FCA wins civil case against Ponzi-like care home investment scheme
The High Court has ruled in favour of the FCA against Robin Forster, the director of a company which took £57m from 380 investors in an illegal care home investment scheme. The FCA will ask the Court to determine the sums the defendants should be required to pay back to investors.
Between 2016 and 2020, Qualia Care Properties Ltd and Qualia Care Developments Ltd offered investments in care homes run by a third company, Qualia Care Limited. Investors purchased a long-term lease in a room in a care home, then sub-let the room back to the Qualia companies. Investors were promised returns of between 8 and 10% of the purchase price over the period of the sublease. The leases cost between £50,000 and £75,000.
Following a trial in May, the High Court agreed with the FCA that the scheme was unlawful and amounted to an unauthorised collective investment scheme. The court also agreed that the returns promised to investors were never likely to be achievable and that Forster had made false and misleading statements to investors about the sustainability of the scheme.
The FCA’s joint executive director of enforcement and market oversight Steve Smart said ‘Forster not only put investors’ funds at risk by selling investments in an unauthorised scheme that was not sustainable, but also put the wellbeing of care home residents, many of whom were vulnerable, at risk. I would like to thank the Care Quality Commission for their assistance during our investigation and their work ensuring the residents of these care homes continued to receive the care they need.The Qualia scheme offered unrealistic returns based on its unsustainable business model and operated like a Ponzi scheme. Forster’s reckless behaviour put investors at serious risk, and we will now seek compensation for them.’
The FCA’s action was also against the main sales agent for the scheme, Fortem Global Limited, which was owned by Forster and Richard Tasker. The Qualia companies are now in administration and Fortem Global is in liquidation.
Forster was previously involved with MBI companies, which operated a very similar investment scheme to Qualia. The FCA has issued a claim in the High Court arguing that the MBI scheme was also a collective investment scheme operated unlawfully without FCA authorisation. The FCA will also now seek a similar restitution order in relation to the MBI scheme.