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The downfall of a Nigerian Mr. Instant Millionaire

Posted by Vanguard on 2005/10/09 | Views: 2528 |

The downfall of a Nigerian Mr. Instant Millionaire

He told ordinary Londoners to jump on the Buy-to-Let bandwagon and get rich quick. They say he ran off with their life savings. Now Spencer Michaelís business empire is under investigation

He told ordinary Londoners to jump on the Buy-to-Let bandwagon and get rich quick. They say he ran off with their life savings. Now Spencer Michaelís business empire is under investigation

HE seemed to have everything - hand-made suits from Milan, trophy cars from Germany, a beautiful, blonde wife from Poland and two lovely daughters. In just four years, 40-year-old Spencer Michael had worked his way from a council flat to owning nearly 30 properties across London worth millions. Ambitious and driven, he does not smoke or drink and is obsessively secretive about his past, especially his poor childhood in Nigeria.

His dazzling "poor boy made good" success led hundreds of people - nurses, chefs, widows and businessmen - to pay up to £6,000 each just to hear him speak at his Instant Millionaire property investment courses. Such was his charm that dozens went on to hand over their life savings to him to buy property on their behalf. A few paid £30,000 or more for nothing as substantial as ticks and mortar, simply "consultancy services".

But now, this well-spoken MBA graduate of Durhan University - who loved to boast that the "Financial Times calls me a genius" - is under investigation by the Department of Trade and Industry for possible fraud. Clients say he has ruined their lives and all their money has disappeared. Former employees and clients have also made serious allegations - fiercely denied by Mr. Michael - about poor book-keeping and a failure to separate clientsí money from his own personal bank accounts.

Mr. Michaelís difficulties are the consequences of the craze for "get-rich-quick" schemes that have swept London in the 10 years since Buy-to-Let started and property prices soared. Although popular all over the country - the Council of Mortgage Lenders estimates that the Buy-to-Let market increased by 14 per cent last year and is now worth £52 billion in the UK - it was London, with its spectacular housing boom, that saw a real explosion.

But last month, the government announced a crackdown on unregulated businesses and forcibly wound up six schemes that encouraged speculative investment. Michael is currently being sued for £600,000 by developer, Fairview New Homes, for allegedly failing to buy as he had promised, 10 houses and 17 plots of land on Balham High Road, South London. He denies the claim.

Two other former clients -wealthy businessman Richard Wilkins and an unnamed religious institution - have launched a winding-up petition against him, claiming a further £500,000 between them. And many of his other clients - who each paid between £20,000 and £100,000 to him to buy properties for them - are demanding their money back.

Almost all claim that they never received any of the promised properties or their money back, and have just been fobbed off with excuses from Michael.

Meanwhile, Joanna, his wife of eight years, has left him and been cut off without a penny. She is surviving on child benefit and handouts while watching her husband "blame everyone but himself" for their troubles. The only remnants of the good times she shared with her husband are her elegant outfits - which drew admiring stares from onlookers when they dined at his favourite restaurant, Windows on the World at the Park Lane Hilton - and a mountain of debt in her name on his property portfolio (the 27 properties are believed to have mortgages of £6 million outstanding).

"I was a director but didnít have much to do with the business. Iím assigning all the properties in my name to him to cut myself off completely", she says. "All I know is that Spencer is very driven and takes bigger risks than is prudent. Heís very persuasive, particularly with women, but maybe he overestimated his capacities. Now, weíre going to have to take our daughters out of private school as I have nothing to pay the fees." Besieged by irate clients and apparently unable (or unwilling) to repay any of them or provide them with the promised properties, Michael has sought advice from Kallis & Co. a North London firm of insolvency practitioners. Cheryl Haynes, itís spokeswoman, said it is trying to work out the full picture of Michaelís debts and whether there is any possibility of repaying clients. So far, Kallis has discovered Mr. Michaelís four companies owe £2 million, but says the eventual sum is likely to be higher.

It is a far cry from the extravagant claims that Michael made in his advertisements. The Advertising Standards Authority has already ruled that one claiming that Michaelís companies could "secure you up to £4 million-plus of quality assets within six months" was unproven and misleading. It certainly was - as the hundreds of delegates to his free seminars at the Russell Hotel in Bloomsbury (where Michael also used to live in rooms that cost up to £170 a night), can verify. Attracted by the get-rich-quick ads, they were treated to "classic Spencer" evangelical performances.

