London-based Caledonian Limited and Caledonian Commodities Limited have been wound up in the High Court in London following a 5 day trial before Mr Robin Dicker QC sitting as a Deputy Judge of the High Court.
This followed an investigation by the Insolvency Service.
Caledonian Limited marketed and sold a succession of products namely carbon credits, rare earth metals, coloured diamonds, storage pods and precious metals to the public. A sister company Caledonian Commodities Limited was also involved in the marketing and selling of some of the investments.
Both companies sold the precious metals namely gold and silver via unallocated gold accounts. The precious metals were purchased by investors and were held in the name of Caledonian Limited and not in their individual names despite the investors being lead to believe that this was the case.
The court heard that a number of investors believed that they were purchasing physical gold and some were told that should the company enter into liquidation their investment would be safe. However this would not be the case.
During the trial it was established that Caledonian Limited currently holds approximately ?62,204 of gold and silver. It appeared that the current shortfall as against investors? positions may amount to as much as ?425,000 by value. In essence the company had not purchased sufficient and/or sold precious metals that resulted in an unfunded precious metal account.
The sales of carbon credits, rare earth metals, coloured diamonds and storage pods totaled at least ?134,083.
Deputy Judge Mr Robin Dicker QC in his judgment stated:
In my view, the business of the companies has been conducted in a way which does not meet accepted minimum standards of commercial behavior. This is the case not merely in relation to the marketing and sale of carbon credits, rare earth metals and coloured diamonds, where the Companies accept that investors were seriously misled, but, despite assertions to the contrary, also in the sale of precious metals. Such trading involved mis-selling which, in a number of respects, can only have been deliberate.
Commenting on the case, David Hill, a Chief Investigator at the Insolvency Service, said:
The companies persuaded members of the public to part with substantial sums of money to invest in precious metals and a variety of alternative investments. At the end of the day nothing remained and the savings of members of the public had been lost.
As so often is the case, if an investment scheme appears to be too good to be true, it probably is.