UK High Court shuts down “web” of carbon credit boiler rooms – £19 million scam with Eco-Synergies at the centre

Following an investigation by the Insolvency Service, 13 companies that sold carbon credits as investments have been wound up in the UK’s High Court on the grounds of public interest. The companies had scammed people out of more than £19 million.

The Insolvency Service describes the companies as a “web”, with Eco-Synergies Ltd at the centre. Eco-Synergies was a wholesaler of voluntary carbon credits (VERs), which it sold to other, often related, companies to sell to the public as investments.

Eco-Synergies bought the credits for an average of 65 pence per credit. The web of companies selling the credits to the public inflated the price by up to 869%. The company’s website has now disappeared, but here’s an archive copy. Eco-Synergies sketches the outline of the scam:

We are the largest wholesale supplier of Carbon Credits in this market and currently have over 25 active trading agents, we also take on between 2-5 new agents a month and this culminates to us settling between 1-2 million credits per month.

In ordering the 13 companies into liquidation in the High Court, registrar Clive Hugh Jones said,

I am satisfied on the basis of the evidence before me that the sale of VER carbon credits to the public on the basis that the credits will increase significantly in value would be a sale based on a fraudulent misrepresentation.

It is plain that the companies were trading VER carbon credits as investments which is wholly incorrect and misleading.

So these companies (and presumably all the others that sold carbon credits to the public as investments) did so based on “fraudulent misrepresentation”. But what happens next? Will the police soon be knocking on the doors of the directors of these companies? Will the people scammed into handing over a total of £19 million be able to get any of their money back? Chris Mayhew, Company Investigations Supervisor at the Insolvency Service, suggests not:

“Essentially investors including vulnerable individuals and often repeat victims who were urged to buy more and more credits have lost their money.”

Here’s the list of companies wound up in the High Court – the summary of information on each company comes from the Insolvency Service’s website:

1. Eco-Synergies Ltd was set up on 1 March 2011. Its first director was Simon Barr who was replaced on 25 October 2012 by Nicolas Towers. Richard Beese, David White and Gavin Manerowski were former shareholders. The company went into voluntary liquidation on 6 February 2013. The company was dissolved on 5 March 2014. On 1 May 2014 the High Court ordered the company to be restored to the register and to be wound up compulsorily in the public interest.

2. Eco-Synergies Nominees Ltd was set up on 23 March 2011. Its first director was Simon Barr who retired as director on 1 October 2011. On 1 February 2012, Anna Rickard, Citadel Nominees Limited and Citadel Secretarial Services Limited became directors. Shareholders are Citadel Nominees Limited and Citadel Secretarial Services Limited. Richard Beese, David White, Gavin Manerowski and Jonathan Cocks were former shareholders.

3. Alternative Capital Limited was set up on 9 September 2011. The first director was George Andreetti who retired as director on 22 August 2012. Lewis Tweed was director from 3 April 2012. On 9 April 2013 the company went into voluntary liquidation.

4. Beta Commodities Limited was set up on 5 October 2011. For the first day of the company, the director was Yomtov Jacobs, after which James Cable took over as director. The company traded as Alpha Commodities.

5. Capital Acquisitions Ltd was set up on 5 March 2010 under the name Capital Marketing Solutions Limited. The company’s sole director was William Strutt. On 17 June 2013, the company went into voluntary liquidation.

6. City Asset Partnership Ltd was set up on 15 November 2011. The sole director was William Strutt. On 17 June 2013, the company went into voluntary liquidation. I wrote about City Asset Partnership in May 2013.

7. Cleartrade Limited was set up on 19 October 2011. Graham Hawrysh was director until 20 October 2012. Carl Thornton and Marcel McKeigue became directors on 27 October 2011.

8. C T Carbon Limited was set up on 28 July 2011. The sole director was Christopher Thompson. On 4 December 2012, City of London Police arrested eleven people after the police found “evidence linking them to fraudulent companies Hudson Forbes, CT Carbon and Burlington Energy Markets”. On 1 November 2013, the company went into voluntary liquidation.

9. MH Carbon Limited was set up on 27 September 2010. The directors were Gavin Manerowski (until 24 October 2012) and Jonathan Cocks (until 1 July 2011). Jeffrey Razaq became a director on 24 October 2012. On 31 May 2013, the company went into voluntary liquidation. I wrote about MH Carbon in January 2013, and twice in May 2013.

10. New Frontier Advisory Ltd was set up on 16 August 2010. The sole director was Charles Denbigh.

11. Wealth Capital Ltd was set up on 30 May 2012. the sole director was Darren Bartlett.

12. World Commodity Trading Limited was set up on 14 May 2012. The directors were Mark Griffiths and Rebecca Pate (from 27 March 2014 to 29 March 2014). On 28 March 2014, the company went into voluntary liquidation.

13. Worldwide Commodity Partners Limited was set up on 25 May 2011 under the name World Carbon Limited. Keith Lane was director, until 9 June 2011, when Lee Thompson took over as director. I wrote about Worldwide Commodity Partners in July 2012.

