Spanish Equity Release Fiasco

Equity Release Fiasco: Gathering in Malaga on 09-04-2012

admin — Sat, 07 Apr 2012 08:58:11 +0000

As many of you already know, the ERVA has organized a gathering at the Malaga Tax Office (Avenida de Andalucía number 2, next to El Corte Inglés), Monday the 9^th of April 11.30 a.m. (if wish to arrive earlier we will meet in front of El Corte Inglés at 11 a.m.), with the purpose of submitting a tax “denuncia” against the Equity Release banks.

The main aim of this action is to make the Spanish Tax Authorities aware that their Danish counterpart, the Danish Tax Authority (SKAT), as well as the Danish Ministry of Taxation, have already labeled these schemes as fraudulent and started an investigation.

The form below should ideally be printed and filled out by hand, in block capitals, so that it has a more personal touch than a form that only has an original signature. The denunciations will be grouped and Lawbird will attach relevant contractual and marketing documentation we already have, classified by banks.

If you are not able to print and fill out don’t worry, we will take forms that can be filled out there and then.

We will require from you, if at all possible, a copy of the mortgage loan signed with the denounced bank. Failing this, a copy of a “nota simple” showing the mortgage loan registered against it. If you are not able to obtain this, so long as the property details are recorded on the form, we will proceed with filing, and at a later date we will submit the paperwork that is missing.

Also, please bring your passport and a copy.

We expect the Tax office to start an investigation into the activities of the banks because of the fraudulent nature of the proposal, and the loss of revenue as a result. We must not forget that it is almost certain that the tax evasion element of such products has already materialized in some cases, if we consider that hundreds of owners would have been deceived into signing up these products and a few, sadly, are likely to have passed away, some probably due to the enormous stress caused by the actions of the thieving banks.

Please note that this is an important gathering: from the point of the claimant, it is the start of the civil action against the bank in question since obtaining an opinion from the Tax Office is crucial in destroying the validity of the contracts, and from the point of view of the bank, it is the formal communication to the Tax Office of an ill-conceived scheme devised in conjunction with unethical unregistered IFAs, that openly invited customers to violate fiscal laws in Spain (and elsewhere too).

Should there be any change between now and Monday, we will advise by email and also, by publication on the ERVA forum. Any queries will also be responded by emailing myself (or calling the mobile 656 967672), Euan Armstrong (euan@sunnyspain.org) or Ian Sherdley (sherdleys@hotmail.com).

Documents

Denunciation Form (PDF – 170 kb)

Post originally posted on the ERVA website - Monday the 9th of April Gathering in Malaga.

ERVA Discusses the Legalities of the Denunciation to be Lodged at the Tax Office on 9-4-2012 (Video)

admin — Sat, 31 Mar 2012 09:42:35 +0000

Euan Armstrong and Antonio Flores discuss the denunciation to be lodged with the Spanish Hacienda, that is to be held on the 9^th of April 2012, at 12.00 am, in the Delegacion de la A.E.A.T. de Málaga (map). Claimants will gather outside at 11.30 a.m. for a peaceful protest and it is expected that the different press will cover the action.

Tax Office Building in Malaga

The denunciation consist of a writ to the Tax Office informing them that the denounced bank(s), with a view to capture new clients, offered a product that supposedly would mitigate the impact of Inheritance and Wealth Taxes when, as it has turned out, actually consisted on a tax fraud proposition for such taxes could have never been avoided.

The writ will be standardized and denouncers will just have to fill out their personal details, the bank involved and the date of signing of the mortgage deed. We will load the denunciation on this website on the following days. Denouncers will be able to fill out the form at home, and bring it to the meeting, or fill it out on day and have it signed.

The only document that will be required is a copy of the mortgage deeds, or escritura de préstamo hipotecario. This can be sent to either Euan or Ian, or can be brought to the meeting.

Please confirm your attendance by email Euan Armstrong (euan@sunnyspain.org) or Ian Sherdley on (iansherdley@gmail.com) at the earliest possible convenience.

Story originally published on the ERVA website.

