By Chris Lang
The High Court in London has ordered Diffraction Limited into liquidation following an investigation by the Insolvency Service. Diffraction Limited is another part of the web of companies around Eco-Synergies.
Eco-Synergies was a wholesaler of voluntary carbon credits, which it sold to other companies to sell to the public as investments. Between March 2012 and November 2012, Diffraction Limited sold more than £1.3 million of voluntary carbon credits to retail investors.
Eco-Synergies bought the carbon credits for an average price of 65p per credit. On average, Diffraction bought the carbon credits from Eco-Synergies for £1.11. It sold them to retail investors for £4.81.
In her ruling in the High Court, Ms Registrar Derrett said:
In my judgment a substantial increase in value would therefore be required before the customer could break even. Customers in my judgment were therefore not obtaining the competitive prices represented and the risk warning was inadequate to advise consumers that they were in fact purchasing at inflated prices what are wasting assets that are difficult to trade.
Derrett also noted that “customers were referred to Citadel’s FCA registration, which offers the customer no protection as trading in carbon credits is not a regulated activity”. Citadel Trustees has appeared on REDD-Monitor a number of times in the past. On 1 April 2014, Citadel changed its name to Highpoint Trustees.
Diffraction Limited’s website has disappeared, but parts of it are safely stored on archive.org. Here’s a sample of how Diffraction Limited misled the public into buying carbon credits as investments:
The carbon market is currently valued at around 100 billion Euros and is projected by analysts to rise to 3 trillion Euros by 2020. The market is still in its infancy, offering investors the huge potential of this predicted rise in markets.
Diffraction Limited’s sales team cold called people to persuade them to buy carbon credits. One potential victim was on the receiving end of a two hour long sales pitch from Diffraction, despite the fact that he said he had no money to invest. Diffraction rang him again five hours later.
Diffraction Limited was registered in October 2010. David Ramsey was the sole director for one year, after which he was replaced by Lincoln Prevost. Ramsey told the High Court that after he resigned as director, he continued to be involved in the company as an employee and assistant to Prevost. Ramsey currently buys and sells diamonds in Dubai through a company called Diffraction Diamonds DMCC.
The company’s name has appeared in a few comments following a post about MH Carbon (another company in the Eco-Synergies web). “Carl” commented in January 2013 explaining that his mother had bought £40,000 of carbon credits from Diffraction Limited. Towards the end of 2012, Diffraction Limited wrote to tell Carl’s mother that she would now be dealing with MH Carbon. Carl wrote that Diffraction Limited had “left their offices and apparently moved to Dubai”.
Another commenter, “Sam”, wrote that his “investment” of £7,000 had also been transferred to MH Carbon, and that MH Carbon was trying to persuade him to hand over another £4,000.
A third commenter, “Dbinny”, reported that he had been contacted by Spencer George from Hamilton Carter offering him an exit for his carbon credits. Spencer George had previously worked for Diffraction Limited and had sold “Dbinny” carbon credits. Hamilton Carter set off a cacophony of alarm bells when I looked into them in November 2013.
These companies have something in common other than selling carbon credits as investments. Diffraction Limited, MH Carbon and Hamilton Carter were all on Carbon Neutral Investment’s “List of Clearing Members”. Coincidence?
Has anyone had contact with MH Carbon Nominees? They are now offering to transfer Carbon credits purchased through MH Carbon (now in liquidation) from a register managed by them to a new register that will enable the credits to be traded in the future.
They state that the transaction will be managed by major accounting firms – PWC, EY etc..
I have been approached by a so called accountancy practice (I suspect they are not accountants)mentioning prices of $ 4.50 per carbon equivalent unit and other unrealistic data.
I am obviously suspicious of any organisation connected with MH Carbon and wonder if anyone has also been approached?
In fact, MH Carbon Nominees started contacting people back last Nov. See for example comments here
http://redd-monitor.org/2013/01/15/mh-carbon-another-boiler-room-scam/#comment-1004480
Back in Nov they had the same sort of proposition that they have given you now (it is still on their web site). At that time the transfer to another register was supposed to happen after an external audit. As you see, six months+ further on, there is no reported progress. Not even the promises they made 6 months ago have been updated.
The stuff about multiple big-4 accounting firms being involved in the registry transfer looks deeply implausible. Note that before he ‘bought out’ MH Carbon Nominees, Razaq of MH Carbon Nominees allegedly worked at MH Carbon, in the same room as the boiler room brokers.
The unrealistic CC price you mention makes this sound like yet another scam. Dangling the prospect of a $4.50 CC sale may be a device to keep you paying MH Carbon Nominees custody fees, or to extract an advance fee from you.
The whole MH Carbon Nominees story smells like phase 2 of the scam, the so called ‘Recovery Room’.
Contact Action Fraud!