What are the chances of recovering my £20K from an ex-friend?

[crazyvish]

One of my friends started a construction company and a group of friends invested varied amounts of £320K in Sep 2018, mine being £20K. He promised us a return of 20% - 30% profit on our investment. He would be the project manager and would take 20% of overall returns as his fee. Construction of the four flats completed in Jun 2020 with a delay of 6 months over the projected time scale. Towards the end we realized he misused the funds for his personal gains. He told us that the project is at loss but would return our investment. He converted the flats to buy to let at a nominal cost. He repaid a few with the money he received towards the mortgage. He is yet to pay me and few other investors a total of £50K.

In parallel, before we realized the true side of him, he started another project with a new set of investors - which is currently in progress.

He says he will pay me but he wouldn't give any definitive date in writing. When on phone to him he says he will repay by end of the month and this has been continuing for over 4 months now. What are my chances of getting my money back? Should I wait patiently for him to finish the next construction and see if he returns the money?

[islandgirl]

Do you have details of the loans you made in writing ie some form of contract?

[crazyvish]

islandgirl Thank you for your response.

Yes, he provided me with

1. Loan agreement, which was only for £5K which was my initial payment and which says I was giving him loan on 0% interest basis for 5years i.e. until Sep 2023 - when I questioned about the 5yr period he said this agreement it is purely for mortgage purposes and I have taken this statement in writing (email) as well from him. He did not provide me with a new agreement after the rest of the payment has been made.

2. I also have a partnership agreement which states about the projected profits. But this one states £25K!

Apart from the above I have bank statements, email and WhatsApp conversations. Other investors are also willing to provide proof where necessary.

[islandgirl]

I am not an expert in this area but unless he does not repay by Sept 23 I do not really see how you can take action at this stage. I may well be wrong.

[crazyvish]

Thanks. I have whatsapp message saying that the project has been complete and that he will transfer me the money in May 21 but he hasn't done so far. Have I posted this question in the correct forum? Also, is it okay to record our phone conversation without him knowing?

[echat11]

I'm speculating, either by design or the way it has unfolded, this sounds like a 'Ponzi Type' scheme. I don't know, just speculating.

Build project, pay some investors off, another project, pay some investors off, another project, pay some investors off etc.

[crazyvish]

Any suggestions on this please? The builder paid off the mortgage (which is related to the loan agreement I signed) but hasn't paid my money yet. He now says end of March 22. Should I seek help from a solicitor? Will it be a long winded process costing me a lot of money to claim my £20K? Please advice.

[DE DOGS]

A bit late now, but with this sort of investment my opinion only. I would have had all legal documents drawn up by a lawyer, with the inclusion of a guarantee on his property if no repayment was forthcoming.

[echat11]

Speak to several solicitors, you can get 30 minutes free from some. See if you can get a fixed fee quote, then you can better assess your options.

[crazyvish]

Thanks echat11 , will try that.