LICENSING bosses are probing whether a licence to run student accommodation in Liverpool should have gone to a company whose owner served time in a US jail for passport fraud and tax evasion.

The council granted licences to property company Penlake, which refurbishes old buildings and sells individual student bedrooms to investors.

But, when details emerged that Penlake’s owner, Merseyside-born Nigel Russell, 51, had served time in a Federal jail – inmate number 99909-071 – the council sought legal advice following inquiries from opposition leaders as to whether the convictions should bar the property developer from running “houses of multiple occupancy” (HMO).

Mr Russell said his conviction was “in the past” and he didn’t wish to discuss it. The council’s own rules state that “when determining whether or not the applicant is fit and proper, the council must have regard to certain offences relating to fraud, sexual offences and contraventions of housing or landlord and tenant law”.

Opposition leaders have also raised concerns about claims allegedly being made to investors about Penlake’s operations in the city.

Under the arrangement, investors pay a lump sum of around £48,000 per unit and are guaranteed a £6,000 return in the first year only.

The company’s investor packs for two of its city properties claimed that “the entire building” had been requested “by a local university which requires an extensive amount of accommodation on an ongoing basis”.

But the Daily Post has learned that no such arrangement exists for the two properties – Arena House, in Duke Street, and the old fire station at Hatton Garden – with any of the universities, although the company actually has an arrangement with an independent language school in the city centre, the Liverpool International Language Academy (LILA).

But LILA also confirmed it had no arrangement to take on all the rooms on an ongoing basis at developments in both Hatton Garden and Duke Street.

In recent months, Liverpool council agreed to sell the Grade II-listed St Andrews Church, in Rodney Street, to Mr Russell’s construction arm, Middle England Developments, for £1. The Daily Post understands some council officers were aware of Mr Russell’s convictions in the USA – which saw him stripped of his right to deal in real estate in South Carolina – but had not informed senior directors until after the deal had been recommended.

The council claims it has safeguards in place to ensure that, if the conversion doesn’t go ahead, then it can take the building back.

Liberal group leader Cllr Steve Radford said: “It is deeply concerning that people who may be inclined to invest in Liverpool could potentially be doing so on the basis of misleading information.