Antonio Flores’ Blog

What Mr. Keith Rule and Castro Abogados have achieved is one great result for the 47-strong Finca Parcs (Hellín) group of claimants who, having paid upfront deposits on a failed off-plan development, found to their horror that through the incompetence of their legal representation, no bank guarantees were available.

An undeniable great exposure has meant that numerous claimants who are on the same boat are starting to enquire what is it with this case that is different from many others, in process or already finalized with equal result. Our firm has received a handful of such enquiries, and presumably, many other are already receiving similar emails.

In writing this, I am aware that I do risk being dismissed as some miserly person void of happiness and filled with envy at the successes of others, but far from it: I do wish to congratulate the Castro family and Keith’s group for this success that, by “juridical contagion”, should help everyone involved in this conundrum.

But still, factuality deserves respect and so, once again, let us allow the truth get in the way of a good story:

• The CAM bank and Cleyton Ges S.L. had given out the 1968/57 bank guarantees to a very large number of customers at Finca Parcs, some of which in fact happened to be represented by us. When the developer kicked the bucket, those with bank guarantees were duly refunded by the CAM whereas those who did not, were told to sod off. No surprise there considering that the predatory CAM bank was governed by a gang of pirates who saw no issues with lending themselves astronomical amounts to invest in the Caribbean, a robbery now subject to criminal investigation.
• To contend that this is a landmark ruling is to be dismissive of the work of many other lawyers who have already obtained success in identical cases. The reality is that there are plenty of rulings that contradict Mr. Rule’s claim that this is legal precedent, no matter how hard, perhaps at the insistence of the media, they were conveniently omitted. Strangely enough, the original article published in El Pais does not say it’s a groundbreaking case, and it does not for the simple reason that it was a serious journalist who did his homework and got the facts right (he did call us and we pointed him to  the most reliable source of information: online law libraries!). Conversely, we could admit that, where no bank guarantees of any description or special accounts were available, a ruling ordering a bank to pay would be deemed worthy of being classified as legal precedent. In the ruling of this post, both bank guarantees and a special account were actually available.Keith’s Rule: Don’t let the truth get in the way of a good story!
• To say that Mr. Rule had “…taken on bank bosses after discovering a 45-year-old property law making them jointly responsible with promoters for returning guaranteed deposits on failed developments” is just risible; Mr. Rule has not discovered the 57/1968, just as Roberto Sanchez Saavedra did not discover the Spanish Civil Code (it was already there when his great-grandfather was born). The reality is that the “dug out” 1968 Act was helping many when Franco still went wild-boar hunting, and thousands have already benefited since then…including many of the Finca Parcs victims.

In summary, what has really happened is that Keith Rule and his group hired competent legal representation to help them out, and were lucky that funds were channeled through the developer’s accounts with the CAM, and not pocketed by the rogue developers via overseas accounts (even in this case protection may still be available). And not the least, that many buyers had bank guarantees whereas others didn’t (implying the existence of a blanket bank guarantee), an unfair situation caused by the inaction of property conveyance lawyers, the developer and the CAM bank and, as far as Spanish consistent case law is concerned, totally unacceptable.

But to announce that this is a groundbreaking ruling -when the bank had already given out dozens of individual bank guarantees (a few examples below) to as many customers, and there are plenty of identical rulings on the matter-  is just false.

Proof that Bank Guarantees for Finca Parks do Exist

Downloads

• Bank Guarantees for Finca Parks (PDF)

Antonio Flores Litigation, Property bank guarantees, CAM Bank, Cleyton Ges S.L., Finca Parcs, Keith Rule

Losses sustained on a financial investment that has not performed cannot always be attributed to the consumer. There are many instances where risks were not properly disclosed,where the consumer’s profile and an understanding of the complexities were incompatible, perhaps there was been misrepresentation or even fraud..

Of special importance are the timescales within which an action may be taken as, where there was mistake or misrepresentation, the contract can be rescinded within a period of 4 years since it was consummated but if, for instance, the contract is null and void because it violates public policy, or goes against moral or ethics, the contract is deemed to have never existed and so, there are no timescales to bring such an action.

The type of financial contract entered into may also determine when the 4-year rule elapses: as an example, claimants that sue for having been mis-sold “swaps” have 4 years since the contract was consummated (end of the term of the contract for both parties) whereas, those who wish to set aside a contract on a Unit-Linked Life Assurance product, pursuant to a recent ruling by the Appeal Court in Vizcaya (30-9-2011), can only bring an action within 4 years since the contract was signed.

It is worth noting that the 4-year term is for mistake or misrepresentation (viodability), but not for contractual default (15 years) or total voidness (no term).

