The Serious Fraud Office is investigating a car leasing investment business that collapsed into administration last month and left ordinary investors facing potential losses.
An arrest has been made in its inquiry into Raedex Consortium, which is behind a group of companies including Buy2LetCars.
Two homes were searched on Thursday with the help of the National Crime Agency and City of London police. An individual, who has not been named, has been interviewed and released pending further investigation. A second person has been interviewed.
Buy2LetCars went into administration weeks after the Financial Conduct Authority intervened at the business.
The company, which was set up in 2012 by Reginald Larry-Cole, 50, offered unregulated investments in lease cars and promised annual returns of up to 11 per cent over three years. The money it raised from small investors was used to buy cars that were leased under the Wheels4Sure brand to people with poor credit histories.
Advertisement
The FCA ordered Buy2LetCars to stop entering into new leases in February because of its concerns about the firm’s financial viability.
Last month RSM Restructuring was appointed as administrator of Raedex Consortium and other businesses in the group, and the FCA said that it had believed the firm was insolvent. Buy2LetCars had told the regulator that it owned 1,200 vehicles, but the FCA found there were charges at Companies House linked to only 69 cars.
A random check conducted by the FCA on 102 vehicles had also shown that 55 were used, even though the firm having told the regulator that secondhand vehicles made up only a minority of its business. The FCA said that the firm’s business model “relies to a large extent on securing deep discounts on new vehicles, and such discounts would not be available on secondhand cars”.
Two of the cars could not be found on the DVLA’s database and the FCA also identified 18 leases that were said to have been started “significantly before the vehicle was put on the road”.
The SFO said it was investigating “suspected fraud in relation to the activities of the Raedex Consortium.
Advertisement
RSM declined to comment. A request for a comment from Larry-Cole through his website was not returned.
