The Equity Release Scam not Important Enough for the Audiencia Nacional
As we were almost expecting, the Audiencia Nacional has chosen to not deal with this case. Just as they chose to do with the “Urdangarin” case, King Juan Carlos’ son-in-law, they consider this matter not susceptible of being investigated by the higher AN but directly via the local Courts of First Instance. Below is a brief explanation of the position of the case and what we will be proposing next:
We are writing to you to advise that the Audiencia Nacional, the Madrid Courts specialized in major criminal cases, terrorism, money laundering and other high-profile cases, has rejected investigating the matter on jurisdictions grounds.
This decision comes as no surprise after learning, via the press, that only a few days ago they also rejected (on similar grounds) a petition to investigate the activities of the King Juan Carlos’ son-in-law, on corruption and tax evasion grounds, in spite of the very serious charges brought against him as well the geographically dispersed nature of his activities, throughout Spain (two key elements to attribute jurisdiction). The case is therefore now back to Court number 3 in Palma de Mallorca against the wishes of the, surprisingly, indicted person.
This relocation of jurisdiction in favour of district Courts of First Instance is thus a mere formality that has, in principle, the following immediate consequences:
- The choice of legal action (civil or criminal) will be determined by the specifics of the case, the situation of the mortgage and namely the existence is enough evidence to demonstrate criminality, in the form of deceitful publicity and swindle when selling the equity release products.
- Jurisdictional matters will now have to be re-addressed, depending on whether civil or criminal charges are instigated, the place of signing the contracts (both investment and mortgage loans) and where the offices of these banks are situated (some have closed their offices altogether).
Our firm is in favour of filing civil cases pursuing the declaration of “nullity and voidness” of equity release contracts on broader grounds, as is permitted in the civil jurisdiction where the legal standard of proof is reduced to “the balance of probabilities”, often referred to “more likely than not”. Our main arguments will be based on 2 Supreme Court rulings on an almost identical case, which found a Spanish bank guilty of mis-selling financial products to customers with no financial knowledge. A summary of the cases and how they relate to equity release can be found on the following links:
From our perspective however, the need for further clarification of the nature of the contracts necessarily will require an expert opinion, financial in this case. Also, we are very keen to obtain the opinion of the Spanish regulators in respect of the following, for which we will apply directly to them (as we had requested the rejecting Madrid Courts to obtain such reports and will now not be getting them):
- If the Tax Office considers that mortgaging one’s home and hiding the proceeds in Luxembourg is a valid way to avoid taxes.
- If the Bank of Spain gave clearance to this speculative product, aimed at retirees, pensioners and older people.
- If the Financial Regulator (CNMV) gave clearance to this investment vehicle, the promotional literature devised to sell it, the IFAs through which the products were sold and the content of the contracts, from a consumer protection legislation perspective.
- Where the investment vehicle was a unit-linked insurance policy, if the Insurance regulator (DGS) approved the items on point c).
We will write to you shortly with a legal representation proposition as soon as we decide the venues for bringing an action and whether we can join together lawsuits where the defendant is one same bank, regardless of the address of the mortgaged property. Needless to say, from a legal fee point of view this proposition take into account your financial situation and will give weight to the no-win no-fee element of the legal fee, in detriment of the retainer, that will be much reduced and that can be paid by installments.