Tuesday, 7 June 2016

The True Story behind the Crowdcube 88 Delicious Fraud

This story reveals the true nature of the Crowdcube platform.

It is a story of incompetence, greed, fraud and 88 Delicious. It is a story that we have exclusively from an impeccable primary source. We will call them Alfie in this.

Lets begin at the beginning.

Alan Colton contacted Crowdcube in the early summer of 2013, to raise funding for his venture 88 Delicious -  a drinks brand company. Crowdcube carried out their rigorous due diligence and accepted Alan Colton and 88 Delicious as a bona fide business. The business launched its campaign in July 2013 and by August 2013 it had raised the full amount of £290k.

Then in September 2013, as investors expected to receive the final paperwork, they received a brief email from Crowdcube saying that the 88 Delicious campaign had been cancelled. There was no explanation. Below is the email sent to investors - 

Crowdcube <support@crowdcube.com>

16/09/2013
to me
Hello #USER_NAME#,
Drat! We need to let you know that 88 Delicious Brands Ltd has expired or been cancelled and is no longer on Crowdcube and as such no money will be debited from your account.
The reason for this is: #REASON_CANCEL#
But fear not! There are plenty of other great ideas for you to invest in.

You can 
view the latest pitches here.

Happy investing!

The Crowdcube Team
PS: Follow us on Twitter for the latest news @Crowdcube


Alfie was not happy with this and responded to CC that he would like to know what ''REASON CANCEL' meant. This is the reply CC sent him - 

Crowdcube support@crowdcube.com via email.freshdesk.com 

19/09/2013
to me
Hi XXXXX 
Thanks for your mail alerting me that the mail did not work again - I can only apologise and I have escalated the issue.
We have been unable to complete our post funding due diligence in 88 Delicious Brands.  As a result we have taken the difficult decision to cancel the pitch. Your investment via Crowdcube will automatically be cancelled and no money will be debited from your bank account.

I would like to take this opportunity to apologise for any inconvenience this may have caused.

Please don’t hesitate to contact me if you have any questions
Regards
Rose Elliott

t: 01392 241319     w: www.crowdcube.com   

Crowdcube is authorised and regulated by the Financial Conduct Authority (No. 572026)

So even after asking directly, CC gave no reason.

That month Alan Colton wrote to the list of investors that Crowdcube had given him, saying that the cancellation had been the result of CC asking for sensitive commercial information which the company was unwilling to give them. And Alan Colton continued, investors could now invest direct with him in the exciting new brand. What's more, he upped the investor rewards to include tickets for the imminent Football World Cup in Brazil. 

Alan also included a new clause in the shareholder agreement that allowed investors to get their money back in a period up to September 2014 if they were not happy with the company's performance.

At this stage Alan handed over day to day communications to a Sara Hinge - see below - 

88 Delicious Update
88Del
x
Sara Hinge <sara@88delicious.com>
09/09/2013
to Laura, alan
Good Morning 88 Investors,

Please see the new updated brochures for you're viewing, we believe they are coming along great and we have tested with the american distributors this weekend that have seen a huge response rate.

Alan is in the USA now for the next few days at the Distillery meeting with the Brazilian Importers for the world cup distribution and meeting with P. F. Changs buying director to close the supply chain to them.

** We understand to the third eye some times little mistakes can be picked up so i ask if any of you see anything in the brochures that could be worded better we would like your input **

I have so far received over half of the agreements back which I thank you for, if the remaining could come back to me ASAP that would be great, remember you are not obliged to sign the agreement and this would not effect your investment.

I will be compiling a list this week of all of your rewards, bottles of 88delicious, bottles of champagne, seats at Chelsea/Arsenal and Brazil tickets, Also I will be sending a list of how many tickets you have allocated to you for the Launch event that will be publicised this week.

We would also bring to your attention we are due to be in the Daily Mail this week, so keep an eye out.




Regards ,
Sara Hinge
Admin Manager


In the first of many quirks in this story, it turns out that Sara Hinge doesnt exist and never did. 

