Watch out for this property scam!

This scam preys on your trust for well known brands.

Back from my holiday (cycling, sightseeing, eating and drinking mostly in Hungary), I find a pile of mail including a large envelope from Capita Group.

Capita Group? Why should the Footsie quoted company write to me? It's an outsourcing company – among many activities, it can count TV Licensing, administration services for a number of life and pensions companies, council tax collections for local authorities, while it used to run the London congestion charge.

But this Capita Group is not the £4.3bn company which made £1m a day in profits last year. Instead, and confusingly, it's a landbanking company whose covering letter says it “aims to offer clients the greatest opportunity to take advantage of the high level of returns that are being gained from investment in land.” The brochure itself is the usual landbanking stuff including the almost obligatory quotation from Mark Twain - “Buy land, they're not making it anymore.”

Just as I am in the middle of reading this, my phone rings. It's George Harrington, an adviser from Capita Group. He tells me that his firm is different – it sources and buys land but it is not reliant on planning permission. All land, he claims, is sold with an exit strategy.

A sure-fire investment

“How does that work?” I ask.

“We have 30 to 40 house builders lined up,” he says. “They buy land from us and they get planning permission.”

When pushed, he cites Taylor Woodrow (as have other landbankers) despite Taylor Woodrow having no connection to these claims. Along with other builders, it is quite capable of finding its own land.

He tells me about land for sale in Grantham – I can have 2,613 sq ft for at £2.13 a square foot. If I invest, I am promised a 25% gain by “early December or spring next year at the latest”.

“If it's such a sure-fire investment, why don't you keep it and make a profit rather than spend time and money on phoning me?” I ask.

He says it is something to do with banks and financing the next deal.

It's difficult to translate the price quoted in square foot into acres (the measure more usually used for land deals). And Harrington doesn't know the price per acre or hectare – he said square feet were used in land deals. They are not.

In any case, this works out at around £5,500 for a plot of 0.06 acres or £93,000 an acre – local agents would sell me an acre of agricultural land in the Grantham area for less than £7,000.

What’s in a name?

So who am I dealing with? The company Harrington works for, Capita Group Ltd, is apparently registered at 100, New Bond Street, London. The only Capita Group listed at Companies House is the outsourcing giant at a different address. The Bond Street address offers “virtual office” facilities.

Harrington explains that there was a problem with Capita Group PLC (the out-sourcer) so it is now registered as Cap Group. But the only Cap Group I could find at Companies House was registered at a flat in south east London in December 2008 and dissolved in July 2010.

Harrington, who did not seem worried that he did not know the name of the company he represented, then told me it was called CapG Ltd. But this is the name of a Middlesbrough firm involved in bookkeeping and accountancy with no connection whatsoever to Harrington's firm or to landbanking.

Harrington then fetched “senior adviser” Edward Eastwood to the phone to clarify the name. But he didn't know the company name either although he promised to email me the firm's registered name and number later on as he “was just passing through the office”. For some reason, he thought my email was that of a woman called Paula.

Eastwood now has my own email address. He promised a reply within two hours but I still do not have a response. So I can't tell you who runs this outfit. But I have yet to find a single investor who has ever made a penny in profit from landbanking.

Hi-jacked!

This is not the first time that the real Capita's name has been hi-jacked. Over the past year or so, its identity has been stolen by a boiler room share outfit and a firm pushing “standby letters of credit”, a sophisticated fraud.

The real Capita says: “The Capita Group Plc is not, nor has it ever been, a land bank. If members of the public are contacted by individuals purporting to be selling land, shares, bonds or similar on behalf of the Capita Group they can assume such claims are fraudulent.”

The Financial Services Authority has a new video warning on the £200m a year landbanking scam. Go to http://tinyurl.com/5r7yhwo

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Award-winning scams expert Tony Levene explains why he's writing a blog about scams and why he is The Scam Magnet!