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Bentley-Leek denies pyramid scheme attack

by William Robins on Oct 07, 2011 at 07:41

Bentley-Leek denies pyramid scheme attack

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.’

15 comments so far. Why not have your say?

Ric Green

Oct 07, 2011 at 08:45

Is that Rumpole?

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Big Ears!

Oct 07, 2011 at 08:51

I have a feeling the guys from Canary Wharf may be making a trip out to Guildford!

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Anitaki

Oct 07, 2011 at 09:06

I expect that Mr M B-L didn't have a level 4 qualification. If he had, of course it could never have happened.

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Paul Barnard

Oct 07, 2011 at 09:14

Oh, three posts in and someone has to make an RDR link.

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Ric Green

Oct 07, 2011 at 09:28

@ Paul - i did try to introduce some 80's nostalgia to the gloomy story!

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Paul Barnard

Oct 07, 2011 at 09:38

Oh yes - Rumpole. One of my favouriites. Still listen to the audio cassettes (yes, cassettes) on long journeys in the car!

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l'ifa passeport en provenance de France

Oct 07, 2011 at 09:44

He would make a great banster... £800k bonus and working in a pryamid banking system

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Bob Donaldson

Oct 07, 2011 at 10:33

Smacks to me of another get rich quick scheme for the advisors not the clients.

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JBT

Oct 07, 2011 at 10:53

Paul Barnard does that mean you have an 80's walkman in the car to put the cassette into

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Paul Barnard

Oct 07, 2011 at 11:00

I was pretty peeved because I couldn't get them on 8 track and had to update my technology.

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Ruth Cordero

Oct 14, 2011 at 19:15

I find the levity of some of the comments quite hurtful.

I am assuming that those making them have not been affected by this - otherwise, maybe it's admirable 'sang-froid', but for me, this is no laughing matter.

Needless to say, there has been nothing forthcoming from BL.

I wonder if Mr BL is going to lose his home?

Somehow I doubt it.

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RABCAP

Nov 01, 2011 at 10:05

@everyone

The address of Bentley Leek Financial Management on Companies House is now

c/o B&C ASSOCIATES LIMITED, an insolvency practice. Notifacations of winding up BLFM were sent out last week.

What now for investors who were complaining about the bad advice they were given to invest in BLP?

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Arthur Schopenhauer

Nov 25, 2011 at 06:14

As usual the IFA takes the criticism. While the structure may have been flawed and the concept at the wrong stage of this "pass the parcel" deal are the right questions being asked?

As someone who looked at these ideas in 2007 and rejected them (lost the money elsewhere) it is too easy to go for the argument that leads to the tax payer paying out compensation

Where did the real money go?

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Ruth Cordero

Nov 25, 2011 at 08:20

Arthur,

While I agree with you that the tax payer paying out compensation doesn't sit comfortably, the IFA or other body designated to a 'control' role does have the responsibiltiy to look out for people who have lost because of flawed or deceitful investment companies, or those within them, surely.

Unless, and until, harder penalties are inforced on those who are either negligent or crooked, little is likely to change.

The real money? You may well wonder, as I do.

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Arthur Schopenhauer

Nov 25, 2011 at 08:37

Here is the issue, The IFA isNOT in control. If the IFA takes a greater interest and say becomes a non executive or even has the temerity to move up the food chain to provide a project that he actually understand then he is "conflicted"

Its a no win game.

I have advocated the Model P&L for the Model adviser with a business plan that the regulator and all industry can buy into Otherwise we finish up with the Equitable Life model of no commission but volume related salary replaces commission or not for profit (because the exec salaries make it so)

Conflict is a morality issue and is present in every human transaction

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