Qualia Care Limited Robin Forster Care Home Investment ‘Ponzi’ Scheme
The High Court has ruled in favour of the FCA against Robin Forster, the director of a company which took £57 million from 380 investors in an illegal care home investment scheme.
Between 2016 and 2020, Qualia Care Properties Ltd and Qualia Care Developments Ltd offered investments in care homes run by a third company, Qualia Care Limited.
Investors purchased a long-term lease in a room in a care home and then sub-let the room back to the Qualia companies. Investors were promised returns of between 8 – 10% of the purchase price over the period of the sublease. The leases cost between £50,000 and £75,000. Investors were encouraged to use Qualia’s recommended conveyancers – Gaddes Noble Property Lawyers – for the conveyancing process, with Qualia paying Gaddes Noble’s fees. The investments were also promoted using a report produced in June 2016 by Lupton Fawcett LLP – a firm of solicitors used by Qualia.
Following a High Court trial in May, FCA v Forster & Ors [2023] EWHC 1973 (Ch), the Court agreed with the FCA the scheme was unlawful and amounted to an unauthorised Collective Investment Scheme. The Court also agreed the returns promised to investors were never likely to be achievable and that Mr Forster had made false and misleading statements to investors about the sustainability of the scheme.
The Court noted that what was happening in reality, was that investors were unknowingly taking all of the risk of the commercial operation of the property concerned.
Steve Smart, Joint Executive Director of Enforcement and Market Oversight at the FCA, said:
‘Mr Forster didn’t just put investors’ funds at risk by selling investments in an unauthorised scheme that was not sustainable, he also put at risk the wellbeing of residents of the care homes, many of whom were vulnerable. I would like to thank the Care Quality Commission for their assistance during our investigation and their work ensuring the residents of these care homes continued to receive the care they need.
‘The Qualia scheme offered unrealistic returns based on its unsustainable business model and operated like a Ponzi scheme. Mr Forster’s reckless behaviour put investors at serious risk, and we will now seek compensation for them.’
The FCA’s action is also against the main sales agent for the scheme, Fortem Global Limited, which was owned by Mr Forster and Richard Tasker.
The Qualia companies are now in administration and Fortem Global is in liquidation.
According to the FCA, prior to the Qualia scheme, Mr Forster was involved with MBI companies which operated a very similar investment scheme to Qualia relating to investments in Downshaw Lodge, Oakesway, Ferndale, Birchley Hall, Sandycroft and Gilwood Lodge. The FCA has issued a claim in the High Court arguing that the MBI scheme was also a Collective Investment Scheme which was being operated unlawfully without FCA authorisation. The FCA have said it will seek a similar Restitution Order in relation to the MBI scheme.
Although the above judgment concerns enforcement action by the FCA against the individual behind the schemes, there are likely to be good claims against the conveyancers that recommended the scheme to the investors, namely Gaddes Noble Property Lawyers, Licensed Conveyancers, Huddersfield, and also against any other firms who fulfilled a similar role. The Court’s findings that the scheme was a CIS within section 235 FSMA, which likely gives rise to negligence claims as there is a good argument that a conveyancing solicitor should have warned the client about the risk that the scheme was being promoted and operated illegally. Such negligence claims against the conveyancers would be met by their professional indemnity insurance.
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FS Legal will be working on a full ‘no win no fee’ basis for victims of these schemes.
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We understand that, whether it’s a personal or business matter, funding is a key concern. We have a variety of funding options available to seek to remove the risk and cost from our clients. Unlike most firms, we are able to operate the vast majority of our cases on a contingent (‘no win no fee’) basis. FS Legal will be working on a full ‘no win no fee’ basis for victims of these schemes.
