Hotel investment scheme director banned for 'misleading investors'
A director behind a hotel investment scheme has been disqualified for eight years for allowing the company to ‘mislead' investors.
Keith Michael Stiles, from Donegal, was appointed director of Kayboo Limited in August 2012.
The company purchased the luxury Hurst House hotel in Laugharne, Carmathenshire before renaming it the Corran Resort and Spa.
Stiles was responsible for the fractional ownership scheme that secured funds to expand the hotel.
This saw Kayboo grant a 999-year lease on each individual room to a company limited by guarantee, which would then grant a sub-lease to the hotel operator and charge them rent.
Investors would purchase membership in the company limited by guarantee, representing a fraction of that room, and become entitled to a share of the rent paid by the hotel operator.
Kayboo went into administration in October 2016 which triggered an investigation by the Insolvency Service.
Investigators found that Kayboo received £6.4m in respect of the existing hotel building but only registered three leases for investments worth £585,000.
They also found that Kayboo ‘misled' investors to believe a scheme to develop 28 rooms in a nearby semi-derelict farmhouse at East House Farm was secure and they would be protected if the company became insolvent.
Kayboo received £10.6m from investors to develop the farmhouse but no leases were registered, it never purchased most of the property and secured lenders did not give permission for the scheme.
Stiles was handed an eight-year ban after he did not dispute that he allowed Kayboo to mislead investors. It also secured over £500,000 of deposits from December 2015 after the company was insolvent.
Mark Bruce, chief investigator for the Insolvency Service, said: "Keith Stiles allowed his company to misrepresent the true risks of its complex investment scheme to investors.
"Furthermore, he allowed the company to continue taking hundreds of thousands of pounds worth of deposits when he should have known that the company was insolvent and unlikely to honour its future commitments.
"Thankfully Keith Stiles has been removed from the corporate arena for a significant amount of time. His disqualification should serve as a stark warning that we will investigate failed investment schemes such and sanction directors who mislead the public."
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