The UK High Court has taken action to wind up a fraudulent scheme known as a "recovery room" scam, which aimed to deceive investors who had previously fallen victim to an unscrupulous carbon credit seller, according to the Insolvency Service. Portman Chandlers Limited, established in February 2014, was wound up earlier this year following an investigation by the agency. The case was initiated after a 73-year-old investor reported being cold-called by Portman Chandlers. The investor had previously been defrauded by Global Neutral Ltd, which was liquidated in December 2013 for mis-selling voluntary carbon credits and rare earth minerals.
A representative from Portman Chandlers falsely claimed to the investor that their carbon credit investments were safe and had appreciated in value, but insisted that the investor needed to contribute at least £60,000 to purchase an investment bond in order to sell their existing verified emission reductions (VERs). The investigation further revealed that Portman Chandlers had no physical presence at its registered office in London and that the company's website plagiarized substantial portions of content from an unrelated global investment management firm.
The court registrar emphasized that the activities of Portman Chandlers aimed to exploit the public, stressing the importance of issuing a warning. This concern was supported by evidence indicating that the website copied content from a legitimate and well-known global investment company.
While numerous fraudulent carbon credit companies based in the UK have been shut down in recent years, the winding-up of Portman Chandlers represents one of the first instances of the UK High Court taking action against a growing number of firms offering "recovery room" services.
In a separate development, the UK's Court of Appeal has ruled that exotic investment schemes, including those involving carbon credits, should face stricter scrutiny from the Financial Conduct Authority (FCA). The FCA won a case against Capital Alternatives and several other firms accused of promoting and operating schemes without regulatory approval. Operators of these funds argued that each investor's holdings were managed separately, thus avoiding oversight as collective investment schemes. The FCA intends to seek compensation for investors in these schemes by recovering funds from the operators.
