The UK’s insolvency and companies court wound up three businesses in the public interest on 12 January 2020.
Rationale Asset Management, Value Asset Management and Merydion Corporation were involved in property investments.
The first two were based in London, while Merydion operated from Cheshire and was linked to Rationale AM.
Following reports on the first two companies’ business practices, investigators discovered they told potential clients that they were involved in the purchase and development of properties such as care homes, hotels and pubs to then sell for a profit.
Rationale AM received more than £2m ($2.7m, €2.2m) from investors, but the Insolvency Service found that only a fraction of the sum was used for property investments. Most was used to pay the directors of both Rationale and other companies in which the same people had controlling interest.
Additionally, Rationale received £1m in funding from a pension scheme called the Optimum Retirement Benefits Plan, which had been under investigation by the Insolvency Service and Pensions Regulator following allegations of pension liberation activity.
Lack of properties
Value Asset Management, closely linked to Rationale AM, sold bonds to investors; which the company claimed were secured against property assets.
It sold shares as well, promising that the funds raised would be invested in property.
But investigators revealed that Value AM’s marketing materials were misleading and that the company’s accounts showed it was insolvent and that it owned no property whatsoever.
According to the Insolvency Service, Value received £200,000 from Rationale, “which did not benefit Rationale Asset Management investors”.
Similarly, Merydion Corporation received investments of £300,000 from Rationale AM, which also came from Optimum.
The money was then used to invest in hotels owned by the director of the company under a separate business.
Seek advice first
David Hill, chief investigator for the Insolvency Service, said: “These companies were entirely misleading to their investors, taking millions of pounds without making any genuine investments.
“There is no evidence that Value Asset Management ever commenced any property development projects and all of Rational Asset Management’s investors have been left with worthless shares.
“The courts recognised the severity of their misconduct and these companies have been wound up, putting a stop to this ongoing pattern of harmful business practices.