Inside
Track blames the credit crunch for its collapse as banks
tighten up on buy-to-let lending, effectively ending 100%
loans. Profits for the group three years ago were as high
as £12m, but internal management accounts for the
nine months to January 31 this year show income of just
£239,000, with a £97,000 loss in January alone.
Its attractions had started to wane before mortgage rationing,
as critical attention in the media - including the Guardian
- focused on "minus millionaires", customers owing
banks more than they could afford as promised rental yields
failed to materialise and property values started to tumble.
Inside Track Seminars, which labelled itself "Britain's
biggest property investment company", was set up in
2002. It specialised in holding "free workshops"
at hotels across the country. Lasting about two hours, these
painted a world where anyone could become a "property
millionaire". But it was a model that depended on a
rising housing market.
Founder Jim Moore, who spoke at the early seminars before
moving to Spain, told prospective investors they could "start
from scratch, live on easy street instead of struggling
for a living". As house prices soared, it was a message
that attracted an increasing number of wannabe property
millionaires. Although the workshop was free, it was a taster
for a weekend seminar of "property investment education".
This could cost £2,495. Those attending were then
offered - for further payments of up to £110,000 -
membership of "a property club" run by an associated
firm, Instant Access Properties.
The main Inside Track thrust was buying "off plan"
- purchasing properties for a small down-payment, often
years before completion. Investors were then told to sell
before the property was finished, taking advantage of an
expected rise in prices. This was known as "flipping"
and landlords were encouraged to re-invest the profits into
more off-plan purchases.
Prospective landlords were promised expertise and due diligence.
But in March 2006 a London court was told that Lorraine
Captan, Moore's then sister-in-law, who was "taken
on to source properties had no contract and no experience.
She was not a professional valuer but a newcomer to the
property process."
By 2005, amid talk of a stockmarket flotation, Inside Track's
overall pre-tax profits hit £12.1m. It is difficult
to calculate how much of that came from the company itself
due to intra-group transfers. In 2006, group profits fell
to £10.8m, then there was a steep slide in 2007 to
£6.9m.
In documents filed at Companies House, the directors state:
"We are aware that the risks to the company's ability
to trade are impacted by the general economic environment,
the current housing market sentiment, and the lack of liquidity
in the financial markets."
In early March, Inside Track announced it was ending its
workshops as interest in buy-to-let diminished. The last
seminar, at Warrington this month, attracted fewer than
a dozen people. Attendance at workshops had fallen from
31,722 in the year to March 31 2006 to 25,265 in the following
12 months. More crucially, those who converted to paying
seminar customers slumped by a third from 5,917 to 3,834.
The shares of both Inside Track and Instant Access are held
by majority shareholder Pearson Foundation, based in Panama,
and three Isle of Man trusts including one designated for
Jim Moore and his former wife Kim.
Instant Access is, for accounting purposes, the company
into which trading figures for Inside Track Seminars are
consolidated. Instant Access is not subject to any administration
order and will continue trading as normal for its members,
as will the group's in-house mortgage broker, Fuel.
Descent and rise
Jim Moore, Inside Track's founder and substantial shareholder,
first came to prominence in the late 1980s for his role
in L'Arome, a pyramid-selling perfume company. After a lawsuit
brought by Chanel, L'Arome went bust, owing £6.5m
and leaving 180,000 distributors with unsellable scent.
He was, he said, "broke, massively in debt". A
decade later, he rediscovered his ability to galvanise with
promises of quick riches through Inside Track. Moore earned
millions from selling the buy-to-let millionaire dream.
In 2004, his marriage to Kim broke up. The couple have since
been arguing over a settlement. Today, a court will announce
that the former Mrs Moore has been awarded £15m.
http://www.guardian.co.uk/money/2008/apr/29/buyingtolet.mortgages
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