The Carlauren care homes scandal that cost investors millions and brought Ferrari lifestyle for founder

Administrators have frozen £40 million of "Walter Mitty" founder's assets but fears rise for "missing" funds
Murray is said to have travelled the world in a private jet
Jim Armitage @ArmitageJim13 February 2020

When investors were offered the chance to plough their savings into upmarket British care homes, it was a tempting prospect. With the promise of 10% interest a year, they were told the Carlauren Group would renovate properties and turn them into elderly residential homes for the wealthy.

It was, they were assured, a growing market. Britain’s rapidly ageing population have become flush with money from the value of their homes to spend on their long-term care.

Convinced by the patter of founder Sean Murray and his sales agents, the public parted with £75 million to invest in Carlauren’s homes, happy in the knowledge that they were beating super-low interest rates from the bank.

Unluckily for them, within a couple of years, the business started going badly wrong. Properties that had been bought for renovation remained dilapidated and tradesmen were going unpaid.

Carlauren, actually a complex web of interconnected businesses, collapsed into administration shortly before Christmas with administrators Duff & Phelps and Quantuma appointed to salvage what they can from the wreckage.

Elderly residents in the few care homes that were built were forced to look for alternative accommodation and nurses have been made redundant.

Investors are now left fearing for their savings in what appears to be another repeat of the scores of dubious investment schemes such as London Capital & Finance selling investments from car parking spaces to student flats.

Again, the Financial Conduct Authority stands accused of being asleep at the wheel for failing to act against the company before it was too late.

It is now alleged that Carlauren founder Murray was living high on the hog, spending what appear to be company funds on supercars, a yacht and a private jet in which he is said to have flown around the world.

A man with what one former associate describes as “a limp handshake and an obsession with designer clothes”, Murray is said to be a former telecoms worker who boasted of being married seven times. He is dubbed a “Walter Mitty” character by one involved in the situation. Administrators say he bought the luxury vehicles through a company called Carlauren Travel. He has claimed they were for the purpose of servicing the company’s rich clientele. But in fact, according to several sources, they were used by him to travel in luxury.

Quantuma told investors last week it had obtained a £40 million freezing order over Murray’s assets in the High Court in London. However, neither Quantuma nor Duff & Phelps can estimate how much money will be returned to investors, due in part to the state of record keeping at Carlauren.

In a statement last month, Quantuma and Duff & Phelps revealed they have seized the cars (thought to include a Rolls-Royce, a Bentley, a Ferrari and a Lamborghini), the yacht and the jet with a view to selling them. Two luxury homes allegedly lived in by Murray and his latest wife are expected to go the same way.

It has also emerged that much-married Murray was not the only man with an interesting past at Carlauren. Paul Murphy, described on Carlauren’s website as “executive consultant, investor sales” and lauded as having “over 20 years’ experience in UK and international real estate”, was sentenced to six years’ jail in 2011 for his part in a boiler-room scam.

Property agent Mike Symondson, who found investors for Murray through his sales company Asia Gold, dealt with Murphy and Murray.

He recalled how when the business started, Murray was living in a rented property. “But pretty soon he was living like Rod Stewart, with his own aeroplane.

“He turned up in a McLaren, then a Lamborghini, then a Rolls-Royce. It just never stopped.”

Symondson was one of several agents selling rooms in the care homes with a commission of as much as 15%. Such fees made it even more unlikely that Carlauren would be able to deliver on its promised 10% returns to investors.

He targeted investors in Asia and the Middle East and said his fee was justified by the 10% commission he paid his agents in Asia, and his own regular business travel to the region.

Asked how he felt about his investors who had paid an average of £100,000 per room bought, he said: “They knew it was a risk. They weren’t naïve.”

Other agents such as London and Brighton-registered One Touch Solutions, sold to a UK clientele. Symondson says they, too, got 15% commission but had very few overheads. Investors have questioned why they were paid so handsomely, when most property agents charge 1%-2%. One Touch investment director, Arran Kerkvliet, did not respond to questions about his fees or the amount of due diligence he had done.

In a statement, he said: “One Touch have worked closely with the administrators to bring the Carlauren group of companies under their control.”

In their January report to creditors, the administrators said they were uncertain how much the group owes due to the poor quality of Carlauren’s financial records, but that it had only £5976 cash in the bank when they were appointed in December.

The report adds that Carlauren spent £22 million of investors’ funds on buying 21 properties, but some were mortgaged, making it uncertain how much security investors have. The situation is further complicated because leases on the properties, which include a number of hotels, are split between so many investors.

Before Duff & Phelps was appointed, investors had approached it with concerns that work had ceased at many of the company’s development sites and trade creditors had not been getting paid.

The administrators found the group had invested in assets which were not integral to the business model, including “software development”, a travel business with a private jet and luxury yacht, and “private residences”.

“The group’s business model which it operated is fundamentally flawed and unsustainable which led to the group’s failure,” the administrators concluded.

Murray could not be reached for this article, but in a court hearing before administrators were appointed, he denied their claim that £50 million was missing, said there was no misuse of funds, and claimed the jet, yacht and cars were bought as part of “an exclusive membership programme”.

As investigators at Kroll are now believed to be sifting through the wreckage he has left, the Carlauren club is one everybody regrets joining.

Was the regular asleep at the wheel?

A battle now looms between Carlauren investors and the Financial Conduct Authority.

Investors hoping for compensation will claim they were falsely sold a “collective investment scheme”, where a selection of assets are put together for sale to the public.

It is illegal to sell such investments without being regulated by the FCA. Carlauren and its agents deny they were selling collective investments because customers were buying individual rooms and suites.

But investors’ returns appear to have been paid by a management company that rented the rooms using funds from the Carlauren group, effectively a pool of all the investors’ funds.

Investment blog Bond Review says the business model was the same as in Park First, a collapsed scheme that sold and rented back airport car parking spaces. The FCA moved to prevent the firm selling it without the proper regulation.

Bond Review said: “In Park First, the FCA did intervene, confirming these schemes are illegal collective investments. But its response has been pathetically weak. Others involving hotel rooms, student flats etc have proliferated because of the FCA’s masterly inactivity.”

The FCA said: "Carlauren was not authorised by the FCA. On the basis of the evidence we have seen it does not appear to have been a collective investment scheme but we will, of course, consider any further evidence that may come to light.”

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