A High Court freezing order covers founders Stephen and Stuart Pratt and two associates
The brothers behind a suspected motorway service station Ponzi scheme have been hit by a multi-million-pound asset-freezing order.
Administrators for Godwin Capital, which collapsed in June last year, successfully obtained a £155m High Court freezing order against the directors and associated companies. The order covers the business’s founders, brothers Stephen Pratt and Stuart Pratt, and two other associates.
Administrators of MHA cited mismanagement, fraudulent trading and breach of fiduciary duty when obtaining the order, according to a letter seen by The Telegraph.
Godwin Capital’s collapse last year left thousands of Britons out of pocket. The company had raised hundreds of millions of pounds from thousands of small-time investors who provided loans of between £5,000 and £50,000 each and were promised returns of 10pc or higher.
Investors were told their money would be used to build residential and commercial properties, including motorway service stations, and that their loans would be secured against the properties.
Some of the projects were built, such as the Ram Jam Service station on the A1.
However, after Godwin collapsed, administrators allegedly discovered that loans were not secured against properties and funds had instead been used to repay other investors in an apparent Ponzi scheme.
Overall, it is believed that around 2,500 investors could have lost as much as £150m.
Martin Richardson, senior partner at Richardson Hartley Law, which is representing some of the investors who lost money in the scheme, said: “Investors’ money was clearly not spent in a way for which they intended when they sent the money.
“We have scores of clients whose lives have been ruined by this incredibly sophisticated scheme that took tens of millions of pounds with little or no returns.”
Barry Coffey, a partner at law firm Mishcon de Reya who specialises in fraud investigation and recovery, told Bisnow, a commercial real estate newspaper: “If there was money coming in which has been used to pay off prior investors, that would appear to be a Ponzi scheme.”
‘They seemed very professional’
Hilary Randall, a 72-year-old retired lab technician, lost £20,000 investing in Godwin Capital – almost all of her entire life savings – after being introduced to the scheme by a friend.
She was promised annual returns of up to 12pc and was repeatedly asked to invest more money in the scheme. After she asked to withdraw her funds, she was told to wait another 12 months, during which time the company collapsed.
Ms Randall is now entirely reliant on her pension to support her.
“I was contemplating having to sell the house to get some money taken out for me to live off,” she said. “I want to go on holiday; that’s what this money was supposed to be for after I retired, and I was going to get the money out, ironically, and then obviously it all went kaput.”
Stephen Jones, a 62-year-old self-employed landscape gardener, invested £90,000 with Godwin Capital – his savings and also his pension. He received no further communications from the company after investing and has been unable to contact anyone since.
“I’d gone to the office in Birmingham, and they’d cleared the stuff out two or three weeks before they went into administration,” Mr Jones said.
“They sent a proper professional leaflet with all the directors explaining the debenture. Yeah. And they told you about the directors, people with a lot of experience, a lot of years of investment.
“These men would have nice houses. They’d have had a good salary out of it. They seemed very professional. So why do what they’ve done?”
Lawyers for the directors were contacted for comment.
In 2003, the Pratt brothers began converting a former office building in central Nottingham, owned by their father, into luxury homes. The project was planned and administered from their parents’ dining room, giving rise to the company name Godwin Developments, after the 19th-century architect who designed their family home.
It wasn’t until 2018 that they launched the company’s associated finance division, Godwin Capital, and started raising money from retail investors in earnest.
It’s difficult enough buying companies quoted on a stock market, it’s a potential can of worms if you venture outside of the market.
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