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Director gets 14-year ban for £13m property investment ‘Ponzi’

He promised substantial returns but instead transferred the funds abroad

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The Insolvency Services has banned the director of Essex and London Properties Limited for dishonest conduct.

Mitchell Mallin, 34 from Chelmsford, Essex ran the now defunct firm which targeted investors promising to use their funds to buy “dilapidated properties in London and Essex before renovating and selling them for a profit”.

Over three years, Essex and London Properties received over £13m ($18.4m, €15m) from hundreds of investors, who handed over between £5,000 and more than £100,000, the Insolvency Service said.

But only one property was ever purchased, while the majority of investor money was “siphoned to overseas bank accounts”, it added.

The investigation discovered that Mallin had been running what the Insolvency Service deemed a “Ponzi” scheme by failing to “invest the £13m and used the funds provided by new investors to directly pay returns to previous investors”.

Additionally, more than £4.75m of unverified payments were made to third parties, it added.

‘Dishonest and reckless’

Following the intervention of the Insolvency Service, the company was wound up in the public interest in September 2018. At the time, it owed creditors more than £11m.

On 11 March 2021, the UK’s secretary of state accepted disqualification undertakings against Mallin, as he did not dispute that he had run Essex and London Properties “with a lack of commercial probity”.

He is now banned from acting as a director for 14 years.

Neil North, chief investigator at the Insolvency Service, said: “As the period of disqualification reflects, obtaining funds from investors and using them in a dishonest manner is a serious matter and contrary to the conduct expected of a company director.

“Companies have limited liability, which is a privilege, not a right, and we have strong enforcement powers which we will not hesitate to use to remove that privilege from dishonest or reckless directors.”

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