ISLAND-based investors fear they will never see their money again after a fund promoted as ‘low risk’ was suspended, unable to pay its multi-million pound debts.
Regulator the Financial Supervision Commission is being urged to wind up the Louis Group Structured Fund in the interests of investors and the Manx public.
Liquidators from PricewaterhouseCoopers say investors were left in the dark about the financial affairs of the company and its various linked entities.
Louis Group investors gathered in the high court last week to hear that the date for the winding up hearing has been set for January 21.
Among them was Richard Griffiths, aged 62, of Douglas, who invested a significant proportion of his life savings in the Louis Group in July 2009.
He was introduced to the Louis Group by a friend who had a successful earlier investment.
‘It appeared very low risk. My investment was for a one year term at a rate of 5.3 per cent, to be paid on maturity. At the time banks were going bust and paying very little interest.’
He said the product was sold with the promise that it would be secured by property owned by the Louis Group in the island and in Europe, with its operation in South Africa being the ultimate lender of last resort.
First indication that all was not well came a year later when Mr Griffiths received a letter from the Louis Group informing him that as the property market had not performed as well as expected it would not be able to pay out on the due date.
Interest would continue to accrue at 5 per cent and the pay out would be made the following year instead.
Then earlier this year came another letter saying that the fund would not be able to pay any interest on the capital in the future.
‘I still thought I was going to get my money back,’ he said.
But then he read our article in the Examiner about the liquidator’s report findings.
‘I was horrified,’ he said. ‘I’ve come to the conclusion that I’m unlikely to see my money again – it doesn’t look hopeful.
‘I would like to know where my money has gone. I would like to see someone brought to book for this.’
Retired Manx Airlines pilot Peter Green, 74, who lived in the island for 25 years before moving to Cheshire, invested £100,000 - his whole life savings - in Louis Group.
He, too, fears he will never get his money back.
‘I understood it was a company with Christian ethics that conducted its business with that very much to the fore.’
Another island-based investor who attended last week’s court hearing was a 61-year-old who had invested her inheritance in a Louis Group Secured Loan Note in April 2009.
Her mother, who is now 90, also invested in LG SLN and Louis Group Structured Fund.
They have written to the Financial Services Ombudsman asking them to investigate their allegations they had been mis-sold products as ‘low risk’.
And they say it is difficult to understand how Louis Group employees could be unaware of concerns about the viability of both companies at the time of the sale.
The daughter, who did not wish to be named or give details about the size of her investment, told the Examiner: ‘We were assured it was a low-risk product. It was promoted as an ethical company run on Christian values. We would never ever get into anything that appeared risky.’
Liquidators believe there could be more than 100 investors in LG SLN which is likely to be insolvent and unable to pay its debts.
In their report, made public following a court ruling, they say the Isle of Man-incorporated Louis Group Structured Fund plc, based at Louis Buildings on Bucks Road, Douglas, ‘probably suffered an almost total loss of investor capital’ due to its exposure to LG SP Investments Ltd, an allied company registered in the British Virgin Islands, which they say appears to have been engaged in unlicensed deposit-taking.
The FSC first had concerns in the autumn of 2010 following information received from the company’s board.
Liquidators were appointed by the High Court in May this year to investigate the affairs of the structure of linked companies and to trace the whereabouts of sums totalling more than £5 million.
The company rejects the liquidators’ findings, with director Alan Louis saying they weren’t given the opportunity to comment in advance and that they will oppose the winding up hearing.
Meanwhile, Mr Griffiths believes a support group for Louis Group investors should be formed. You can contact him via our newsdesk on 695693.
Search for a job
Search for a car
Search for a house
Weather for Isle of Man
Monday 20 May 2013
Temperature: 9 C to 14 C
Wind Speed: 23 mph
Wind direction: North west
Temperature: 7 C to 13 C
Wind Speed: 24 mph
Wind direction: North west