UK, Spanish Authorities Investigate Self-Storage Investment Fraud

Update 6/2/17 – U.K. officials have filed four “wind up” petitions intended to force self-storage operator Store First into liquidation. The move is related to the SFO “storage pod” investigation and tied to investments made through Capita Oak and the Henley Retirement Benefit pension funds. Petitions were filed in court on May 31 against Store First Ltd., Store First Blackburn Ltd., Store First St. Helens Ltd. and Store First Midlands Ltd. A hearing has been set for Aug. 1 in the Manchester District Registry of the High Court of Justice.

“We can confirm that winding-up proceedings have been served on us. We have instructed our solicitors and intend to defend these proceedings vigorously,” Ruth Almond, a spokesperson for Store First parent company Group First, told the source. “Given that High Court proceedings are now in progress, it would be inappropriate for us to comment further at this stage, pending our formal response to the proceedings. We are advised that the proceedings could take many months.”

At issue is the Store First business model, which sells individual or multiple units to investors. A marketing video released by the company in 2014 claims the operator “has much lower overheads because units are owned by investors” and promises an 8 percent return for two years.

Ruth told the source the company continues to “believe firmly in our business model, and that is why over the years we have worked in an open and transparent manner with the regulators explaining how our business operates. Indeed, we cooperated fully with the secretary of state’s inquiry and had understood it to have concluded, and [we] were therefore surprised to have received proceedings at this point. We will provide a further update as to our position as soon as we are able.”

The Insolvency Service concluded a pension-fraud investigation into Store First in 2015, but the SFO didn’t take action against the company until last month. The company was accused of luring £100 million in investment through sales company Jackson Francis Ltd., which was forced into liquidation in September 2014.

At least 70 investors transferred 100 percent of their pension investments to Store First through the Capita Oak and Henley funds, according to Angie Brooks, founder of Pension Life, an organization that works on behalf of pension-fraud victims. Investors were allegedly promised returns higher than 8 percent after two years and told that Store First “would buy the pods back for the same price as was originally paid after five years,” she told the source. “They were also promised loans of between 5 and 20 percent, and were told they would never have to pay them back and that there would be no tax to pay.”

Investors became suspicious when Capita Oak and Henley failed to return phone-call and e-mail inquiries about their investments, according to Brooks. “Nobody really knows whether there will ever be any value in the pods, or whether it would be better to demolish them and sell the buildings as normal commercial property,” she told the source. “The victims unanimously wish the authorities had taken action considerably earlier.”

Headquartered in Padiham, England, Store First has 15 self-storage facilities in England, mostly in the northwest region, and one in Scotland. The company’s model blends traditional self-storage units with full business amenities for small enterprises, including use of P.O. boxes, free WiFi and private meeting rooms. Site amenities include office facilities, breakout areas, packaging and shipping services, complimentary moving services, and reception areas. Security includes closed-circuit television, coded electric gates and perimeter fencing.

Group First is a U.K.-based real estate developer. It’s property portfolio includes residential, business, self-storage and vehicle-storage assets.

5/23/17 – The U.K. Serious Fraud Office (SFO) is working with Spanish officials on an investigation into several pension funds that may have bilked more than £120 million of investors’ money in self-storage schemes. Capita Oak Pension, the Henley Retirement Benefit, Trafalgar Multi Asset Fund and the Westminster Pension Scheme are all under investigation for allegedly promoting bad “storage pod” investments, according to sources.

The alleged schemes positioned the investments as a way to generate high returns by buying long leases on storage containers or units and then sub-leasing them, a source reported. The SFO believes more than 1,000 investors, many of them retirees, are affected. Authorities have advised anyone who made investments into any of the named funds between 2011 and 2017 to contact officials.

The joint investigation is known as Project Bloom, which was created specifically to identify investment fraud after reforms provided pensioners with more control over their investments. In addition to the SFO, it involves the National Crime Agency and the Pensions Regulator in the United Kingdom as well as authorities in Spain, according to a source.

The suspected funds often targeted expat investors in Europe and other regions, a source reported. Capita Oak and the Henley Retirement Scheme were closed two years ago under suspicion of taking in £19.4 million in fraudulent investments.

A legal complaint has already been filed against Henley for ignoring transfer requests to pull investments from the storage scheme, according to a source.

Last August, the U.K. Insolvency Service shut down five “pension liberation companies” for fraudulently taking £128 million from pensioners. The bulk of the investments were in self-storage and came through benefit transfers from Self-Invested Personal Pensions, a government-approved program that enables individuals to have control over their investments, a source reported.

Earlier this year, Keith Popplewell, former managing director of investment-advisory firm The Pensions Office Ltd., was banned from running any company for nine years after his business advised more than 300 clients to place £12 million in unregulated investments, including overseas property and self-storage units, according to a source.