Two companies - Denver Trading AG, and Denver Trading Ltd - that sold rare earth elements as investments to the public were wound up in the High Court on 27 August 2014.
The winding-up orders follow an investigation by the Insolvency Service.
Denver Trading AG, a Swiss registered company, and Denver Trading Ltd, a Seychelles registered company (collectively ‘Denver Trading’), acted as suppliers of rare earth elements – a set of 17 related metals – increasingly used in electronics related manufacturing – to members of the public through a network of UK based sales agents, over 40 in total.
A number of those agents themselves have ceased to trade or have been subject to winding up proceedings following investigations by the Insolvency Service, including Westpier Consultants Limited and Global Metal Exchange Limited, Sales agents were typically paid 40% to 50% commissions for each sale.
Welcoming the court’s decision to wind-up the companies, David Hill, a Chief Investigator with the Insolvency Service, said:
In spite of their grandiose claims, this company’s services, were simply designed to fleece vulnerable investors
Investors need to be wary: if you are cold-called and pressured to invest in any kind of investment, just hang up. No genuine investments would be in such a manner.
The Insolvency Service will continue to take robust action whenever serious failings are discovered and in particular against contemptible companies as in this case.
The investigation found that sales agents made serious misrepresentations as to investment returns to prospective purchasers of these rare earth elements. Additionally, the Denver Trading AG website included a number of false and misleading statements as to the standing and expertise of that company.
The investigation also found that the Denver Trading companies had authorised its sales agents to sell rare earth elements at very substantial mark ups, ranging from 300% to 500% of the prices paid by the Denver Trading companies for those elements. In practice it was found that agents had been selling those rare earth elements at typically 625% of the prices paid by the Denver Trading companies. The Denver Trading companies had in turn sourced and purchased rare earth elements in bulk from a Canadian supplier.
Registrar Barber sitting in the Companies Court found that the companies were structured in such a way as to mask the identity of those individuals who exerted control and management. They were in fact controlled and managed by Christopher John Sabin and Tobias Alexander Ridpath, although neither had ever been appointed as directors. Mr Ridpath had been previously disqualified from acting as a company director, for a period of 9 years between 2000 and 2009. By operating through two overseas companies, the UK centre of their operations was hidden from scrutiny.
The investigation found that the affairs of the companies had been intermingled to such an extent that their trading activities could not be readily separated, matters not assisted by a comprehensive failure by both companies to maintain adequate accounting records. According to Messrs Ridpath and Sabin, the Denver Trading companies had generated turnover in the region of £6 million in a trading period of approximately 15 months, starting in early 2012.
Those purchasers of rare earth elements from the Denver Trading companies and their network of sales agents were informed that their purchases would be held in a bonded warehouse for a period of 5 years, with storage costs and insurance paid for a period of 5 years from the date of purchase. This was false. The Denver Trading companies ceased paying storage costs to its storage facility provider, Cadogan Tate Limited, in early 2013, and all insurance cover was withdrawn due to no payment on 31 August 2013. Furthermore, purchasers have not been able to access their products, on the basis that the storage contract is between Cadogan Tate Limited and the Denver Trading companies.
The Denver Trading companies are subject to an on-going criminal investigation by Devon and Cornwall police, named Operation Stagecoach. Devon and Cornwall police can be contacted via their website.
Notes to Editors
Denver Trading Limited, a company registered in the Seychelles, registration number 103981, was incorporated on 23.February 2012. Denver Trading AG, a company registered in Switzerland, registration number CH02030323997, was incorporated on 15.May 2008. The registered address of both companies since they were placed into provisional liquidation on 20.12.13 is The Insolvency Service, 4 Abbey Orchard Street, London, SW1P 2HT.
The current appointed director of Denver Trading AG is Philippe Francois Jean Godet, a French citizen and resident. Trident Trust Company (Seychelles) Limited, has been the sole appointed director of Denver Trading Ltd since its incorporation.
The petitions to wind up the companies were presented in the High Court on 20 December 2013 under the provisions of section 124A of the Insolvency Act 1986 following confidential enquiries by Company Investigations under section 447 of the Companies Act 1985, as amended. The Official Receiver was appointed provisional liquidator to both companies on that date.
Company Investigations, part of the Insolvency Service, uses powers under the Companies Act 1985 to conduct confidential fact-finding investigations into the activities of live limited companies in the UK on behalf of the Secretary of State for Business, Innovation & Skills (BIS).
The Insolvency Service administers the insolvency regime, investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. It may also use powers under the Companies Act 1985 to conduct confidential fact-finding investigations into the activities of live limited companies in the UK. In addition, the agency authorises and regulates the insolvency profession, deals with disqualification of directors in corporate failures, assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees, provides banking and investment services for bankruptcy and liquidation estate funds and advises ministers and other government departments on insolvency law and practice.
Further information about the work of the Insolvency Service, and how to complain about financial misconduct, is available.
By virtue of the winding up orders all public enquiries concerning the affairs of the companies should be made to: The Official Receiver, Public Interest Unit, 4 Abbey Orchard Street, London, SW1P 2HT. Telephone: 0207 637 1110 Email: firstname.lastname@example.org.
Published: 5 November 2014
From: The Insolvency Service