The liquidators of MJS Capital have released an update into the first year of its winding up.
In total MJS Capital raised £42 million from investors, including via unregulated introducers. Claims for £36 million have been received by the liquidators and they estimate a further £6 million is yet to be claimed.
MJS Capital claimed that investors’ money would be invested in “low risk” arbitrage.
In reality, at the time of the liquidation, the bulk of investors’ money – £38 million, according to MJS’ balance sheet – was invested with just two companies, namely Angel World Family Office LLC , and Fortitude Capital.
The balance sheet puts the amounts owed by Angel World and Fortitude at £26m and £11m respectively, but the administrator goes on to put the amounts invested with Angel World and Fortitude at just £6m and £7m respectively. The only other assets held by MJS Capital consisted of a million or so loaned to other businesses, plus funds held by payment agents.
The loans to other business include £400k loaned to Tempus Media (London) Limited and used to acquire Tempus Magazine.
What happened to the rest of the £42 million invested is not clear from the report.
At the beginning of the liquidation the liquidator saw statements indicating an asset value of £36 million. This proved to be aggressively optimistic, as prior to the liquidators’ being called in, MJS Capital made settlement agreements with Angel World and Fortitude which left the potential asset value at £7 million.
Investors’ losses may yet be greater than this depending on what the liquidators manage to recover.
Angels and devils
MJS Capital had £7 million invested with Angel World, an entity in Dubai. Prior to the liquidation, with angry investors banging on the doors, MJS agreed with Angel World to take just £5.3 million in full and final settlement.
After a trawl of the emails relating to the deal, the liquidators were unable to find any evidence that this was not an honest “arms’ length” transaction.
Only an initial £250,000 was ever paid back to MJS, and even that was spirited out of MJS before the liquidators got in.
Angel World is now also in liquidation, meaning the chances of the liquidators recovering any of the remaining £5.05 million are unclear.
As for Fortitude, MJS had £6 million invested with their trading platform, but in another settlement agreement entered into prior to the liquidation, MJS agreed to accept just £1.6 million as full and final settlement.
When the liquidation began, Fortitude still owed £816k to MJS, of which the administrators (after serving a statutory demand) have so far recovered £141,000 and a Porsche valued at £70,000. A payment schedule is currently being negotiated for the rest.
Fortitude Capital claimed in its March 2019 accounts to have net assets of £7.4 million. These figures were not audited.
MJS Capital CEO Shaun Prince
Let us remind ourselves at this point that in September 2019, months after the liquidators were appointed, CEO Shaun Prince was still insisting that MJS had “cashflow issues” and should never have been put into liquidation.
How Prince thinks MJS was ever going to repay the £42 million owed to creditors while writing off its own debts down to £7 million is unclear.
Former MJS Capital advisory board member Nigel Peck, who was director of an MJS shell company MJSC Marketing Limited, alleged that MJS operated as a Ponzi scheme by using new investor money to pay off existing investors who were threatening winding up proceedings.
A total of £450,000 was paid to 25 parties after the winding up petition was presented. As per the Insolvency Act S127, these payments are now null and void. The administrators have recovered a total of £31,000 so far and are mulling whether it is worth pursuing legal action to recover the rest, which has met with “significant resistance”.
Thames Valley Police are currently also investigating. The investigation was passed to a specialist team in Hertfordshire Police but then passed back to Thames Valley’s finest. Details of the investigation have not been disclosed.
MJS investors have been repeatedly contacted by recovery fraudsters claiming they can get their money back – after they pay a fee, which of course they never see again.
The liquidators report that the fraudsters not only know the investors’ contact details but also details of their investment with MJS.
How the recovery scammers obtained details of the investors’ investments is not known.
To date the liquidators have recovered £149k from MJS Capital. Their own costs stand at £525k and a further £354k in legal costs is due to Taylor Wessing for legal advice.