Antonio Flores Litigation Banco Valencia, CAM Bank, Complex bank deposits, Equity Release Spain, Financial Mis-selling, Preferential Shares Spain, Suing Financial Failed Investments, Swaps

An 80 year-old rural-based lady who could not write nor read was told it was the ideal product for her, others were advised that it was a secure fixed-deposit they could cash at any time, when the small-print indicated that the deal’s maturity was postponed till… 31/12/3000 and many others were simply duped by excessively commission driven bank staff.

Examples of the inventiveness of despicable branch managers, hoping to convince anyone with any decent sum of money entrusted to them, are as abundant as are the numbers of people affected: around 900,000 according to some estimates.

It makes me wonder how come savers who bought Spanish banks’ preference shares, or were (mis)sold rather, have not revolted as pretty much everyone stuck with this “toxic refuse” would argue that bank managers doing time in some Siberian gulag would not be harsh enough.

Below is an email sent to a client advising on what I think are the different options specifically related to CAM and Sabadell:

Dear John

I have been getting information about this offer made by Banco Sabadell.

As you know, the original CAM was split into to 2, the CAM Savings Bank and the CAM Bank, that was taken over by Sabadell.

You purchased “participaciones preferentes”, which form part of the latter and therefore, are taken over by them. Had you had “cuotas participativas”, which are a type of share or bank stock, the value today would be literally zero.

Banco Sabadell is now offering that you change your preferential shares for ordinary Banco Sabadell shares, until the 27^th of July 2012. One thing seems clear from all of this: it is difficult to predict whether it best to accept the swap or not.

The 3 options you would have now are as follows:

1. Accept the swap: the main advantage with this is that you get rid of a perpetual product, which is exactly the nature of these shares (and which was never told to you when you “bought” them). The main disadvantage is that you can lose a substantial part of your investment if you sell, in fact you will, since you are being offered shares at €2.3 per share when the value is now around €1.5 per share.What you would then need to do is cross fingers and hope that the share value goes up to €2.3 so that it washes its face (at €2, you would be losing in the region of 20%). Below is a chart showing the trend of the bank, clearly downward.
   
2. Keep the “preferential shares”,which would allow you to keep receiving the annual coupon, as it is called, provided the bank has profits. The bigger problem is that lack of liquidity: if you wish to sell them you need to go to the secondary market, a pretty difficult scenario nowadays.
3. Sue CAM and Sabadell invoking that contracts were sold unlawfully i.e., without a clear, transparent and concrete explanation of the nature of the product and associated risks. This again throws you into the litigation route, which we had managed to avoid till today…but it may mean that your contract is declared null and void. Following a consultation with our legal library elderecho.com, there are currently 63 Court rulings showing when typing the search words “participaciones preferentes”, some as back as 2005 (which indicates that far from being a novelty, defrauded bank users have  silently battled along…I cannot give just now the proportion of wins vs. loses but there are of both types).

It appears that many people are accepting the swap as the least worst of options, but many others are staying put since there may be a second “offer” for those investors who chose not to swap: the value here is unknown though.

Antonio Flores Litigation, Scams Banco Sabadell, CAM Bank, Preference Shares

I have an American client, Ray, who happens to be a CAM Bank client. Several months ago, Ray got caught up by this bank’s disastrous decision-making processes and stuck in what seems an unresolvable legal quagmire.

Ray bought from a developer off-plan, back in 2005. In 2008 the properties were finished and licensed but, because the developer was running into problems, there were court cases being filed, and potentially embargoes being registered against the units, including his. So to protect him, on our advice he chose to complete on the property assuming the existing mortgage, without qualifying with the CAM as the application had not been submitted.

On a property valued at €900,000, he had paid more than half of it, during the course of the construction.

The situation was that he owned the property but the mortgage was in the developer’s name, although he kept his payments up to date. Twelve months ago, his loan fell behind by €300 during 3 days, and the CAM, because it coincided in time that they had just foreclosed on the loans on the other unsold units, seized the opportunity and did the same with his. Two days after this he had €20k in his account to cover several installments, but CAM refused point blank to reinstate. No other bank will lend him now, even though is not in a bad creditors list, because of this unusual situation.

This is an example that shows that some banks choose to be where they are: they are just bad banks with bad people running them, no more, and the CAM, the fourth largest savings bank in Spain, epitomises this.

Ray is not alone, as there seems to be a large number of clients who have had to deal with branch managers lacking the minimum common sense you expect from someone in their position. If you are one of those affected, we would love to here you story.

Today on Talk Radio Europe

For those of you interested, I will be today around 4.00 PM on the Life At Five with Allan Tee Show on Talk Radio Europe, to discuss this matter.

You can tune in directly through their website (internet stream), or through the FM frequency assigned in your area.

Antonio Flores Mortgages bank repossessions, CAM, CAM Bank, foreclosure