Crowdcube's Ethos Global fiasco runs and runs

Ethos Global, run by Dr Theo Koutrakides and his wife, Jennifer Hersch, was put into liquidation by court order in July 2017. It had raised over £700k on Crowdcube just a year before. That liquidation has gone nowhere since. Before the liquidation, the good Doctor and his wife had set up Soma London England, which operates from a unit paid for in large part by Crowdcube investors. It has just filed accounts showing large losses and its BS in very negative territory. How is that even possible?

We have been talking to the good doctor - or rather we have been asking Qs and he has been avoiding them. And we have written about them here. He had promised to gift all Crowdcube investors in Ethos equal value shares in his new Soma but he hasn't done that. One thing is consistent  - he rarely does what he says he will. We have also been trying to help some investors find out what is going on. I have to say we have not had much luck - Crowdcube have done their usual 'it's nothing to do with us'.

This is an email we had today from Dr Theo in response to our chasing him - 

Hi Rob,

Thank you. It has been a hard last few months that has now produced results that new shareholders will be happy to hear. After meeting a number of deadlines incl. filing annual accounts, I am now returning back to writing and completing my response as I will also notify shareholders of some good news.

I need to also await responses from Crowdcube, our tax advisors and solicitors to validate the information in my response before this can be published. I would like to promise a specific date, although this is dependent on receiving the necessary confirmations, which should be this side of the year. Our past investors will all have their shares.

Theo

He has previously made several promises to give me his written explanation and his deadline for this was the 10 December 2018. This email says nothing and is full of confused, irrelevant statements. Nothing new there. 

Ethos made certain promises and declarations in its Crowdcube pitch which were not quite right. The company closed its only unit in Cambridge shortly after raising on CC, where it had stated the unit was a cash cow.  Turned out the Landlords, who forced the company into liquidation, hadn't seen things the same way. It seems unlikely that the major dispute between the company and its landlords was not in process before the CC raise. The CC pitch made not mention of it. CC apparently did not pick this up in their due diligence. 

For some unknown reason the liquidator, Adam Harris of Mazars LLP, has not filed a single thing since they started  - which is odd. He has refused to answer phone my calls. Meanwhile, the good doctor and his wife continue to use the assets paid for by the money pumped in Ethos by CC investors, in their new unit in London. This is apparently owned by Soma, although we imagine the law may have something to say about that.

Soma London England was called Ethos London, when the good doctor incorporated it in February 2017, before Ethos was forced into liquidation. He is the sole shareholder and the company has no investment filed at CH. The Crowdcube pitch was full of the new London unit and its fitting out works started before Ethos ceased to trade. Dr Theo continues to gather more debts as he 'trades'.

The only problem here is a simple one. Crowdcube allowed Dr Theo to take over £700k off investors in 2016 on the basis of false information. These investors are still no clearer now as to what has happened. Both Ethos and Soma studios had and have a decent revenue stream. The London unit turned over £500k in its first 13 months to March 2108; albeit making a large loss in the process. The Cambridge unit was popular. But the way the business is run is an issue. Laws are in place to prevent this sort  thing. The picture is fairly complete and its image is clear to us. When will something be done about it?

2nd July marks a whole year since Ethos Global was forced into liquidation. Yet the liquidators have produced nothing. What is going on?

For our system to work, people who abuse it need to be made to pay. Ethos Global took £709k from 388 Crowdcube investors in  2016. Then they went into liquidation, having opened up a London studio with these funds, which they transferred to their newco. Leaving investors and creditors out of pocket.

Under what system would that be legal?

So why has it taken a whole year to get nowhere?

We have contacted the liquidators many times on behalf of shareholders who asked us to help but they never respond. FYI Adam Harris of Mazars is a complete waste of space.

It cannot be that complicated  - it was not a large turnover business. There are no offshore accounts - there are barely any accounts. The trail from their Cambridge studio, to the new London one, is very clear and obvious. 

Wake the F up will you Mazars. 

Collapsed Ethos Global pair open new businesses by the month

Ethos Global was forced into liquidation 10 months ago. The founders have since moved into the venue fitted out by Ethos Global in London and started a new business, SOMA. 

We have written many times about this outfit. Crowdcube investors put in around £800k in 2016. Then almost immediately the company 'closed' its only studio in Cambridge, moving to the London site and spending most of the cash there. The Cambridge landlords then had Ethos closed. All quite straightforward.

Well it should have been. But the local liquidators couldnt handle the situation and in February of this year they gave up and handed the case to a London firm, Mazars LLP. So essentially since July 2017 nothing has been accomplished.

Meanwhile, the two founders have been very busy. Not only have they used the assets of the old co to set up their expensive new studio in Spitalfields, but they have launched a plethora of newcos. The old Co is not yet buried and serious questions over their conduct have to be answered.

The two founders did make an offer of free shares in Soma but we have it from investors that this hasnt been followed up.  

Soma has now grown wings. The two founders have a Soma Holding Ltd which in turn has a share on Soma Retail Ltd and  Soma Education Ltd and Soma London England Ltd. The two of them also have Minerva Method and the good Dr has also opened Singularity Healthtech Ltd. All of these newcos were established on the same day in February 2018. Something is brewing and it smells. 

Here is the Q. If we are right that these two directors have behaved in such a way over Ethos Global that their ability to be directors in the UK might be called into question, then none of this activity will stand. So why has it taken so long to make any progress on the liquidation. In the last conversation we had with the Cambridge liquidators, we were told they were waiting for the directors to come for another interview to explain things.

You might ask what Crowdcube, who allowed these two to take £800k off their 'members' have done about any of this. The answer is nothing, as it always is with Luke and Darren. Sweet as pie when they are about to get your money and their commission; shadows when the yoga goes pear shaped.