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Bournemouth Directors Face Charges Over Collapsed Investment Scheme

Ethical Forestry Ltd Accused of Defrauding Investors Through a Ponzi Scheme

In a major development, three former directors of a Bournemouth-based company, Ethical Forestry Ltd, have been brought up on charges for alleged fraudulent activities related to an investment scheme that went under, resulting in substantial financial losses for investors.

The company, which managed tree plantations in Costa Rica, is reported to have left approximately 3,500 investors out of pocket, with individual losses exceeding £12,000. The company went under in 2015.

Understanding Ponzi Investment Schemes

The directors stand accused of running a Ponzi scheme, a fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for earlier investors by acquiring new investors. This is similar to a pyramid scheme in that both are based on using new investors’ funds to pay the earlier backers. The accused allegedly utilised funds from new investors to pay returns to existing investors, according to what was heard at Westminster Magistrates’ Court.

The Case Details and Charges

Facing charges of conspiracy to commit fraud by false representation and running a business with intent to defraud, the three accused directors are set to appear before Southwark Crown Court on July 26. The Serious Fraud Office (SFO), which is prosecuting the case, alleges that the men conspired over seven years to offer returns on timber harvested in Costa Rica. The defendants, residents of Parkstone, West Parley, and Lytchett Matravers, have been released on unconditional bail.

The Nature of Investments

For over eight years, Ethical Forestry Ltd operated tree plantations in Costa Rica and sold investments linked to fast-growing hardwood saplings. The promise was that investors would see returns once the trees were mature enough to be logged and sold.

Fast-growing hardwood saplings refer to a type of investment where investors purchase saplings of hardwood trees, often exotic species that are expected to grow quickly. Once these trees mature, they are harvested and the wood is sold, often at a premium due to its high quality and scarcity. The proceeds from these sales are then distributed back to the investors, generating the promised returns.

It is alleged that many investors, some of whom used personal pension funds, lost millions of pounds in the collapsed scheme. The case continues to unfold and is being closely monitored by investors and financial regulators alike.

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