Byline: Hilary Clixby
VICTIMS of a massive property scam were greeted by the grim sight of burned-out buildings when they finally viewed the house sold to them as an investment opportunity.
Maureen and Philip Patrick sank pounds 25,000 into the buy-to-rent scheme set up by Practical Property Portfolios Ltd after being persuaded their money would be used to buy, renovate and tenant a house on their behalf.
Instead they discovered the premises lying empty in a run-down Wearside street resembling a war-zone - its investment potential so poor it was eventually sold to a housing association for just pounds 2,000. Mr and Mrs Patrick were among hundreds of innocent people duped into handing over their cash to the now wound-up PPP business based on the Team Valley Trading Estate in Gateshead.
Prosecutors at Newcastle Crown Court said while it was not suggested the company was set up as a fraud, it became fraudulent because its directors became "greedy and careless".
When the deception was exposed, the company had sold an estimated 4,000 residential properties to at least 1,750 investors in exchange for an estimated pounds 80m.
By the time the liquidator intervened, it is believed there were almost pounds 65m worth of investor funds providing no genuine return - with many of the properties sub-standard and some even derelict. Former PPP directors John Potts, Peter Gosling, Natalie Laverick, Eric Armstrong and Peter Graham were arrested after an investigation lasting four years.
They had faced a lengthy trial last month accused of conspiracy to defraud potential and actual investors between June 2001 and March 2003 when PPP folded.
But Potts, 60, of Silksworth Hall Drive, Sunderland, Gosling, 57, of Rothbury Gardens, Lobley Hill, and Laverick, 28, also of Silksworth Hall Drive, all went on to admit the conspiracy charge .
Graham, 62, of Topcliffe, Sunderland, admitted three counts of fraudulent trading and Armstrong, 55, of Moorside North, Fenham, Newcastle, two fraudulent trading counts.
Sentencing began yesterday for a hearing expected to end tomorrow.
Prosecutor Nicholas Dean, QC, said PPP was established in April 1998 when Potts and Gosling became directors having met working for the same financial company.
Mr Dean said: "The prosecution are not suggesting these defendants set up the investment scheme as a fraud from the start.
"The scheme became a fraud for one main reason - the defendants and particularly Potts were both greedy and careless. Their greed meant that the scheme became a fraud and could only be continued as a fraud. Greed driven by Potts meant that the income became the focus of PPP's business at the expense of the prudent acquisition, refurbishment and management of property."
Mr Dean said PPP advertised in national newspapers and provided potential investors with slick promotional literature claiming to offer "unrivalled experience" and "quality, ethical and professionally managed services". …