<
p>Two men have been sentenced to a total of seven years and ten months’ imprisonment for defrauding over 100 clients out of more than £2 million.
Christopher Douglas and Richard Hodgson, who ran property club Challenor Property Developments (CPD) in York, reportedly used unfounded predictions of quick wealth and promises to buy house purchase franchises, according to the The Press.
CPD worked by negotiating the bulk purchase of new build properties and negotiated discounts which were then passed on to their clients, detailed a North Yorkshire Police press release.
The two “greedy” businessmen were jailed for a nationwide fraud that netted more than £2 million and left 133 people out of pocket.
The company was established in 2005 but eventually collapsed in June 2008. CPD sold franchises based on its business model, promising a low-risk, high return investment and exclusive access to a particular postcode area. It also promised training in how to run the franchise, support from the company, and in some cases, leads.
A police investigation began in summer 2008 when North Yorkshire Police was contacted by alleged victims. In one of the force’s biggest ever fraud investigations, officers took statements from 130 witnesses, seized 33,000 paper documents and recovered computer files equivalent in size to 1,500 copies of the Encyclopaedia Britannia. They also worked closely with HM Revenue and Customs Criminal Tax Unit.
The victims used their life savings and the money they had set aside for themselves and their families in later years, Judge Chris Batty told Leeds Crown Court.
The publication detailed how the fraudsters failed to provide the back-up that could have made the franchises work and instead repeatedly gave themselves large cheques. The reported figures totalled £752,000 for Douglas and £500,000 for Hodgson, the court heard. Both men dispute the figures.
Despite existing franchisees attempting to get their money back, the duo continued to recruit more franchisees. On the day CPD folded in spring 2008, Douglas spoke to the staff at a pub near its offices, and then escaped down a fire escape clutching the company’s financial books and the database of its customers which he “highly valued”.
The judge told him: “Whatever the sums, you and Hodgson were handsomely paid throughout the period when the franchisees got nothing. Many, many people lost out from your actions and that is what these sentences are about.”
Both men were found to be equally responsible for the franchise scheme, which started honestly but quickly became dishonest, and they took the decisions together.
Douglas admitted carrying on a fraudulent business. Hodgson denied the same charge and was convicted after a three-month trial.
The judge also said Hodgson and Douglas have been in business together on more than one occasion and in 2000, ran a similar scheme through their company Century Mortgage Ltd, which resulted in Hodgson getting a criminal conviction for misleading share information.
Detective Sergeant Garry Ridler, of North Yorkshire Police, said: “I am very pleased with the result of the court hearing, which shows that greedy fraudsters cannot manipulate the public and get away with it.”
Douglas, 48, was jailed on Friday for three years and eight months, and Hodgson, 66, was jailed for four years and two months.
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