After years of investigative work, the Hanover public prosecutor’s office has brought charges against the former boss of the German Property Group. The suspicion: commercial fraud.
After a long investigation, the Hanover public prosecutor’s office has brought charges against Charles Smethurst, the founder and former boss of the German Property Group, which owns a large number of listed properties in Germany. The public prosecutor’s office announced this on Wednesday in response to a t-online request.
The accusation that the Commercial Criminal Chamber of the Hildesheim Regional Court must now deal with: commercial fraud in 27 cases, of which 22 cases are said to have resulted in a large-scale loss of assets.
The German Property Group was founded in 2008 as a merger of several companies that invested money from investors in real estate. The company, headed by Smethurst, was initially called Dolphin Capital, but the company has only been operating under its current name since 2019.
The business idea of the German Property Group was to acquire historical, often listed, buildings from municipalities in Germany, renovate them and then sell them to private buyers at a profit. To do this, Smethurst’s company raised large sums of money from small investors abroad, to whom the investments were touted as a safe form of investment with high returns and possible tax savings.
The company acquired some well-known buildings, such as the ruins of Dwasieden Castle on Rügen. According to research by several media outlets, including NDR, BR and “Süddeutsche Zeitung”, the renovations often never took place. According to this, more than one billion euros were raised from 15,000 to 25,000 small investors, most of whom came from Great Britain, Ireland, South Korea and other Asian countries. However, the money from new investors is said to have only been used to pay returns from existing investors and commissions to people who recruited new investors.
There is a suspicion that the German Property Group has set up a fraudulent pyramid scheme. In such a business model, the payouts to the first investors are financed with the deposits of investors who invested later. The system collapses when the number of new depositors is no longer sufficient to serve existing customers.
At the end of 2019, the first criminal complaint was filed against Charles Smethurst, including for delaying bankruptcy. Shortly afterwards, at the beginning of 2020, the public prosecutor’s office initiated investigations against three people associated with the German Property Group, and the suspicion was already at that time: investment fraud and breach of trust. In July 2020, the company filed for bankruptcy.
To date, the investigation, which was later significantly expanded, has lasted almost four years. A circumstance that outraged many investors – and in the meantime also called a prominent lawyer, the FDP politician Wolfgang Kubicki, onto the scene: In 2020, in his role as lawyer for a potentially injured party from Great Britain, he spoke of a “gigantic investment fraud”, the case could ” Wirecard dimensions”.
Today, Kubicki no longer represents British investors. In an initial reaction to the charges that have now been brought, he told t-online on Tuesday: “It’s good that the events surrounding German Property are now being investigated under criminal law, even if the wheels of justice grind slowly.”