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The Spanish Lawyer Online

Antonio Flores’ Blog

Thoughts about laws and regulations which affect foreigners in Spain


Archive for the ‘Scams’ Category

Jail Terms for Dishonest Real Estate Agents

October 18th, 2016

Tshutterstock_105509726wo Court rulings have each confirmed that real estate agents should serve a minimum of 2 years in prison for defrauding both buyers and sellers in at least two property deals. The punishment meted out to these professionals relates to the dishonest -albeit not common- habit of structuring their commission payment, in addition to what % they formally agree on with either party, on the difference between what the buyer pays and what the seller receives…without telling either party what these amounts were.

The Courts, on finding the estate agents guilty on counts of criminal fraud, concluded the following:

  • Both buyer and seller were unaware of the real terms of the deal, having the estate agent effectively obtained the consent of both parties on different prices to those reciprocally agreed with either party, causing loss to both.
  • The dual agreements are not a reflection of the real facts, the price for the buyer and the vendor are different and the “agreed commission” is not real, as it was jacked up.
  • The “buyer’s price” was not the lowest he could get away with and the “seller’s price” was not the highest the property could achieve, owing to an artificial and fabricated deal.
  • The Court refutes the defense allegation that the real estate bought and then sold the property, at a profit, on grounds that it is improper conduct for real estate brokers to act in such manner, in addition to concealing the true nature of the deal to its customers.
  • The Court neither accepts that both buyer and seller were satisfied at the time with the terms of the agreed transaction: they probably were as they did not know otherwise, owing to the disinformation and deception devised by the agent.
  • There is an aggravating circumstance in that the real estate agents, operating via an establishment opened to the public, added further credibility to their actions and facilitated the removal of objections by buyer and seller.

Similar behaviours as those described are known to have happened in the Costa del Sol but the likelihood of them resurfacing, considering that approximately 95% of all transactions included 2 real estate agents, is mostly residual.

Property, Scams , , , ,

Illegal Investments: Fiduciary Duty Claim Sticks Against Santander Bank

August 10th, 2016

shutterstock_161194061 (1)

For the first time that we are aware of, a Spanish Court has found a complaint to sufficiently allege a breach of fiduciary duty against a bank, Santander, who had opened an account to an unauthorized financial investment company and allowed it to take clients’ deposits for unregulated investments. Needless to say, clients’ money was almost all lost.

According to the Madrid Appeal Court, (…) the unauthorized firm acted illicitly by breaching is contractual terms with its clients and more importantly, the Court deemed this firm was (…) offering the public an investment service in blatant violation of mandatory regulatory laws.

The directors of the unauthorized have also been found to have acted illicitly –for the above reasons- and as a result, deemed personally responsible for the losses of clients’ savings.

And Santander, more crucially, was found to have (…) acted reprehensibly by allowing the unauthorized firm to operate freely by opening bank accounts, authorizing transfers and permitting other typical banking transactions reserved to authorized firms.

The Court invoked article 7 of the annex to the Financial Markets Code of Conduct that prohibits dealings with illegal companies:

Entities will refuse any operation from non-authorized intermediaries, as well as those in which they have knowledge that the relevant legislation applicable to the former may be infringed.

Such “knowledge” was decisive in this case for the Court to rule that Santander was in breach of the above obligation and order the bank to indemnify the client for the losses sustained by the boiler room.

This events leading to this ruling happened prior to the approval of the Anti-Money Laundering Act where banks –and other obliged parties-, are obliged to obtain information as to the

purpose and expected nature of the business connection of the client and in particular, the nature of the professional and/or business activity, carrying out those measures to reasonably prove the information” (art. 5),

as well as a

continuous follow up of such business connection, inclusive of scrutiny of any dealings conducted throughout the relationship” (art. 6).

On this basis, we believe that the above “knowledge” is no longer essential and therefore banks that facilitate any person, company or otherwise to illegally operate in the financial markets could be deemed responsible for the losses sustained by their clients/victims.

For the avoidance of doubt, an unauthorized entity (or “fly-by-night operation” as described by Spanish regulators) is any such that offers investment or insurance services and is not approved by the CNMV (Financial Conduct Authority) or the DGS (Insurance Regulator).

