View the article online at http://citywire.co.uk/new-model-adviser/article/a530245
Bentley-Leek denies pyramid scheme attack
by William Robins on Oct 07, 2011 at 07:41
Embattled IFA firm Bentley-Leek Group (BLG) has denied it ran client money like a pyramid scheme, after the firm’s accountant issued a scathing attack on its investment strategies.
Accountant Nimal Fonseka has attacked the firm’s ‘abysmal accounting records’, accused it of failing to separate client accounts and investing £16 million of client money in a series of ‘dubious property ventures’. In a letter to John Brace, a forensic accountant who has written a report on BLG’s investments for a client action group, Fonseka said: ‘It became apparent that each project that Mr Bentley-Leek had invested in had been a loss.’
He also alleged director Mark Bentley-Leek treated the company bank account ‘as if it was his personal account’, spending £800,000 on renovations and extensions to his home. Mark Bentley-Leek has denied both allegations. Guildford-based Bentley-Leek Group hit problems when it emerged its property arm, Bentley-Leek Properties, used the sale of a £1.6 million Esher property investment scheme to refinance a separate £15.6 million Dubai property development. However, the Dubai property scheme did not complete and the loan had to be repaid, leaving both Esher and Dubai investors with the prospect of no returns.
In the letter Fonseka said: ‘I soon realised these schemes were flawed and it was unlikely that the investors would receive the returns they were promised.’
Fonseka was hired by BLG in December 2010 after the previous accountant, The Bryant Partnership, was asked to resign. In the letter Fonseka said that on taking up the post, he became aware the group’s investments were flawed. Under the heading ‘pyramid scheme’, he said: ‘The returns paid to claimants did not come from profits made, but from further investments made by new clients.’
Mark Bentley-Leek said there was ‘absolutely no substance’ to the allegation he was running the business like a pyramid scheme. He also disputed Fonseka’s claims about the money he took out of the business, arguing the money he had spent was ‘considerably less’ than £800,000 and formed a directors loan account that has now been discharged.
Fonseka has been critical of Brace’s report, which raised concerns about his accounting abilities. He has threatened legal action if Brace does not retract his accusations. Following Fonseka’s letter, Bentley-Leek Investor Group co-ordinator Barry Perrin told other investors the report suggested they would not be able to reclaim their investment.
‘We suggested you should register a complaint if you felt that you were wrongly advised or were mis-sold a Bentley-Leek investment. We have not changed our view on this,’ said Perrin. ‘As we see it, this is the only way that members will be able to pursue a claim for compensation.’
News sponsored by:
Today's top headlines
More about this article:
More from us
- FOS may pay out twice to victims of IFA's failed property fund
- Analysis: Investors dig into confusing trail of Bentley-Leek investments
- IFA's property venture collapses as fund unravels
- IFA promises returns from troubled property scheme
- Bentley Leek takes fee dispute to High Court
- IFA Bentley-Leek hands FSA details of property loan
- Hornbuckle Mitchell berates IFA over property venture
- FSA demands Ucis data as scrutiny intensifies
- Ucis failures show the dangers of the FSA's mixed messages
- FSA considers new qualifications for Ucis advice
- FSA hands directors £26.5k Ucis fine
- FSA fines three IFA firm directors over Ucis failings