Plots of land in Suffolk described as "ideal for housing" and sold to investors for £9,000 have been valued by the Insolvency Service at only £150.
Former director Neil Westley said plots could still be built on
Deals offered by Townfield Investments cover 100acres (40 hectares) of land at Southwold where homes are sold for some of the highest prices in East Anglia.
Plots were sold near a flood plain and an area of outstanding natural beauty.
A statement from Townfield, now wound up, said the land could still be used for homes and they acted in good faith.
BBC East has discovered hundreds of people have been left out of pocket following deals totalling £3.8m.
The operation is called landbanking and is not illegal. Developers buy up cheap farm land and then sell it on for up to 50 times its worth.
Management consultant Russ Spargo paid £9,000 for a 2,000 sq ft plot but said he knew it was "a high risk investment with no guarantee".
Townfield Land Investments Ltd who sold the plots has been wound up in the High Court where its business was described as "inherently objectionable and detrimental to members of the public".
Winding up uncontested
Peter Eyres, area planning officer for Waveney District Council, said: "Their brochure described the land as brown field land. It is agricultural land which is green field."
Robert Burns, an Insolvency Service investigator, said: "The investors were being misled in a way which amounted to a scam.
"The plots of land were being sold for £9,000 but the true agricultural value was about £150."
Townfield former director Neil Westley issued a statement through solicitors which denied investors were actively mislead and claimed "the site was, and remains suitable for residential development".
The statement said proceedings to wind up the company were uncontested and the views of the Insolvency Service had not been found by a court to be accurate.
It points out the area of outstanding natural beauty covers a large tract of coast from Felixstowe almost all the way to Lowestoft encompassing numerous towns and villages and this does not prevent new development.
"The land at risk of flooding was not marketed by Townfield and the plots which were sold were not part of the Site of Special Scientific Interest," the statement said.
The solicitors point out, after overheads, the company made profit margins of 15% and there was no reason why money should be paid back to investors.
The statement said farm buildings were described as the "brown field" part of the site.