Companies, Corporate Law, Scams , , , , ,

Financial and Investment Advice in Spain: Basic Things You Need to Know

December 20th, 2013

According to report on the matter, banks provide 90% of the investment and financial advice given in Spain. The remaining 10% is left to the different type of authorized investment businesses: financial and investment advisors, broker-dealers, securities dealer companies and brokerage houses.

Banks offering investment advice has proven to be disastrous in Spain: hundreds of thousands (literally) have been missold financial products by their own banks that by and large, deliberately dumped billions of own worthless stock on their customers. Conflict of interest does not begin to cover it.

Other than banks, any person or company not deemed a regulated investment business (empresa de servicio de inversion), either directly with the Spanish regulator (CNMV) or through the ‘passporting’ system, which gives rights to firms to conduct business into the European Economic Area (EEA) under a single market directive, is not allowed to provide financial advice, let alone take funds from the public.

A third category we cannot miss are those who operate illegally, without any authorization. The Spanish CNMV calls them ‘chiringuitos financieros’, a term that is increasingly used officially to best describe how these rogues operate.  The activities of these cowboys are dangerous in different intensities: some just provide advice (never innocent though), others take funds from the public and invest them more or less sensibly and then, the most dangerous of all: those who take funds from others, on the pretext of carrying out a sound investment, and either run a Ponzi scheme, sell worthless stocks/bonds or, quite simply, make off with the monies. This type of con artist, often with a previous criminal conviction in a different country, unfortunately finds Spain a ‘fertile ground’ full of trusting retirees sitting on substantial savings. And there is the sun too.

Some of these fraudsters have learnt that, if they take money under the promise of returning the capital plus say 20% and they record the transaction as a personal loan, they could get away with it and, at the most, be successfully sued in a civil Court; or maybe not but, in any case, stay away from these defrauding individuals altogether. If you are desperate to lend money to others for a nice return, do it officially via a Spanish Notary and use, if possible, real estate as collateral (just as banks do).

Currently, there are only 50 or so regulated Spanish financial and investment advisors (called “EAFI”) and approximately 10 times that figure operating with a EU ‘passport’. Any person or company offering services not appearing on the CNMV list of authorized investment services businesses is operating illegally. Don’t deal with them, not even a beer.

Scams , , , , , , ,

Lawbird Once Again Victim of Identity Theft

September 10th, 2013


Once again, Lawbird Legal Services’ name is being used by the ‘Nigerian scam’ fraudsters to cheat Australian citizens. In a nutshell, the letter says that 10 million U$D are waiting for you if you advance some money to us.

If you have received one of such letters, we suggest you do the following:

  1. Write to us on, attaching where possible a copy of the letter.
  2. Report the incident to the Australian Competition & Consumer Commission.
  3. Ignore the missive and just bin it!

Going back to the letter, we must add that it gets it wrong factually and conceptually too. Firstly, I am no Barrister, but a lawyer (in Spain, there is no distinction between a Solicitor, a Barrister or a Lawyer), and I am not a Doctor in Law.

Secondly, if you ring on the given mobile number, you will get to talk to someone that looks just like the chap on the picture or even, any of these 3, talks with a funny accent which is neither Spanish or English, but from West-Central Africa and has so little credibility that it should be easy to tell it is a scam. This you should not miss, as it is very distinct.

Finally, it is forbidden by the Spanish Law Society to use any official sign, stamp, emblem or otherwise on our correspondence. These dangerous clowns don’t know but even if they were to read this post, they would still not understand as they think it does give them credibility.

We urge recipients of such letters to proceed as explained above.

Thank you

Scams , ,

Buyer Beware: Spanish Residency Frauds

May 25th, 2013

We all know fraudsters never sleep, just like money; in fact when our guard is down the fraudster can be at his most damaging.

And this is exactly what is happening as a result of the irresponsible press release issued by the Spanish Government last November, when they propagated the lie that they would be offering residency (automatic) for anyone who bought a property worth €160,000 and above.