Immaculately dressed in the finest suits (complete with blood-red silk linking to the jackets), he would leap on to the podium before his audience and announce: "In the next six months, we have created 10 millionaires", before asking who would like to be the next one.

He told them that he had started with only £500 and had made an £11 million fortune in just 19 months through buying property. "I have these ideas", he would go on. "Theyíre amazing, I donít know where they come from, but they come from above." Suitably fired up, many delegates then signed up to the courses, such as the Freedom2Fortune one-day course for £3,995 (which included four months of Michaelís "support") or the £1,995 No Money Down one day seminar; with six weeksísupport.

Charles Cutbush attended the No Money Down course with his sister and brother-in-law. He is planning to sue Michael for a refund for what was, he says, "a pathetic course and a complete waste of a day of my life and the money. I learned absolutely nothing of value and was completely fleeced."

Delegates were encouraged to remortgage their existing homes, take out extra loans or even borrow on credit cards, to invest as much money as possible in property. Many there were on modest incomes in the NHS or catering industry. But they were impressed by claims that Michael could negotiate huge discounts for them and even guarantee rental income to cover the mortgage once the properties were purchased.

One couple working in the NHS, who do not want to be named, said they were encouraged to borrow on their credit cards and against their home to acquire Buy-to-Let properties. "We borrowed on our cards for the £3,245 cost of the No Money Down course last August, but when we got there, all the information we were given, we could have got for free from the internet", says the husband, a social worker.

"But we were interested in buying a property to help with our pensions so my partner borrowed nearly £22,000 on our house as a deposit for a flat in Norbury. We also paid another £5,000 deposit on a property in Balham.

"We gave the money to Spencer but two or three months later, we got a letter from the developer saying heís never received the money. He said we could still buy the property at a price that was less than Spencer was offering to us. We realised then that Spencer hadnít passed on the money, and, far from negotiating a discount for us, was overcharging us as well.

Both deals fell through, and although Michael repaid nearly £8,000 to the couple after they contacted the media, they are still owed £22,000. They are also paying substantial interest on the extra loans.

It is a similar story with Nich Kendrick, 34.. He earns £16,000 as a pastry chef at a leading London hotel and had spent years saving £20,000. He was "looking for an investment outlet" when he came to London from Jersey last year and spotted a Spencer Michael ad. He attended the free seminar and then spent £3,995 on one of his courses.

"He turned up nearly two hours late and there were only two other people there," he recalls. "He dazzled us with endless figures but I still wanted a property as a nice little nest egg for retirement and Spencer told me the rental would definitely cover the mortgage. So, I borrowed £17,000 from Barclays and was told to transfer this and £8,000 of my own money to Spencerís personal account as a deposit".

Mr. Kendrick says he received neither a receipt nor a property. He is still paying £286 a month on the loan and says he has been threatened by Michael that he would never get his money back if he contacts the press, lawyers or the police. Meanwhile, Mohammed Malik and his wife, Maureen, who live in South London, have been on the brink of divorce after getting involved in Michaelís scheme.

Eleven months ago, they remortgaged Mr. Malikís fatherís house and handed over a sum of around £95,000. "My life is now very very tense as he owes me three properties and we still have nothing. He says he is moving on one now, but I donít even have enough money left for my daughterís birthday", says Mr. Malik. Delroy Rowe, 45, gave Michael the £50,000 equity from the sale of his house as a deposit for two properties. "Both deals fell through and he then promised me quarterly payments of £4,000, but that didnít happen. Iíve just had £3,000 and he keeps saying to give him another two weeks.

But Iím now unemployed, renting one room and I canít afford to lose this money. I had to try something to make some money. I trusted him, he sounded so sincere."

And what of the man himself? When I confronted him, he claimed he was a "victim" too. While Kallis & Co. calculates his debts, he is living at several addresses in London, including occasionally one of the houses he owns near his office in Streatham. But he spends most of the time travelling around in his favoured red 4.8 litre BMW X5 4.8 - the only one in London.

"Itís just a question of something going wrong and people looking for a scapegoat", he told me. "But Iím a great man of honour. Not everyone has a rightful claim to refunds. This bad publicity is hurting my business and if I give people their money back, Iíd have no business left. I need support and understanding".

* Culled from Evening Standard.

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