Hundreds of pensioners have lost their life savings after investing in a children’s care home business that promised high returns before going bust.
Approximately 230 people poured their savings – collectively worth £11 million – into Gravity Child Care after being promised average returns of 15% each year.
However, instead of helping them to grow their retirement savings, the business collapsed and lost the money.
Gravity Child Care promised to invest in up to 50 homes for children with mental and behavioural difficulties, with the intention of reaping profits from the fees that councils pay to operators.
But when administrators probed its collapse they discovered that only two properties worth £600,000 had been bought and just one had been opened, catering for fewer than ten children.
Investors say they were repeatedly reassured that their money was growing at an impressive rate, but in 2015 concerns were raised after statements were delayed.
When an administrator was called in to investigate, it found that investors’ funds were gone and a paper trail led to a multitude of foreign countries including Dubai and Sri Lanka.
Gravity Child Care was set up by Nicola Fairweather in 2010 and targeted potential investors through doorstep marketing.
The website is no longer online but the business was originally described as an ‘exciting residential care service for children’ and offered potential returns of between 11% and 21% per year.
Most of those who invested in the scheme were saving for retirement or had already finished working.
It’s thought that approximately 30 investors have been repaid but others are still waiting, many of whom have lost tens of thousands of pounds.
54-year-old Kevin Cook decided to invest in Gravity Child Care after hearing about the investment opportunity from an advisor.
He had two pension pots worth £172,000 and believed that the child care firm would offer a sound investment.
But in 2015, after receiving a series of positive updates promising that his nest egg was growing, letters from the business suddenly stopped.
Mr Cook lost all his savings. He said: “Some people have had to get loans out, or borrow money off their families to live. They’ve taken my life savings away.”