Hudspiths was an unregulated forex scheme that launched in 2015 and promised returns of 5% per month, along with 2% per month to be paid to its introducers.
The scheme collapsed late last year, and in early June the company applied for a voluntary liquidation. 30 investors took the company to the High Court in an attempt to force a compulsory liquidation instead. A barrister for the investors accused Hudspiths of being a Ponzi scheme. Director Karl Lubienicki told City AM the Ponzi accusation was “not true”.
At the time of the High Court hearing, Lubienicki told The Mail
There’s no money missing. You can’t hide £50million.
Wherever the £50 million is, it’s not in the statement of affairs filed with Companies House recently, and signed by Lubienicki on 3 June 2019. The only assets they show are £59k of cash in the bank, £580,000 in a trading account and £415,000 in book debts.
Lubienicki also said to the Mail that £7.5 million remained outstanding to Hudspiths creditors. This is also contradicted by the statement of affairs he had signed only a couple of weeks prior, which stated that Hudspiths was £40.1 million short of the amount needed to pay its creditors.
Because the document was filed under a voluntary liquidation, the statement of affairs contains little further details of how this state of affairs came about.
Lubienicki is a colourful character by all accounts, who also owns a sex shop in Swindon and a collection of 30 classic cars, and incorporated a company (which never traded) named after Christian Grey, the walking pile of cash with a BDSM fetish who was the hero of the Fifty Shades of Grey “novels”.
The case to have the voluntary liquidation converted to a compulsory one was adjourned for further hearings on 12 June.
Legend Lane, whose weird and even weirder range of unregulated investments was reviewed here last October, is one of the investors affected by the Hudspiths collapse.
According to an email to investors from directors Chris Miller and Greg Heywood,
The model that has been adopted is that your monies are placed with Legend Lane Group Limited with a loan note issued in respect thereof. The funds then have either been transferred or credited to PCIA Limited who have in-turn issued us with a loan note. PCIA have then placed the funds with Hudspiths who have similarly issued loan notes in respect thereof.
Legend Lane’s forex investment (which is the money that ended up in Hudspiths) offered a return of 24% per year, which seems positively stingy given that the company it was investing money with claimed to be able to generate returns of 80% per year (5% per month compounded).
Legend Lane’s directors claim the money invested in Hudspiths is safe.
We are being told by PCIA Limited that everything is in order and that the fund into which the monies have been invested is intact and safe. In addition, we have been told that there is the sum of £940,000 frozen in an account in the name of PCIA limited with Santander UK plc. We are negotiating with PCIA for the release of all of these funds to Legend Lane Limited so that it may be repaid back to each of the holders of loan notes on a pro-rata basis. Assuming that we are able to achieve this, then we would anticipate being able to pay back between £0.70 and £0.80 in each pound on the loan notes. Our goal is to be able to pay back at least £0.90 in each pound on the loan notes and potentially the whole balance due.
PCIA Limited is owned by Adam Corcoran. At the time of its last accounts in March 2018, it was a micro-entity with net assets of a mere £1,357.
Legend Lane claimed in its investment literature that only 10% of investors’ capital was put at risk and the remaining 90% was held with a “liquidity provider”. This made its claim to be able to generate returns of 24% per year even more ludicrous, because to generate 24% per year on the whole investment while putting only 10% at risk, it was required to generate returns of 240% per year on the amount at risk. A point that Chris Miller failed to explain away during a discussion on this very blog.
That said, if it turns out to be true that 70-80% of Legend Lane forex investors’ money had been dumped in cash before it reached Hudspiths and can now be returned, it is doubtful Legend Lane investors will be worrying about that too much.