88 Delicious received around £80k in investment and for a few months, things appeared normal.

Alan had arranged a grand brand launch for December but when the time came it was suddenly cancelled. Alan started to make (through his pen pal Sara Hinge) some statements about his stock being impounded by Customs. He then claimed to be critically ill, terminal indeed. This claim was rather ruined by his Twitter feed which showed him enjoying the sun in the South of France. But hell if you are going to die anywhere that's a pretty good choice. 

At this stage some investors tried to activate the refund which had been so carefully included in the investors document. However Alan stalled on this. 

Alfie decided to do some checking. Here is the incredible list of facts he found - 

Alan Colton was at the time Crowdcube accepted him onto their platform an undischarged bankrupt. This related to a fraud case involving Alan Colton in January 2013. He was undischarged because the authortities were not satisfied with his conduct post sentence. The police have stated that they had also investigated Alan Colton's wife but had not been able to bring any charges.

The Alan Colton listed as the company director had a DOB making him 70 years old. The Alan Colton who ran 88 Delicious was 32 in 2013. 

We already know about Sara Hinge. Alan told investors that she went on maternity leave in January 2014; where she remains.

Alan Colton is not terminally ill. He is awaiting sentence.

Wetherspoons were the first people to report 88 Delicious to the police as they were owed money. The police contacted Crowdcube in early 2014 as part of their subsequent enquiries and found that the platform had no full time in house lawyer.

At least one of the investors is an elderly lady who purchased the shares on the back of the offer of World Cup tickets.

So where does this leave us?

Crowdcube claim that it was the investors who chose to invest - '' Unfortunately we understand that some of those people invested in the business outside of Crowdcube’s regulated environment.''

This investment was only facilitated because CC allowed Alan Colton, a bankrupt with a record for fraud, to use their platform and then allowed him direct access to their contact details.

Furthermore, despite Alfie's attempt to find out why the pitch had been cancelled, CC chose not to give out this vital information. If investors had known that CC knew the company had fraudulent orders in the pitch then they would clearly not have invested? Our best guess is that they didnt want this getting out. Investors were therefore sacrificed to save CC's image.

All the investors we have spoken to, admit they were foolish but they are angered by CC's arrogant attitude. Surely CC had a duty of care to their members? Then you also have to ask how the out to lunch department missed the glaringly obvious fact that 

1. Alan Colton was not the old man at CH and 

2. Was and still is an undischarged bankrupt.

We believe that Crowdcube should apologise and should reimburse all shareholders  - without the platform and its gross incompetence, none of this would have been possible. So come on Crowdcube, do the decent thing. Just this once.









4 comments:

  1. As an 88 delicious investor (to the tune of an eye watering £2,400) - this is spot on. Well done fantasyequitycrowdfunding and Rob Murray Brown. This is a scandal and deserves to be on the web in full public view to serve as a warning to future investors and the platforms. *Applause*

    ReplyDelete
  2. Wow Rob you've outdone yourself on this one! There's more info here then even I knew and I'm one of the investors. Shall we wager a bet that Crowdcube will not admit any responsibility for this or even an apology??...might be a little tricky getting someone to take the other side though....

    ReplyDelete
  3. I think one of the key details omitted from all of this are the timings.

    An email from Crowdcube stating that the investment was subscribed for and was being processed was sent on 20/08/2013.

    The email mentioned above regarding Crowdcube's withdrawal of 88 delicious was sent on 16/09/2013.

    This gave Alan plenty of time to spin his yarn. Almost four weeks in fact and many investors had already pledged by that point.

    Very unprofessional and irresponsible conduct by Crowdcube. Even their email didn't have the decency to address the issue in a professional manner - "Oh Drat"..

    ReplyDelete
  4. As you noted CC did not have an in-house lawyer on the payroll at the time.
    They were probably not keen on explaining why something was cancelled due to british libel laws.

    ReplyDelete