Caveat Investor: Using Open Source to Combat Scammers

Three ways publicly available information could have alerted Fortress Capital’s victims to risk

The collapse of Fortress Capital Partners is receiving considerable coverage in the media at the moment, in large part due to the footballers and reality TV stars associated with it. Behind the headlines, however, are a multitude of small investors, including members of a church in south-east London, who are expected to regain just 10p in every pound invested.

The Times reports allegations that the founder of the business, Ashley Reading, forged documents to create the impression that charges registered against the luxury home from which he ran his business had been satisfied. It is not improbable that administrators will uncover further adverse indicators as they unravel the business’ operations.

The most galling part of this sad case is that investors who had access to a basic level of pre-investment due diligence would – in all likelihood – never have invested their money with Ashley Reading. Significant warning signs about his probity were freely available in the public record long before Fortress Capital collapsed:

• Bankruptcy: Ashley Reading was declared bankrupt in December 2015. This information was publicly available in the London Gazette, which publishes details of bankruptcies and other important official notices.
  

• Past Corporate Failure: Ashley Reading has a long history of corporate failure. A brief search of UK Companies House reveals approximately 25 different companies associated with Mr Reading, the vast majority of which are dissolved, many as a result of a compulsory order to strike off. Closer inspection of these businesses shows that many of the businesses did not get to a point of filing annual accounts.  Of the few businesses that are active, none appears to be trading in significant measure.
  

• Financial Regulation: Fortress Capital was not subject to regulation by the Financial Conduct Authority at the time of its collapse, a fact that the FCA is now investigating. A search of the FCA register, which provides information about companies and individuals who are authorised to carry out controlled functions in financial services, would have shown that Fortress Capital Partners hadn’t held a registration since 2016. And the website carries a blunt warning: “Do not start to do regulated business with an [entity] that is no longer registered.”

Investors who were misled by dodgy investment schemes deserve nothing but sympathy. But anyone responsible for making investment decisions should bear in mind that these situations can often be avoided through quick and cheap due diligence.