Danske Bank Luxembourg Agreed to Settle With an 85-year Old British Couple Not Before Extracting an Apology

admin — Mon, 19 Mar 2012 09:36:49 +0000

Klaus “Monster” Pedersen, the same high-flying executive who thought to be above-board to sell his Spanish tax-evading equity release products to old-age pensioners, preferably through Costa-del-Sol financial cowboys, promising them it was a miracle-product (only to later make the advice disappear from the company website), found that further humiliating his victims by extracting an apology was correct, not before taking €300,000 from them.

Humiliator-in-Chief Pedersen had to agree on a settlement after his company was approached by Sharon Bowles, MEP for the victims, but took great offence that the matter had “transpired” because in opaque Luxembourg, where he is based, washing dirty-linen in public was seen as a sacrilege, particularly with tax-evasion being high on the agenda.

Will he be asking for an apology from the largest Danish newspaper, Jyllands-Posten, for stating that they actively promoted tax fraud through Costa-cowboys?

Story originally posted on the ERVA Website.

Spanish Equity Release Fiasco Legal Action – February 2012 Update

admin — Fri, 24 Feb 2012 16:13:45 +0000

Antonio Flores of Lawbird explains the next actions in respect of the Equity Release Fiasco Case. Antonio comments on the demonstration to be held on the 8th of April Monday, at the offices of the Spanish Inland Revenue in Malaga. This will be done prior to reporting/filing a “denuncia” against the banks involved in allegedly scheming, together with unregulated, unqualified Costa del Sol pseudo-financial advisers, to defraud the Spanish Revenue on inheritance and wealth taxes of pensioners, as confirmed by the largest Danish newspaper.

Originally posted on ERVA.

Danish Government to Investigate the Equity Release Scam

Antonio Flores — Mon, 16 Jan 2012 14:01:59 +0000

Early this week the Audiencia Nacional chose to reject the investigation of the “Equity Release” alleged fraud on grounds that include, on the one side, the argument that they lack “geographical” jurisdiction and on the other, that there is not enough evidence within the claim (250 pages) to merit starting a criminal investigation by their Courts. And if those grounds were not enough, to further convince themselves of the wisdom of their decision, they also mentioned that we had not managed to prove enough the relationship between the cowboy coastal IFAs and the reported banks (informally known in Spain as “chiringuitos financieros”), as if to suggest that we should have eavesdropped on their board meetings or tapped their telephone conversations. I would be lying if I said that we were not aware that it would very be difficult to get these elitist Magistrates to deal with white-collar crime, even if as serious as this.

In our opinion, this is a clear case of judicial apathy by the Court which, after probably not reading the claim, considered it nevertheless irrelevant in what is a steadily worsening record of protecting rights of consumers.

In stark contrast to this indignant “skimping over”, the Danish Government has reacted forcefully to the allegations published by the largest newspaper in Denmark, the Morgenavisen Jyllands-Posten. According to the daily newspaper, Sydbank targeted wealthy expat residents of Spain, encouraging them to take out a Danish mortgage on their property and offering to transfer the released money to Switzerland. Jyllands-Posten claims that the Aabenraa-based bank was aware that Swiss bank secrecy rules would allow these assets to be hidden from the Spanish tax authorities.

The newspaper points to an internal mail sent from a director of Sydbank Switzerland to senior management in Denmark, including CEO Karen Frøsig. EPN.dk quoted the email admitting that in Spain, tax on inheritance on real estate only applies on the equity. Mortgaging serves primarily the purpose of inheritance tax reduction. It was also mentioned that Sydbank may not even have had a license for operating in Spain, let alone offering tax evasion products.

The Danish Tax Minister, Thor Möger Pedersen, has indicated that It is clear that my awareness increased if a large bank is proposing a maneuver in which the tax due on the loan is placed in a tax haven country without accountability. If it is a widespread traffic in the financial sector, it is definitely something we will look at.

According to Johnny Schaadt Hansen, director of The Danish Tax Office Special Department of Economic Crime, there may be a counselor responsibility, which the bank may be punished for. It does not sound very good if a Danish bank is involved in such a concept. It will be included in our priorities, and one should not forget that in such a case can be a counselor responsibility, as one can be punished for, whether you are accountant, lawyer or banker, said Johnny Hansen Schaadt.

The articles also quotes Lars Krull, a senior consultant and expert in banks from Aalborg University, saying that if it is primarily tax that drives it, and not a real need for funding, you should be wary. Also, the specialized financial daily Finanswatch.dk openly regards this practice as a scam.

