Yahoo Finance Pensioners lose £1.5m on Liverpool care home venture
Investors who put tens of thousands of pounds into an unregulated care home investment have lost close to £1.5m, after the scheme which had promised annual returns of 10pc came close to collapse.
Savers including pensioners had feared losing life savings they had invested in a care home in Liverpool, now called Oak Springs, after the project’s developer was arrested in a building contracts corruption probe involving top local Government officials.
But investors will now get back 75p for every pound they invested in the 74-bed development back in 2014, following the sale of the business to new owners Sandstone Care Group earlier this month, Telegraph Money understands.
Emails from sources close to the deal, seen by this newspaper, said the business was barely breaking even on its operating costs and would “have been in administration within weeks”, leaving investors with virtually nothing, had the acquisition not gone through.
“While losing money is never good, it could have been a lot worse,” the emails read.
Investor Bob Firth, 76, from Devon, got £60,000 back on his original £80,000 investment and said overall he was down a few thousand pounds when accounting for the initial income payments he had received.
“It looked too good to be true at the time and turns out it was. I could afford to lose this money but others were not so fortunate,” he said.
Another investor, 71, who asked not to be named, said the promised returns of £8,000 a year had formed a significant part of his pension plan and that being without those payments for a number of years had diminished his living standards.
Singita Kansal, 54, a law lecturer from London, who also invested, said: “It has been a massive stress. I have had to chase a number of income payments I did not receive via the Small Claims Court.”
Investors initially bought in at around £80,000 per unit on the promise of 10pc returns a year, although the business was only ever able to yield up to 6pc before incomes eventually began to dry up.
Savers then feared they would lose everything when the project’s developer Elliot Lawless of Elliot Group was arrested in 2019 on allegations of fraud, causing a number of his other developments involving around 1,000 retail investors to fall into administration.
The arrest was part of a broader Merseyside police investigation into alleged corruption relating to building contracts in the city, called “Operation Aloft”. A number of other men including Liverpool’s Labour mayor Joe Anderson have also been arrested, although no charges have been brought.
Mr Lawless has fiercely maintained his innocence throughout, insisting the allegations were “baseless” and “completely without foundation”. The warrants used in his arrest were deemed to be unlawful and were quashed in the High Court.
Mr Anderson has said: “I maintain the police investigation will prove I have done nothing wrong and my name and reputation will be exonerated.” He has temporarily stepped down from his positions as mayor and is suspended from the Labour party pending the outcome of the investigation, which is still ongoing.
Experience Invest, a London-based firm run by Steven Worboys, marketed the Oak Springs property development scheme to retail investors. The firm was previously involved in another scheme selling “bargain” properties going through foreclosure in American cities such as Detroit during the financial crisis. That too lost investors money.
Mr Worboys declined to comment.
A spokesman for Mr Lawless said he could not comment for legal reasons relating to the deal.
A spokesman for the new owners Sandstone said the company had no involvement with previous funding arrangements.
