A HELMSHORE commercial property developer has been convicted of duping investors across the country in a £1.3million scam.
Shaun Kiely, 43, of Limewood Close, was the director and shareholder Sky Properties (Northern) Ltd, a development and real estate business, as well as S-Mart Stores, a chain of small retail outlets.
The 2005 fraud involved Sky Properties buying 50 cheap outlets and creating 20-year commercial leases for S-Mart.
S-Mart auctioned off the freeholds to seven investors who believed they would make money from ‘viable and profitable business opportunities’, while S-Mart paid the rent.
But they were stocked with poor quality goods, damaged items and got no customers.
A trial at Preston Crown Court heard Kiely’s intention was to make a quick short-term profit.
Investors were shown falsified 2004 accounts which overstated S-Mart’s turnover by millions of pounds.
But the company was really making significant losses and within a matter of weeks, and in some cases only days, after the sales had gone through, S-Mart defaulted on all its leases and stopped paying rent.
Investors from Lancashire, Cumbria, Essex and Co Durham were amongst those who lost their money and Kiely sent out a letter to them, saying: “For the past six months S-Mart has suffered the worst trade in its history. Takings in our stores are down in some cases 90 per cent and we often have sales of less than the wage of a single member of staff.
“Our losses over this period have been massive…The fact is that we cannot make the rent payments – we cannot operate the stores…No matter what action you take – we cannot continue to rent your property and we felt it best to send you the keys so you can re-rent the property as soon as possible”.
The case was referred to the Serious Fraud Office in 2007 which ran a joint investigation with Lancashire Constabulary, culminating in charges in 2009.
Kiely, was found guilty of obtaining money transfers by deception and of false accounting. He will be sentenced in July.
Another defendant, Christopher Page, 44, of Woodside Road, Accrington, a former manager at the two companies, was acquitted of obtaining money transfers by deception.