The above innocent release triggered a desire by tens of thousands of potential buyers eager to move to this part of the world, whether to be able to start a better life away from war zones or potentially conflictive areas, move the family to better education or living conditions and where the choice was for the Coastal areas, get the enviably famous weather. For many too, it was a way to be able travel more effectively without the hindrance of waiting in queues to be dealt by unfriendly Consulate staff for visas and for a few, for reasons of privilege and even social status.

And confusion was compounded by ignorant journalists who mistook residency for “citizenship”.

So in the wake of all the above, professional conmen saw an opportunity to try to trick desperate families into buying a property and on the back of it, get permanent residency for all the family. One of such companies, Green Planet EU residency, most probably run by former timeshare resale scammers, is offering a package where you pay €220,000 and you get, for the privilege, a property and a residency card. To make things look legit, they resort to the Costa conman manual and pick novice lawyers generally based in Fuengirola to receive the payment (whether the lawyers are aware of the scam or not is unknown to us).

Far from it. There is no approved norm, law, act, ruling or otherwise, in Spanish law, that will allow you to get automatic residency by buying a property worth €160,000 and above, for one simple reason: it was never approved.

The latest move by the Spanish Government has been to announce that, after much consideration, they will grant residency to families buying a property worth €500,000 and above, as was approved on Friday the 24th of May. But beware, this pre-law has not been published in the official gazette ( so even after this press release, professionals in the sector need to be cautious because as of yet, buying a property over 500,000 (cash-no mortgage) will yet not secure residency, and it is not going to be retrospectively applied!


Immigration, Scams , ,

(S)CAM Bank Preference Shares

July 23rd, 2012

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 27th 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, 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.

Litigation, Scams , ,

Top 7 Worst Banking Practices I Have Come Across

February 8th, 2012

It is only a few days ago when we read a story of an ailing 80-year-old diagnosed with Alzheimer and dementia, who had been sold €18,000 worth of… worthless financial products from CAM bank. The gentleman in particular had an officially recognized 80% disability, impaired vision and a history of strokes, and yet, he was persuaded by his branch manager into buying CAM shares for €9,000 and a further €9,000 on deposit, until year…3000!

This example of disgraceful behaviour, far from being an isolated case, adds on to a long list of what we could call “bankers´ most despicable actions” (we would completely miss the point if we thought that these are not man-made) and illustrates the utter disrespect and greed of certain individuals working for some banks.

So listed below are Top 7 Banks’ questionable at best, despicable at worst practices I have come across both in the exercise of the legal profession, and exemplifies the declining ethical standards within the industry.

  1. Equity Release: a scam that was operated by a number of Scandinavian and British banks where pensioners were asked to gamble away their lifetime savings on two main pretexts: that by registering a mortgage on their property, they could eliminate Inheritance Taxes for their children, legally, and that by investing the loan obtained from the mortgage they would obtain an additional income to their limited pension. A few criminal ongoing court actions, and an avalanche of soon to come civil suits will determine how ethical it was for Rothschild Bank offer a 90-year old a 90% loan on her property…
  2. Clip or Swap clauses on mortgages: financial products wrongly sold to mortgage-loan customers as insurance against increasing interest rates. The bona-fide insurance policy was in reality a complex derivative instrument. Most Spanish banks indulged in this awful practice and court cases are being resolved in favour of customers. Bankinter, Popular Bank and a few other culprits have lost 523 Court cases versus 90 ruled in their favour…
  3. Bad-advice provided by Deutsche Bank to its customers when advising them that Lehman Brothers and some Icelandic banks, which ultimately went bust, were, nevertheless, the investment of choice. Court number 57 in Madrid is currently dealing with the matter.
  4. Awful advice by Santander Bank when offering customers to invest with “world’s biggest conman” Bernie Madoff, despite knowing since 2006 the dangers of investing with him, according to the press.
  5. Deceitful advice given to long-standing clients by La Caixa, CAM, BBVA and many other banks to sign up “preferential shares”, when they thought they were depositing their savings on a fixed-deposit. Whereas one would think that younger, dynamic and financial-savvy investors would take on these products, this meeting held by very upset customers seems to suggest otherwise.
  6. Abusive use of the extra-judicial foreclosures by some banks. This repossession mechanism is generally (and inadvertently) agreed to by the borrower when signing the mortgage loan deed, is conducted by Notary Publics and can lead the bank keeping a property for €1. An association is fighting to expose this practice.
  7. And lastly, a shocking photographic report of Jyske Bank’s not-so-exquisite treatment of an evicted property owner, his belongings and the property itself, following a bizarre dispute lasting 18 years. The Gibraltar-based bank managed to regain possession of an offshore-company-owned property although not ownership, that was retained by the ultimate owner (our client), as confirmed by a  number of quirky court rulings that nevertheless allowed Jyske to put their hands on this property with one sole purpose: destroy as much as they could!

