The German Property Group (GPG) comprises several companies that acquire, refurbish and resell listed properties and properties in need of redevelopment. GPG is the legal successor to Dolphin Trust. There are allegations of investment fraud and the public prosecutor's office in Hanover is already investigating those responsible. The company is based in Hanover. In our view, this is a pyramid scheme: New investor money was used to serve investors who had already invested and were therefore waiting for their distributions!
Some redevelopment investments were just as fake as sales. Some of the properties did not exist or were owned by third parties. Various properties have been waiting for years to be redeveloped, for example about 50 residential units in Augsburg, for 7 years the Stockaumühle in Reichertshofen/Ingolstadt, to quote just a few mentioned by Bayerischer Rundfunk. In other words, it is not only investors who have been deceived, but also local authorities. Some of them have sold high-quality, listed properties in the hope of improving the cityscape. At least the wait is over for the time being. It has been replaced by the hope that the properties will soon be available for sale to another investor.
For investors, the situation may be less confident. After all, investments of over 1 billion euros are at stake. Where the money has gone, what is still up for grabs and against whom claims can be made depends on the individual advisory situation and investment.
Who are the potential claimants?
Possible opponents are personally liable managing directors, investment intermediaries and also the banks, if they have violated duties of disclosure, for example about possible refunds. According to the information available to us, BaFin was also informed about the dubious transactions of GPG as early as 2019. However, the BaFin "pulled out of the affair", citing a supposed lack of competence. It is not yet possible to say whether this will ultimately work. But even if the hurdle for state liability claims is quite high, we do not rule it out from the outset. Especially in the present case, where there has been yet another blatant failure of supervision, it is certainly worth examining. As is well known, the wirecard scandal also involves a failure of the federal financial supervisory authority. Of course, the organs of GPG, above all the founder and former CEO Charles Smethurst, should also be liable.
What will the investors have to face soon?
The insolvency proceedings have not yet been opened. Presumably, a significant number of the 200 or so subsidiaries are also affected, often project companies for individual projects. Currently, a decision has been made to provisionally open insolvency proceedings with regard to the parent company. It remains to be seen how these proceedings will develop. We assume that the insolvency proceedings will be finally opened in the foreseeable future. Then the claims will have to be filed in the insolvency table.
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Dr. Nuriye Yildirim