Bournemouth-based Ethical Forestry group had over 3,000 investors who had each invested at least £18,000 ($23,787, €20,133) when it collapsed in December 2015, after being abandoned by its UK directors and the plantation suffered hurricane damage.
The total invested was around £50m.
The group was split into four companies; EF Forestry Management Limited, Ethical Forestry Limited, Ethical Forestry Holdings and EF Sales and Marketing Limited.
The UK’s Serious Fraud Office (SFO) opened a criminal investigation into an alleged fraudulent investment scheme marketed by Ethical Forestry Limited and “associated companies” between 2007 and 2015.
First Target Recoveries, which specialises in mis-sold self-investment personal pension (Sipp) claims and is working with Ethical Forestry’s insolvency company HJS Solutions, is advising investors to “begin the claims process if they wish to receive a swift return”.
Keep investment intact
EF Forestry Management has been sold and it is now under the 100% ownership of Mr R Brown, with the aim of keeping the investment intact.
The sale price was $875,000 (£662,121, €740,531).
It is not known what the current state of play is for the three other Ethical Forestry companies.
Brown intends to harvest and sell the tress on the plantation at the end of the scheme as originally planned, meaning that investors may still get a return.
However, with the hurricane damage jeopardising the final value of the harvest, investors are being encouraged by First Target to make a compensation claim on the grounds that the original investment scheme may have been mis-sold.
According to First Target’s website, the Ethical Forestry investment model was based on planting, cultivating and harvesting hardwood trees over a period of 12 years.
It was advertised as a secure, green, high-yield profit opportunity. The minimum plot was 600 trees, which investors were told could return up to £104,000 after 12 years, which included time for the trees to grow, be harvested and sold as timber.
Although it was presented as a secure investment, the trees were still at risk from timber diseases, pests, natural disasters/weather, changing prices of timber and political changes in the area.
First Target believes that, in some cases, the risks were not explained properly and that the scheme may have been mis-sold to people for whom it was not suitable.
Investors falling into one or more of the following categories could have been mis-sold:
Lack of understanding
Were they new to investing and didn’t understand the process or investment?
Hard sell / pressure sell
Did they feel uncomfortable or pressured into an investment they didn’t really need or want?
Were they advised to switch, even though their existing scheme was more suitable to their current and future pension needs?
Lack of fee transparency
Were they not made fully aware of any management fees or additional costs attached to the investment
Income tax implications
Were they not warned that exceeding their annual tax-free limit of £40,000 would result in them paying 55% in income tax?
Were they not given advice about the risky nature of investing in the scheme and the potential negative implications?
Tax avoidance advice
Did their financial or pensions adviser recommend a Sipp as a means of tax avoidance?