The Good Old Days Are Gone For Bar Works


Three months ago, financial experts began to hypothesize that coworking operator, Bar Works, was likely leading a Ponzi Scheme operation.

What is a Ponzi Scheme?

“A fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for older investors by acquiring new investors.”

The U.S. Securities and Exchange Commission (SEC) states that “Ponzi schemes tend to collapse when it becomes difficult to recruit new investors or when a large number of investors ask to cash out.”

So, when did alarms first go off?

The quick answer is January of this year, 2017, when The Real Deal discovered that Renwick Haddow was the ‘key figure’ behind Bar Works.

“Renwick Haddow, the alleged mastermind of a vast international Ponzi scheme that bamboozled ‘sucker lists’ of British retirees, has found his way to New York’s real estate market through a co-working startup called Bar Works.”

Having quite a past in the UK with fraud and scams, Haddow kept his name hidden from his Bar Works connection, by means of using an alias, Jonathan Black, and by listing his wife (also under an alias) as co-founder of Bar Works. When Haddow’s connection to Bar Works was discovered, investors began to worry.

As the SEC’s Litigation Release against Haddow states, Haddow has a “checkered past with regulators in the U.K.”

REDD-Monitor has a detailed account as to why Renwick Haddow is bad news to investors, but here’s a quick summary.

  1. Haddow was behind Capital Alternatives Network. In 2014, The High Court in London ruled that it was illegally selling collective investment schemes. Twelve months after, the Court of Appeal ruled that these were collective investment schemes.
  2. Haddow was director of Room to Invest, a company that offered ‘guaranteed’ minimum returns of 9%. Yet, suddenly, Room to Invest ‘had become a poor investment.’
  3. Haddow and those behind Room to Invest told investors that they should transfer their investment to Agri Capital, a farming land scam in Sierra Leone.
  4. And even before that, Haddow was finance director of Branded Leisure plc, a company that closed by 2008. Haddow was banned from acting as a director following the collapse of Branded Leisure for ‘schedule of unfit conduct’, for breaching sections 97 and 98 of the Companies Act, and for allowing the company to enter into building expenditure commitments with no proper contractual arrangements.

You can read a full account of Harrow’s ‘bad’ and ‘scam’ investments in REDD-Monitor. Click here.

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In April this year, Bar Works began to have ‘banking difficulties’ that forced Bar Works to change banking partners.

That was only the beginning of difficulties to be faced by Bar Works.

As to when or whether or not investors began to want to ‘cash-out’, we don’t know. What we do know is that Bar Works is seeing the last of its days.

“The SEC alleges that Renwick Haddow, a U.K. citizen living in New York, created a broker-dealer and did not register the firm with the SEC as required under the federal securities laws. Haddow allegedly used sales representatives to cold call potential investors and sell securities in Bitcoin Store Inc. and Bar Works Inc.”

“According to the SEC’s complaint, offering materials presented to investors in both companies touted the backgrounds of senior executives who do not appear to exist. The materials also misrepresented other key facts about both companies’ operations. Haddow allegedly diverted more than 80 percent of the in funds raised by the broker-dealer for the Bitcoin Store, and sent more than $4 million from the Bar Works bank accounts to one or more accounts in Mauritius and $1 million to one or more accounts in Morocco.”  – Litigation Release, 23870

Following the SEC’s charges on fraud, Bar Works investors began to take action.

The Real Deal reported a few days ago that, “a group of 71 Chinese investors is suing the co-working scheme Bar Works and its alleged masterminds Renwick Haddow and Zoya Kiselova (his wife) in federal court, alleging that they stole $7.495 million in a Ponzi scheme.”

Like we said in a previous article, Bar Work’s situation could very well harm and affect the flexible workspace industry as a whole.

And apparently, it’s not just the flexible workspace industry, but the real estate industry that might be seeing a sort of ‘crisis’; as in recent years, there’s been an increase in real estate scams.

David Marchant, from OffshoreAlert, spoke to The Real Deal about how “real estate is an ideal target for con men.” From what Marchant told TRD, real estate scams have taken off “for the confluence of two key trends. The first is central banks pumping cash into economies around the world. (…) The second trend is digitalization(…)opening up a giant new avenue to market online real estate investment.”

“In the U.S., dozens if not hundreds of crowdfunding platforms now allow small-time investors to buy properties they have never seen and may not understand within just a few steps online. A global maze of lightly regulated online investment agencies, many of them based in London, market properties to investors.”

Suggested reading for better understanding of the topic at hand.

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