Name-dropping agency chiefs banned for £3.5m scam

Two agency directors who provided prospective shareholders with false information to secure millions of pounds in investment for their affiliate marketing business – including how they were “besties” with both Sir Richard Branson and the band Madness – have been banned for a total of 17 years for a devious scam which has left hundreds out of pocket.

Lee Skinner, who has been banned for 10 years, and Karen Ferreira, who received a seven-year disqualification, set up an online affiliate marketing company under the name of Our Price Records Limited – which just so happened to be one of Britain’s largest music chain stores which was eventually mothballed by Virgin in the year 2000.

They claimed the plan was to revive the brand and then promote other companies’ products through its website for a commission, although it would appear this was just a front for the duo’s millionaire masterplan.

Initially, the business tried to secure investment through a firm authorised by the Financial Conduct Authority, but when that failed in 2014 they launched two share offerings, promoted through an unauthorised company called Venor.

The first offering took place between October 2014 and March 2015 at 60p a share, while the second between March 2015 and overbear 2015 at £1 a share. Investigators established that 260 investors bought shares and almost £3.5m in funds was raised.

According to an FCA investigation, Skinner and Ferreira had created the promotional material, which made false and misleading promises to prospective investors. These included claims that their brand was well known, despite having their application to register Our Price Records Ltd as a trademark being opposed by the original owner.

The false and misleading claims made also included that Skinner was a “personal friend” of Branson and that Madness had agreed to appear in advertisements for free.

Not only did these false claims breach financial regulations but investors were totally unaware of other agreements Our Price Records had made, which saw millions of pounds being handed over to third parties. These included agreements to pay up to 50% of total funds raised to the third parties selling the shares. In total, Skinner and Ferreira paid at least £1.58m in commission to third parties.

Investors were also not told that Ferreira was a director of two other companies which had entered into agreements with Our Price Records, totalling more than £750,000.

One of the companies that Ferreira was a director of entered into a commercial loan agreement with Skinner and granted him a loan of up to £1m on the understanding he would pay for Our Price Record’s administrative and marketing services. A total of more than £760,000 was paid to Skinner and no repayments were ever made.

The FCA secured a restitution order in the High Court earlier this year against Skinner, Ferreira and the company. The Court found that individuals and the company were in breach of Financial Services & Markets Act 2000.

The Secretary of State has now accepted a disqualification undertaking from both Skinner and Ferreira, after they did not dispute that they had caused Our Price Records to breach the Act, used the ‘Our Price’ brand at a time that the ‘Our Price’ trademarks were subject to dispute and caused the distribution of false and/or misleading information to investors regarding the use of the investment funds. Skinner’s 10-year ban started on October 16 2020; Ferreira’s ban was effective from October 26 2020.

Insolvency Service chief investigator Robert Clarke said: “Using an agent, Karen Ferreira and Lee Skinner made false and misleading promises to prospective investors when they were trying to entice them to invest into Our Price Records.

“Not only did this breach financial regulations but investors were totally unaware of other agreements Our Price Records made, which saw millions of pounds being handed over to third parties.

“Unfortunately, investors have suffered significant financial losses. However, these bans should serve as a warning to other directors tempted to raise funds by illegitimate means that we will investigate and remove them from the business environment.”