The U.K.’s Serious Fraud Office (SFO) announced a series of arrests in connection with an estimated £300-million fraud scheme involving a former listed company, Home REIT, that promised to invest in social housing.
The SFO conducted a number of raids, and arrested six individuals, as part of its ongoing investigation into allegations of fraud and bribery involving the former management of Home REIT — which raised upwards of £850 million from investors to finance a scheme of acquiring, renovating and renting out properties to charities that would, in turn, provide housing to the homeless, veterans and people struggling with addiction.
In 2022, a report from U.S.-based short sellers, Viceroy Research, raised various concerns about the company, including questions about the valuation of its property holdings and the ability of tenants to pay the rent that was supposed to generate its returns.
In early 2023, the London Stock Exchange suspended trading in the company, and in 2024, the company said the U.K.’s Financial Conduct Authority (FCA) was investigating its business.
To date, the FCA hasn’t filed any formal allegations in connection with that investigation. And, no charges were announced in connection with Thursday’s arrests.
Separately, a U.K. law firm is also working on possible legal action, alleging that shareholders were misled by the company.
“This company had a meteoric rise, spending millions on properties that were supposed to house the most vulnerable in society and provide returns for investors. Its chaotic downfall has left many with unanswered questions. Today we conducted a major operation to advance our inquiries into suspected bribery and fraud,” said Emma Luxton, director of operations at the SFO, in a release.
In response to news of the arrests, the company, which is in the process of being wound down, said that it “will provide any assistance it is able to the SFO in pursuing its investigations.”