it is perfectly possible for the hotel to be real, and rather nice, and still be an incredibly bad investment for the punter. Store First investors knew that their storage units were real because they had to keep paying business rates on them after Store First had gone bust and the sites were boarded up!

sendu

AnotherJoe wrote: »

I suspect the fraud part of the scam hasnt kicked in yet. If he's made money, that would mean he has got his original investment back. Has he?

He paid £260k for it in 2010, and in 2017 got £23k rent, and in 2018 got £25k rent (net). (Don't have figures for earlier years). So unlikely to have made the money back yet, but maybe getting close? It seems to be at a yield of 9+% which sounds great for no effort. Can it really be a scam after 9 years, when the room is real and we can go and stay in it?

If it's not a scam, the question is how does someone distinguish the real opportunities like this one from the scams?

[edit] Just read Aretnap's new post... so it could still be a scam, and there's no way to know until a few more years go by? Does it make a difference that all the rooms were pre-sold day 1, so to speak, as this was used to fund the construction?

masonic

sendu wrote: »

If it's not a scam, the question is how does someone distinguish the real opportunities like this one from the scams?

It's almost impossible to do so using the information typically available to potential investors. Which is why the standard response to questions posed about such 'opportunities' involves the words barge and pole.

[edit] Just read Aretnap's new post... so it could still be a scam, and there's no way to know until a few more years go by? Does it make a difference that all the rooms were pre-sold day 1, so to speak, as this was used to fund the construction?

It would make a difference if, for example, all of the money used to fund the construction came from investors. That's often a tell-tale sign that investors are just being used to line the pockets of someone else.