Lord Razzall of Dazzle and a ‘no-risk’ bond that lost investors their life savings
Backing of Lib Dem reassured savers now fighting to reclaim £30million of missing funds
HUNDREDS of investors who were lured into buying bonds by a firm backed by a Liberal Democrat peer and promising annual returns of up to 14 per cent are fighting to claw back more than £30million following the company’s collapse.
The investment bonds were sold between 2016 and 2017 and marketed as ‘highly secure’ and ‘protected’ by a firm called MJS Capital, which went bust in February. Lord Razzall CBE, a former Liberal Democrat party treasurer nicknamed ‘Lord Razzall of Dazzle’, was chairman of MJS Capital until he resigned over a year ago – but his name and face were emblazoned on marketing brochures.
A lawyer by profession, he was not directly involved in the sale of bonds, but victims say they were reassured by the sight of his name on official documents.
Among those now struggling to salvage funds is a 26-year-old former contestant of TV singing competition The Voice, a retired couple who sought a safe investment to supplement their pension income and a man who invested savings built up over 40 years.
Shaun Prince, former boss of the glossy high-life magazine Tempus, was the owner of MJS Capital, which sold unregulated investments and was not authorised by City regulator the Financial Conduct Authority (FCA). He was described to investors as ‘the innovator of new products for the future’. The firm pledged returns of up to 14 per cent a year from the bonds using ‘arbitrage strategies’ that can ‘eliminate risk’.
Bonds were packaged as ‘safe’, with capital ‘100 per cent protected’, and were promoted to unsuitable customers who did not understand the real risk.
Funds are still unaccounted for while the company is in liquidation, though there is an expectation investors may get some money back. However, some people put their life savings into what they thought was a low-risk venture, but turned out to be a risky gamble meant only for high-net worth or financially sophisticated investors.
The scandal has come to light at the same time as details are emerging about the failure of bond comcame pany London Capital & Finance, in which tens of thousands of investors together face losses of more than £236million. Only 20 per cent of its funds are expected to be recovered. In the same way that investors in London Capital were misled, so too were those who put money into MJS Capital.
HOW WERE PEOPLE LURED IN?
MANY investors started a search for low-risk investments online and across ‘introducer websites’, which act as middlemen between mini-bond issuers and new clients.
Their adverts appear at the top of search engine results when people type in trigger words like ‘investment’ and ‘safe’.
One website promoting MJS Capital bonds was Direct Property Investments and its sister website Safe Secure Investments. The latter has been offline since The Mail on Sunday warned about its promotions last year. These websites claimed to be able to provide ‘premium UK investments’ with returns of up to 14 per cent a year, ‘with multi-layered security structures for added peace of mind’.
MJS Capital was flagged as a ‘highly secure investment’. Clients were asked to fill in a form and send it back to the introducer to receive further detailed information, but were signing up as selfcertified sophisticated or high net-worth investors.
One couple was warned by an adviser at their bank not to invest. They fed this back to Direct Property Investments, clarifying that it was a big investment for them, and they would not want to see their life savings disappear.
The email they received back included grammatical errors, which are warning signs for the wary. It stated: ‘Your Bank will always say an investment like this they will not want you to pursue as they cannot compete with the fixed returns, I can reassure you that your capital is 100% protected £ for £ and your return is fixed.’
Once forms were signed, investors received the information memorandum – a document approved by Barton Brown. This firm is a
corporate finance adviser authorised by the FCA, and Lord Razzall is one of its directors.
The memorandum from October 2017 confirmed that a ‘security trustee’ registered with the FCA had been appointed to protect the rights of bond-holders. But the security trustee was Solent House – a foreign exchange company originally serving the needs of crew from ships docking in Southampton. It was only regulated for money remittance services, and not overseeing investments.
One man who received information about MJS Capital, but decided not to invest, recorded the sales call he received about the bonds. During the call he was told the investment was managed ‘by an independent FCA-regulated trustee’ and assured ‘the investment has financial protection for investor capital by Lloyd’s of London.’
WHAT HAPPENED TO THE MONEY?
ABOUT £7million is believed to have gone to a Dubai-based company. Profits thought to have arisen from that deal did not make their way into the ‘security fund’, which was promised to investors as a segregated account from which their interest would be paid.
The Mail on Sunday asked Shaun Prince of MJS Capital for details of where money was invested, but did not receive a response.
When this newspaper contacted Lord Razzall he said: ‘I resigned from MJS over a year ago, and at the time the company was complying with its obligations.
‘I do not understand how nonsophisticated investors subscribed, and I am clearly sorry if anyone loses their money.
‘I think the FCA needs to look at regulation of intermediary companies that appear to suggest investments are regulated when they are not. I was never shown the marketing material.’
Sheila Willshere of Direct Property Investments said: ‘The risks associated with this investment were clearly set out in the information memorandum.
‘Investors acknowledged they had read and understood these risks before going ahead with an application to invest. All marketing materials used were approved by MJS Capital and signed off by an FCAregistered corporate advisor.’
Direct Property Investments is currently inviting new customers to invest their £20,000 tax-free Isa allowance in a new innovative finance Isa, a type of investment which the FCA recently warned was high risk.