A buy-to-let developer who ran unlawful property schemes and mislead investors was jailed for six months for breaching freezing injunctions obtained by the Financial Conduct Authority (FCA).
Robert McKendrick diverted funds and failed to disclose information about his assets in breach of freezing injunctions obtained by the FCA, following an investigation into unauthorised collective investment schemes.
In March 2018, the high court found that McKendrick mislead investors in African Land (also known as Agri Capital) and Reforestation Projects (also known as Capital Carbon Credits) – investment schemes which were operated and promoted unlawfully.
The court made a freezing order requiring McKendrick to disclose all his assets and preventing him from disposing of them.
In breach of the freezing order, however, McKendrick appointed his wife to manage his portfolio of buy-to-let properties at a commission rate significantly higher than he had paid to his previous letting agents.
McKendrick then diverted the rental income from these properties to his wife. He did not disclose these arrangements.
The FCA brought an application to court with the primary aim of discovering what had happened to the money McKendrick took from investors in his schemes.
In court, McKendrick admitted breaching the freezing orders and provided an account of where the money went, leading the judge to sentence him to six months instead of 12.
The FCA said it intended to ensure that as much of investors’ money as possible is recovered and returned to them.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “In this case, McKendrick misled investors and then, in contempt of court, failed to comply with court orders requiring him to properly account for the losses.
“The FCA will ensure that defendants who mislead investors are held to account to the fullest extent possible.”