Bosses at the collapsed investment firm London Capital & Finance invested £70 million of bondholders’ money with a hotel property firm where two senior players now have fraud convictions.
Prime Resort Development was one of the biggest recipients of LCF loans, but administrators to the bust lender say its assets in Cornwall, Cape Verde and the Dominican Republic, are only worth up to £15 million.
One of Prime’s main players, Paul Seakens, was convicted last week over a carbon credit “boiler room” scheme that defrauded vulnerable investors out of £36 million. He is due to be sentenced on 28 May.
The other, Terrence Mitchell, was sentenced in December 2018 to two years’ jail for fraud and six months for “carrying on regulated activities” at collapsed savings scheme Anglo Wealth.
His sentences were suspended for two years and he was banned from serving as a director for six years.
Companies House filings show LCF agreeing a loan to Prime dated 31 October 2018, by which time Seakens had already been disqualified from acting as a director by a court order.
At the time of the ban, he was at Enviro Associates, the carbon credit firm over which he was convicted last week.
Mitchell is believed to have been key to raising funds for Prime Resort Developments, while Seakens worked as its book-keeper.
The Crown Prosecution Service said Seakens, 60, was found guilty last week on charges of running Enviro for fraudulent purposes as part of a marketing scheme that preyed on “vulnerable victims”.
It said he and Luke Ryan, 33, were convicted “for conning vulnerable victims” by selling them worthless carbon credits.
Seakens was also convicted of three counts of money laundering and proceeds of crime charges.
The CPS said in a statement: “This was a particularly hideous scam operation, where vulnerable victims lost their life savings on so-called investments that had greatly inflated return claims and no resale market.”
It said victims were generally elderly and inexperienced investors. “They were cold-called in their homes and pressured into buying these so-called investments by criminals who made them look genuine and trustworthy. They were conned: the products being sold were, in essence, worthless.”
Seakens was disqualified from being a director for 13 years in 2018 while at Enviro. It was one of the toughest sanctions that year from the Insolvency Service, whose maximum toll is 15 years.
Referring to his work at Prime Resort Developments, Seakens told the Evening Standard last year: “I was perfectly qualified for the role I was carrying out for them.”
He added that Prime would have survived if LCF’s funding had not stopped after it was shut by the Financial Conduct Authority.
“Absolutely it would have had a chance of repaying the money [it owed LCF],” he said, adding: “No, I do not feel we did anything wrong.”
Seakens also acted as book-keeper for another bust bond company connected to Prime called Asset Life, according to Asset Life’s administrator David Rubin & Partners.
Mitchell was an Asset Life director until 2018.
David Rubin & Partners said records show Prime apparently lending money to Asset Life, while Asset Life also appears to have lent money to Prime.
Seakens has denied any conflict of interest as the two businesses had separate boards of directors.
The Cornish holiday park owned by Prime has benefited from a strong performance during the pandemic, raising hopes that it could hold some value at sale.
Conservative party donor Simon Hume-Kendall, who set up the forerunner to LCF, was a previous director of the Cornish venue.
Mitchell and Seakens did not respond to requests for comment this week.
The Serious Fraud Office arrested five people in 2019 in the Kent and Sussex areas as part of their investigation into LCF.
The investigation is ongoing, with two further people interviewed in March this year and December 2020 for moneylaundering and another in March in connection with fraud and moneylaundering offences.
All three were in the Kent area, the SFO said.