Finally, a few days ago we learned that three Swiss bankers are charged in a New York indictment with conspiring to hide more than $1.2 billion of taxpayer assets from the Internal Revenue Service, in what is a very similar tax dodging scheme (they were using offshore companies, straw-men and other mechanisms to defraud).

News from the Danish Media (in Danish)

Sydbank hjalp med at skjule formuer 09-01-2012 – epn.dk
Flere banker arbejder i skattely 10-01-2012 – epn.dk
Sydbank: Vi var måske for offensive 10-01-2012 – epn.dk
Spansk advokat jagter danske banker 13-01-2012 – epn.dk
Skyer over Solkysten 14-01-2012 – Finans Watch (Subscription Required)
Kommentar: Bankernes kulsorte hemmelighed 15-01-2012 – Finans Watch (Subscription Required)

The Equity Release Scam not Important Enough for the Audiencia Nacional

Antonio Flores — Fri, 13 Jan 2012 16:06:48 +0000

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:

Dear Sir/Madam,

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:

http://belegal.com/blog-by-antonio-flores/equity-release-contracts-full-of-cracks-i/

http://belegal.com/equity-release/equity-release-contracts-full-of-cracks-ii/

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.
B. regards

Mortgage Broker Arrested in Madrid

Antonio Flores — Thu, 08 Dec 2011 09:23:47 +0000

A “cowboy” mortgage broker has been arrested in Madrid in connection to a mortgage fraud affecting South American immigrants. The Judge in Court of First Instance 42 of Madrid accuses him of setting up a scheme to assist immigrants in qualifying for mortgage loans that would not be available to them in normal circumstances. The fraud consisted on a scheme whereby groups of immigrants would “pool” their income-supporting documentation to buy several properties on a same day, thus avoid detection by banks’ risk-assessment analysts who, on knowing that each buyer was guaranteeing several loans on other properties, would have rejected those applications outright. Unfortunately, the net collapsed once a borrower was not able to meet the repayments.

El Pais considers this as a major step forward among the few criminal complaints filed in relation to practices that were common in the boom days.

The 10 families that have lodged the complaint argue that Enrique Caño, the broker, abused borrowers’ trust and their limited financial knowledge to involve them in high-risk transactions.

76 Year-Old Evicted for Failing to Pay Mortgage

Antonio Flores — Mon, 05 Dec 2011 19:21:16 +0000

It was the second most read article on the most read Spanish online newspaper in the world: a 76 year-old being evicted from her home due to her providing her home as collateral when signing up a refinancing package for debt accrued by the son. Whilst we do not know the particulars of the case, we cannot stop associating the predicament of the lady in the tent with that of hundreds of pensioners duped by foreign banks and imposter IFAs.

I wonder how will the Equity Release banks (Rothschild, Nordea, Danske Bank etc.) cope with being on the press if they choose to start enforcing foreclosure and eviction clauses now that pensioners have, by and large, opted to stop repaying those mortgages.

Two Rothschild Equity Release Victims Interviewed

admin — Mon, 05 Dec 2011 18:36:27 +0000

Antonio Flores of Lawbird interviews Julia Hilling (88) and Peter Cosgrove (78), two Rothschild and Hamilton’s victims.

My Interview to Two Rothschild Equity Release Victims

Swiss Choices: International Financial Planning at its Best

admin — Sun, 27 Nov 2011 20:58:36 +0000

The promotional literature by Swiss Choices Equity Release leaves no room for doubt when signing up the Equity Release obnoxious scheme. As they indicate, “do not make the mistake of leaving any action until the last minute…because you don’t know when this will be.”

Developed by Graydon & Associates Costa Blanca S.L. in connection with Swiss Life (Liechtenstein) AG and BFI Consulting AG (whatever those initials stand for), according to the duo, “it was fine-tuned to provide current and future liquidity whilst ensuring the highest possible level of safety, privacy and asset protection.” .

To cap it all, they declared that “this kind of long-term planning requires utmost solidity – the kind that only the time-tested and stringent insurance and banking regulations of Switzerland can offer”

This financial flyer needs to be read in depth because of the extraordinary record it holds: that of being able to insert one lie within every three words!

Documents

Swiss-Choices-Equity-Release-Brochure (PDF ~500 kb)