Mortgages, Scams , , , , , , , , ,

My Interview to Two Rothschild Equity Release Victims

December 5th, 2011

Having met with dozens of victims of the Equity Release fraudulent scheme, we asked some of them if they would be happy to be interviewed; the result was very positive, with some willing to be interviewed every week, if need be! 

Julia Hilling (88) and Peter Cosgrove (78), two Rothschild + Hamilton’s victims, have no more money to pay to the bank and have not been yet forced out of their homes. Listen to their stories here.

Scams ,

The (Lack of) Values of Nordea Bank

October 10th, 2011

Clients Appreciate our Nordic Values. They differentiate us from our competitors.

Anne-Lise Zahl Sørensen, NORDEA BANK.


This supremacist statement embedded in Nordea’s INTERNATIONAL PRIVATE BANKING in LUXEMBOURG prospectus is not only an insult to Nordic people, but also probably the last straw for many close to losing everything (everything as in the Oxford English Dictionary), to the bank in question. Not even the Nigerian scam has wreaked so much havoc on one single individual as has the Nordic “in-house specialist and experienced portfolio managers”.

But the infamy of this statement and the severity of the insult it projects over the victims of the Nordea Bank Equity Release could be insignificant compared with what could happen if the Spanish authorities (Spanish Anticorruption Prosecutor and the National Tax Office) picks up on one aspect of the programme that the US Justice Department and Internal Revenue Service (IRS), in a case brought against the promoters of a similar scheme, identified as being

conspiracy to defraud the United States and to commit wire fraud, conspiracy to commit money laundering and tax evasion, by promoting fraudulent scheme…additionally the Hirmers attempted to strip the equity out of one of their homes by granting a bogus mortgage to a Panamanian nominee entity they controlled…the use of abusive trust schemes and fraudulent debt elimination tactics intended to conceal income from the IRS isn’t tax planning; it’s criminal activity. There is no secret formula that can eliminate a person’s tax obligations…today’s verdict reinforces our commitment to every American taxpayer that we will identify and prosecute those who promote illegal financial transactions designed to evade the payment of taxes.”

Mortgages, Scams ,

Net Finally Closing Over Bogus Insurer Compagnie Des Guaranties

September 6th, 2011

Last Sunday morning, while cycling around La Cala area, I spotted what looked like an isolated bored Spanish donkey with what looked like a kind of a smallish stork on its back, the latter presumably going about the job of cleansing the animal from parasites, and the former happily accepting it. This is what they call symbiosis, or a mutually beneficial relationship involving close physical contact between two organisms that aren’t the same species. I took some pictures but the mobile was not powerful, unfortunately. In a strange mental composition exercise whilst negotiating the curves, I immediately thought of more than a handful of Spanish property developers and Mr. Carlo S. Mottola, in what could be one of the biggest cases or fraud in the Spanish property sector, and the relationship they had struck to bring misery, anguish and pain to, once again, off-plan property buyers. On the one side of the fraud, sitting comfortably on top of the donkey, Mr. Mottola, the man behind the bogus Compagnie Des Garanties de Du Luxembourg S.A., Company of Guaranties Ltd. and Cauzione, flouting every mandatory insurance legislation provision and without a penny behind him, and with the Spanish Insurance watchdog DGS (Dirección General de Seguros) warning about his activities as early as 2003 (and who incidentally have done nothing since), erected himself as the provider of surety contracts worth tens of millions of pounds knowing full well he could have never honoured them, if we notice the following:

