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Mis-Sold investment - Ethical Forestry

Latest updated: 12th July, 2019 (UK Serious Fraud Office)

Case Points

Total amount invested

£70 million, according to a British government estimate.

Why did people invest in it?

Consumers were promised an ethical investment with a positive environmental impact and high returns.

Why was it mis-selling?

Clients were not properly informed of the associated investment risks and were told that they would benefit from ‘predictably high returns’.

Potential value of cases

Averaged estimated value of approximately £20,000 per investor*

Summary

Bournemouth based Ethical Forestry, invested in plots of Melina Hardwood trees in Costa Rica. Like many investment opportunities, Ethical Forestry attempted to frame itself as an ethical business with a positive impact, both on the environment and on investors’ wallets.

It proposed growing exotic woods in Costa Rica, and using a wood mill owned by the company they planned to refine the wood prior to selling it, thereby increasing its value. The investment itself was marketed to the ‘environmentally aware investor’ and those looking to build SIPP portfolios. It is estimated that £70 million was invested in total.

Unfortunately, those selling the investment failed to conduct appropriate due diligence and Ethical Forestry was hit by a number of mis-selling claims in 2015. Ultimately they were unable to meet their financial responsibilities, and were forced to enter into liquidation.

During the liquidation process, the plantations in Costa Rica were hit by Hurricane Otto in 2016. This caused major damage and the value of the company’s assets dropped heavily. In December 2016, the UK Serious Fraud Office opened an investigation into Ethical Forestry which is still ongoing. The Directors of the company have since been banned as directors after withdrawing millions in tax from the scheme which they knew was being investigated by HMRC.

*Based on a division of the £70 million investment among approximately (according to the Insolvency Service) 3,500 investors.

You are likely to have a potential claim on the basis of advice from a regulated firm. The claim above is only an example of a potential claim. Each claim is judged on its individual merits and as such, we cannot guarantee that your individual claim will be successful or that you indeed may have grounds for a claim.

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