Challenor Property dream turned to investors’ cash nightmare (York Press)

Mike Laycock (York Press) reports on how Challenor Property Developments lured its victims to York and then persuaded them to part with tens of thousands of pounds for nothing.

They flocked to York from all over the country, lured by the promise that Challenor could help them join the great buy-to-let property boom.

They attended seminars at hotels in the city, and many agreed to hand over tens of thousands of pounds to buy a franchise from the Poppleton-based business.

“They were from all walks of life – professionals, pensioners, people wanting to use their redundancy money,” said Detective Sergeant Garry Ridler, who played a key role in a lengthy and complex police investigation into Challenor.

People were persuaded to part with almost £2.5 million, but it was a decision they came to regret bitterly.

Unknown to them in the months leading up to Challenor’s collapse in late spring 2008, hundreds of thousands of pounds were being paid out in cash from the firm to its two owners – Chris Douglas and Muriel Hodgson, Richard Hodgson’s wife.

Leeds Crown Court heard that she played very little part in the firm, but that Richard Hodgson did and that he received weekly payments of £2,000 in cash.

In June 2008, The Press exclusively broke the news that Challenor had closed its doors, leaving investors across England fearing they had been left badly out of pocket.

People from as far away as Leicester and London told the newspaper they had paid out sums of between £6,000 and £58,000 and were worried they might never get their money back.

One man, who spent £50,000 plus VAT on a franchise, said: “We were sold a dream and it is turning into a nightmare.”

A pensioner from Lincolnshire said she had handed over a total of £38,000 which had been left in a will. “By investing in property we thought we were doing the best thing with it,” she said. “The whole thing has distressed me so much that I have been prescribed tranquillisers.”

The business’s offices at Regency House, just off the city’s outer ring road at Poppleton, were deserted, but a notice left inside explained something of its methods.

It stated: “Question. Would you buy property if someone paid the deposit? Your legal fees were paid. The stamp duty was paid. Someone found the property for you. Someone organised the mortgage. Someone instructed the solicitor. Someone dealt with the developer. If the answer to these questions is yes, then you need to join us at Challenor.”

The article led to The Press being inundated with calls and emails from investors from all over the country. Some were frantic, others angry. For some, it was their first inkling they might have lost everything. For others, it was confirmation of existing suspicions that all was not well.

As North Yorkshire Police’s investigation gathered pace, the force also received more than 100 calls and emails.

Chris Douglas, a partner at Challenor, consistently refused to speak to The Press, but in July 2008 the newspaper reported how he had apologised “with personal heartfelt sincerity” for the business’s demise.

In an “official statement” issued to some investors on June 25 - the day when Douglas, then of Fulford, became bankrupt – he blamed the closure on “constant Bank of England interest rate rises, buy-to-let lending institutions which withdrew products from the market and non-payers and trade debtors”.

But in January 2009, he was one of four people who were arrested by detectives on suspicion of conspiracy to defraud and money laundering, and whose homes were raided at dawn and searched. And in June this year, in a surprise move at Bradford Crown Court, he pleaded guilty to participating in fraudulent business at Challenor between August 2007 and June 2008.

Back in November 2008, the trappings of Douglas’s and the Hodgsons’ millionaire lifestyle had been exposed when they were put up for sale to meet creditors’ demands.

Watches worth up to £30,000, exclusive designer jewellery and French furniture were among the 180 lots belonging to Douglas and Muriel Hodgson auctioned off.

THE sheer scale and complexity of the investigation into Challenor Property Developments posed a significant challenge for North Yorkshire Police.

Officers had to examine thousands upon thousands of documents and locate and speak to scores of witnesses from all over the country.

Detective Inspector Ian Wills said after “three very long years” he was proud to say the force’s Major Fraud Investigation Team had more than met the challenge and secured justice for the many victims connected to the case.

“I also have no doubts that the comprehensive nature of the inquiry helped to maintain confidence and integrity in the business community in North Yorkshire and the City of York,” he said.

“I pass on my congratulations to the officers who also worked on the case, DCs Melanie Spanton and Nicola Hancock and Detective Sergeant Garry Ridler for their outstanding work.”

DS Ridler said the case was one of the first in the country to make use of the 2006 Fraud Act, which enabled partners and single traders to be prosecuted for the first time, when previously only limited companies could be charged.

One of Challenor’s many victims, Owen Williams, says the fraud lost him almost £6,000 - and helped cost him his marriage.

Owen, who works in social services in Manchester, told The Press his first contact with the business was reasonably successful – its property club helped him buy an apartment.

But that all changed when he was invited over to a two-day seminar, held at the Marriott Hotel overlooking York Racecourse in early 2008, and he was persuaded to invest in a franchise.

“Before I went to the seminar, I had already been to the offices and it looked very professional,” he said.

“At the seminar, people were saying how much money I could earn.

“I agreed to pay a £5,000 deposit on my credit card, plus £800 VAT. They wanted £15,000, but agreed to let me pay the rest as my first deals came in.

“I never got a single deal. The financial pressures created by servicing the £5,800 debt on the credit card helped to end my marriage. With hindsight, I can see it was a con. I know there’s always the saying: ‘If it looks too good to be true, it probably is.’ “My advice to anyone invited to get involved in anything like this in future would be: Don’t.”