Eco-Synergies was the exclusive supplier of carbon credits to MH Carbon, which sold carbon credits to retail investors. Gavin Manerowski was an initial shareholder in Eco-Synergies and Eco-Synergies Nominees. He was also a director of MH Carbon. Jonathan Cocks was a shareholder of Eco-Synergies Nominees and a director of MH Carbon. In May 2013, Tony Hetherington at the Daily Mail described Manerowski and Cocks’ interesting pasts:

Cocks had been connected to Montague Pitman Stockbrokers, whose mis-selling to investors would have cost it a fine of £240,000 but for the fact that it collapsed into administration.

Manerowski worked for Wills & Co Stockbrokers, which also collapsed in the face of fines and censures as a result of its massive mis-selling.

Montague Pitman was founded by Richard Beese, David White and Thomas Knifton. Beese and White were also shareholders in Eco-Synergies and Eco-Synergies Nominees.

An archive of Carbon Neutral Investment’s website (another company that sold carbon credits to retail investors) reveals that in 2012, Thomas Knifton was one of Carbon Neutral Investment’s three principal partners (along with Paul Seakens and James Brown).

Citadel Trustees

Another company lurking in the shadows of these carbon credit scams is Citadel Trustees – a company registered by the Financial Conduct Authority. On its website Eco-Synergies stated that, “Credits are held with a regulated trust company”.

The directors of Eco-Synergies Nominees were Anna Rickard, Citadel Nominees Limited and Citadel Secretarial Services Limited. Anna Rickard is a director of Citadel Trustees, Citadel Nominees Limited and Citadel Secretarial Services Limited.

Citadel Trustees is a subsidiary of Hutchinson & Co Trust Company Limited. Peter Hutchinson, the founder of Hutchinson is a director of Citadel Trustees. Anna Rickard is also a director of Hutchinson. Between 1 February 2012 and 24 October 2012 she was a director of MH Carbon Nominees (as were Citadel Nominees Limited and Citadel Secretarial Services Limited).

Back in March 2012, the Daily Mail‘s Hetherington wrote about Citadel Trustees in an article about World Carbon Limited (which changed its name shortly before the article went to press to Worldwide Commodity Partners Limited):

So what does Citadel do? Apparently, it simply holds the carbon credits for both World Carbon and its clients. And that’s it. But this leaves Citadel in an odd position.

It is licensed by the FSA, which has issued a strong warning about carbon credits. Not every scheme is a scam, it says, but investors may not be able to sell their credits at any price.

So should Citadel be involved at all? Director Anna Rickard told me: ‘It would only be unethical for Citadel Trustees to knowingly and intentionally involve itself in a scam.’

However, this is not quite the FSA view. The City watchdog said: ‘Firms should be aware that there are some unscrupulous unauthorised investment firms that will try to get advertising or other promotional material approved by authorised firms to appear more legitimate.’

Of course, the FSA is not saying that World Carbon is unscrupulous. But it is saying that Citadel cannot sit back and close its eyes and ears.

Citadel’s role doesn’t finish once the carbon credits are sold. Several people who have been scammed into buying carbon credits have commented on REDD-Monitor about bills received from Citadel asking for payments for Citadel’s service: holding the carbon credits. Citadel explains that it was appointed by Eco-Synergies to provide “custodian and escrow services in respect of the sales of carbon credits”. This is how Citadel explained its charges to one “investor”:

We charge £0.015 per carbon credit. The payment of our annual fees contribute to the costs in retaining the non-trading holding company we administer, Eco-Synergies Nominees Ltd. This company is the entity which holds the carbon credits. In addition, we maintain an electronic record of all carbon credits purchased by investors and attend to various administrative duties.

Citadel explains that its role is necessary, because “we were advised that it was not possible for the credits to be registered in the name of private individuals on the carbon registries”. The credits are owned by Eco-Synergies Nominees. The fees are to cover Citadel’s costs producing annual reports and accounts, and providing directors and shareholders for Eco-Synergies Nominees. And “maintaining a database of owners and responding to client enquiries”.

“If payment is not forthcoming,” Citadel continues, Citadel “could apply interest of 2% per annum above the London Interbank Offered Rate during the period of default”. If no payment is received within 30 days, Citadel “may suspend your ownership of the credits” and try to sell them.

The Insolvency Service reports that Eco-Synergies Nominees Ltd did not oppose the winding up action and that “the professional director” of the company (Anna Rickard, Citadel Nominees Limited and Citadel Secretarial Services Limited are directors) and the secretary (Citadel Secretarial Services Limited) would resign their appointments.

The Insolvency Service adds,

Custodian and trust services were provided to the scheme by an FCA authorised trust company that shortly before the winding up hearing wrote to investors informing them of the winding up petition issued against Eco-Synergies Nominees Ltd that was not being opposed.

On 1 April 2014, Citadel Trustees changed its name to Highpoint Trustees. The company’s website currently looks like this: