A UK Watchdog Has Shut Down Two Fraudulent Art Investment Companies That Scammed Unsuspecting Backers Out of $1.3 Million

Two fraudulent art investment companies in the UK that raked in
more than $1.3 million from unsuspecting investors have been shut
down. Authorities will now oversee the re-distribution of assets
to, hopefully, some of those who were duped.

Gem Tobin Ltd, based in Cheshire, and Dinonysus Design Services
Ltd., in York, were turned over to liquidators on October 7 at the
High Court in Manchester, according to a press release from the
London-based Insolvency Service.

“Following confidential inquiries, investigators established
that Gem Tobin and Dionysus Design Services had received payments
from people who were persuaded to make investments in works of art,
supposedly by renowned painters,” the press release said. But
investigators may have already been one step ahead of the
scammers.

In court, it was revealed that the two companies came to the
attention of the Insolvency Service as a result of previous
investigations into related companies, Halifax Mannin Ltd. and Hey
Design Services. Those companies were turned over to liquidators in
March after raising nearly $1.9 million (£1.4 million) from
investors under false pretenses.

Gem and Dionysus were “a continuation of the activity carried on
by Halifax Mannin and Hey Design,” according to the most recent statement,
released earlier this week. All of the schemes appear to have been
operated from Spain or Morocco by a separate business known as
Asset Consulting Services, or Asset Consulting Group, which itself
was subject to a previous warning from financial regulators.

“These companies have acted cynically in accepting almost £1
million from members of the public, many of whom are elderly and
vulnerable people,” said David Hope, chief investigator for the
Insolvency Service. Hope said there was “no evidence to indicate
that the investment being offered had any value or was likely to
generate any return for the investors. This continues a pattern of
behavior that was identified in relation to other companies.”

The vast majority of the funds received by Gem Tobin and
Dionysus have been pulled out of the accounts, but “investigators
have not been able to determine how the funds were spent as the
individuals believed to have been in control of the companies
failed to co-operate with inquiries,” the release said. The
individuals who operated the companies were not named in the
complaint.

Steven Fifer, an Insolvency Agency representative told artnet
News in an email that information about how the scheme operated is
limited. “It appears that potential investors were generally
approached by unsolicited phone calls.” Prospective investors were
told that they would be investing in works by Salvador Dalí and
Pablo Picasso and that the investments would increase the artworks’
value.

Once an initial investment was secured the investor would often
be approached again and encouraged to make further contributions.
Investors were also sent documentation and subjected to
pressurized sales calls. “A courier would often be sent to their
home to collect the payment,” Fifer told artnet News.

“Thankfully, the courts have now put a stop to their activities,
preventing further harm, and anyone approached by, or thinking
about making an investment with, Asset Consulting Services or Asset
Consulting Group should read the warning issued by the Financial
Conduct Authority and take independent financial advice before
making any decisions,” said Hope.

Investors hoping to recoup their money can contact the Official Receiver, appointed by
the court as liquidator of the companies. “Investors can register a
claim as a creditor in the liquidation, but any distribution to
creditors will depend on the value of any assets that are realize,”
Fifer said.

The post A UK Watchdog Has Shut Down Two Fraudulent Art
Investment Companies That Scammed Unsuspecting Backers Out of $1.3
Million appeared first on artnet News.