Fine Art "investment" mistake

Rob_S

@Alistair31 Everything is via the phone.

Malthusian

AnotherJoe said:

You need to get POA for your fathers financial affairs and arrange thinsg so he cant make any more financial transactions himself.

Doesn't work that way. As long as he has mental capacity it is not possible to stop the father making financial transactions himself. And if he's already lost capacity he can't make a POA.

Assuming he hasn't lost capacity, the OP's father should make an LPOA as soon as possible. Not because he's thrown money away on investment scams but because every adult in a stable family situation should have one. Otherwise he will be giving up control of his affairs to the Government at great expense, at the point he loses capacity.

Losing money in a scam doesn't mean that you have lost mental capacity. By itself it's not even evidence you've lost capacity. Capacity is, in brief, the ability to understand information, weigh it up and communicate your decision; whether your decisions are good ones or not has literally nothing to do with it.

What does the dad actually want to achieve? The OP hasn't said whether he has lost faith in the scam and wants to get his money back.

The only positive action available to get the money back is "terrier tactics" - ring them every day demanding the money back, threaten to go to the police, threaten to go to the press, put up a search-engine-friendly website accusing them of running a scam, etc. The scheme will likely respond with threats to sue for defamation and harrassment, which will be a bluff. If the scam is still taking in money from new investors, and the OP's dad's investment is small enough, they may pay the OP's dad off so they can carry on fleecing others.

Mathematics dictates that terrier tactics only work for a tiny number of people. (By the time most investors want their money back, it's too late, and the money used to pay off the terriers comes from the money lost by newer investors.) But that doesn't change the fact that it works for a tiny number, nor will it bother them.

However that option is only available if Dad has lost faith and wants his money back.

Malthusian

Rob_S said:

@AnotherJoe POA seems somewhat nuclear. Perhaps I'm in denial, but I hope we're not at that stage yet.

Just to underline the above, if he still has capacity he needs to make an LPOA now. When you're "at that stage" it will be too late.

Alistair31

Rob_S said:

@Alistair31 Everything is via the phone.

Might you be able to have your father arrange a meeting, to which you turn up and in no uncertain terms tell the con-artist your expectations for the money to be returned? 

Years ago my father had to get involved when my grandfather was doorstepped in to agreeing to a large extension being put on the back of his house, he was disabled and largely confined to one room of a 3 bedroom house. He got his 50% deposit back as a result of my father, my brother and I ‘popping in’ when a meeting was arranged to mark-out the ground for the proposed extension. 

People targeting the vulnerable should hang.

Rob_S

Malthusian said:

What does the dad actually want to achieve? The OP hasn't said whether he has lost faith in the scam and wants to get his money back.

Good question. We've managed to convince him that "investing" money he has is one thing (stupid, but it's his money), but owing £30k on credit cards to invest is insane. He had his credit cards set to automatically clear each month (a sensible decision) and got a shock when they sent him a reminder that they'd be debiting his account for the full amount. He also started to get more sceptical when they failed to follow through with a promised quick sale.

So getting enough money back to pay the credit cards off would be the first step.

The company in question have agreed to try to liquidate some of his stuff, and get back to him in a couple of days. I'm not particularly optimistic.

Rob_S

At best, this is an extremely unsound investment. But how do we determine what level of scam it is? It could be:

1. He's been persuaded to pay for art where no such art exists, or legal ownership has not been transferred to him
2. He's been persuaded to pay vastly over market price for art, but the art does exist, is legally his, and if he can find a buyer, he may be able to sell it on (presumably for a fraction of what he paid for it)

Scenario 1 is most obviously illegal/fraudulent. Would he be eligible for a Section 75 (or chargeback) claim in this case, as he paid for a lot of it with credit cards.

What would his options be in Scenario 2? He knows nothing about art, and has purchased pieces as advised by the company. Is there any avenue available to him in this case?

Zanderman

Another vote for getting LPOA sorted out.  Now.  Thinking that you don't need it 'yet' is missing the point of the exercise.

LPOA has to be drawn up before you need it.  Because once capacity is gone there's no capacity to draw up LPOA.

So get LPOA  sorted out - for finance and health (different LPOA forms), get them regsitered too.  But don't think that means you have to activate them - you do that when you need to 

[Personally, assuming your father is in agreement, I'd argue for activating LPOA now anyway - giving you management of his financial affairs and disabling his access to the bank account.  If he trusts you this should be possible to do.  And if he wants to still buy things over the phone get him a pre-paid debit card - which you manage. ]

AnotherJoe

Rob_S said:

@AnotherJoe POA seems somewhat nuclear. Perhaps I'm in denial, but I hope we're not at that stage yet.
@LHW99 A phone blocker is an idea, but they have his landline and mobile numbers. How would we go about setting this up?

I think you are in denial. If he's this gullible, hes literally given away all his  money   and filled up credit cards on  an obvious scam like this, whats next?

IMO a phone blocker, whilst vital and a quick action you can make, is just masking the symptoms. They can also have issues, you say he's elderly, if he's getting calls from health services they will usually come in as "unlisted" or "unavailable" and may prevent them getting through. I woudl change his phone numbers as well, he will be ona "suckers" lst now and next step will be more scammers calling to say they cam recover the money.

Is your father also in denial and still thinking he's been astute or does he realise he's been scammed?

harsh_but_fair

Being sold an unwise investment is not necessarily fraud or indeed indication of an unsound mind - the world is full of people (and always has been) who put their money in places thinking they will get a good return but they don't

 it would only be fraud if extremely untrue statements were made during the sales pitch but I would bet they have it off pat implying things or saying that some art has been sold five times its price which would be true but doesn't imply that all art would be sold to five times its price etc etc

you just need to put it down to experience there is no way you'll get it any money back and probably no way you will prove fraud unless you have a recording of the telephone call

eskbanker

Rob_S said:

At best, this is an extremely unsound investment. But how do we determine what level of scam it is? It could be:

1. He's been persuaded to pay for art where no such art exists, or legal ownership has not been transferred to him
2. He's been persuaded to pay vastly over market price for art, but the art does exist, is legally his, and if he can find a buyer, he may be able to sell it on (presumably for a fraction of what he paid for it)

Scenario 1 is most obviously illegal/fraudulent. Would he be eligible for a Section 75 (or chargeback) claim in this case, as he paid for a lot of it with credit cards.

What would his options be in Scenario 2? He knows nothing about art, and has purchased pieces as advised by the company. Is there any avenue available to him in this case?

Section 75 relies on being able to demonstrate misrepresentation or breach of contract, so if everything has been verbal then it would be something of a challenge to go to a card company and say "I paid large sums of money to a company but have no evidence of what it was for, please reimburse me", and it would be much the same for chargeback.  Is there really no paperwork or emails, or anything?  Has he attempted to get anything in writing yet?

Scenario 2 isn't promising either I'm afraid - there is no law or regulation preventing people from paying over the odds for stuff, otherwise the art world would collapse....