Fraud is a very real risk faced by investors in property developments and that is why detailed professional supervision of projects is so essential. The point was powerfully made by a case in which a family fell victim to dishonesty and lost millions on the ill-fated purchase and redevelopment of a luxury flat.

Following the flat's purchase for £7.75 million, the project was to be administered by a man who would receive 5 per cent of profits generated on the property's resale. In the event, there were no such profits and members of the family, who had substantially bankrolled the project via single-purpose corporate vehicles (SPVs), lost the entirety of their £2.5 million investment.

The offender, amongst other things, made fraudulent cash calls on investors, paying their funds into his personal accounts. Evidence emerged that he had spent their money on his personal rent, private school fees and a smart car. The project eventually fell apart when the flat's freeholder obtained an injunction, requiring discontinuation of the works that had been carried out without permission. Mortgage payments were not met, and the denouement came when the flat was sold at auction for £5.5 million.

After the SPVs launched a private prosecution, the offender was convicted by a jury of a number of offences under the Fraud Act 2006 and the Forgery and Counterfeiting Act 1981. He was sentenced to a total of seven years' imprisonment and was disqualified from acting as a company director for 10 years.

In rejecting his appeal against the sentence, the Court of Appeal found that he had been granted due credit for his mental health issues and other mitigation. Given his personal use of investors' funds, there could be no suggestion that his offending was merely an attempt to keep the development show on the road. His challenge to the convictions was also dismissed.