  1. His Luxembourg company, boasting a share capital of €24,283,800 on the letter head of the policies given out by the hundreds in the years 2003-2008, had actually been referred to the Courts on the 10th of November 2003 by the Luxembourg Prosecution Service and, after a remarkably quick Court process (which we can only dream of here), the company was “pronounced dissolved and ordered its liquidation” for what was deemed as grave legal contraventions, these being not submitting a Balance Sheet nor a Profit Loss Statement since the company’s incorporation, in 1999, nor having a known address since the company was reported to the authorities in 2003. Just as his insured property buyers have been used to, he failed to turn up to the hearing…
  2. His accountants in London, Arram Berlyn Gardner, had already warned, in early 2009, that the company was not a viable enterprise.

  3. Lack of any recorded payments on claims (or perhaps one or two smallish at the beginning to give himself a credibility that he lacked) to any of the hundreds of people who would have been entitled to a payout.
  4. Record of payments made to companies under his control, or directly related to him, one in the Channel Islands and the other one in the US: And again in 2008, another payment: And what about the American company?

At the other end of the scam, the Spanish developers, the donkeys in the symbiosis relationship and in real life too, real quadrupeds who, after having their applications for bank guarantees or insurance policies turned down by the likes of Santander, BBVA, AXA, Zurich and many others, resorted to the unscrupulous Mr. Mottola, who would, oblivious to what is right or honourable, and legal too, print off as many policies as required to provide sham covers to the unsuspecting property purchasers. If you wish to know what these policies look like think about the lottery prize certificates that Nigerians send you by email on a monthly basis, when you strike lucky with them: they actually look genuine in comparison to Mottola’s “monopoly” policies.

But the net is now closing: already, the Malaga High Court, in a civil ruling involving a developer currently serving time for tax fraud and indicted on further corruption and swindle charges, stated that: Lastly, to have a perspective on the behaviour of Naviro in this matter, we need to refer also to the surety policy invoked by the defendant, which happens to be completely bogus for the company “Compagnie Des Garanties S.A. is not authorized to operate in Spain, as has been proven in 2 reports, one from the Bank of Spain and a further one from the Insurance Directorate General. And recently, a story about one bogus insurer which is being investigated by the police for insurance fraud for having offered bogus insurance cover and will be presumably soon accused of criminal swindle. The lady in particular was registered with the Companies House to…distribute electrical appliances. Compagnies des Garanties Ltd. is equally currently registered in Spain as a branch operation, and duly registered too with the tax office to carry out the activity of…Maintenance and Repairs of Motor Vehicles. This further dent on Spain’s already appalling reputation for not looking after foreign investors bodes badly for the Government’s plan to bring back foreign investment (a child would see this), not to mention nationals of Spain who have also been caught out in this scam.

And so, who will pay for this? Well, difficult to say now but it seems that a the spectrum of responsibilities will range from possibly criminal to civil and potentially, administrative, given the supervisor’s failure to bring this man to justice, but more importantly, for having allowed him to operate since he was discovered, back in 2003!

And what does the law say?

  • Article 4.2 of the 2004 Private Insurance Organization and Supervision Act (Real Decreto Legislativo 6/2004, de 29 de octubre, por el que se aprueba el texto refundido de la Ley de ordenación y supervisión de los seguros privados) states that any “contracts signed with an unauthorized entity, or one whose authorization was revoked, will be deemed null and void…in the event of a claim being registered the persons or entities responsible will have to pay as if the policy had been valid…The obligation will be joint of the company and any persons who would have authorized or permitted the conclusion of a contract.”
  • Article 48.3 of the same, when stipulating the administrative fines, states that…the dispositions of this article will be understood to be applicable without prejudice to any other responsibilities, including criminal, that may be incurred in.
  • Article 248 of Spain’s Penal Code: A person who, with the intent of gaining a benefit, uses deceit to produce error in another person, inducing him/her to dispose of own or third party valuables, will be liable to be sentenced to imprisonment for 1 to 6 years.

And what about the regulator, the DGS, who did have knowledge of this since, at least, 2003? In my opinion much more could have been done, in 9 years, to prevent this individual from ripping customers off through unscrupulous developers even if that meant filing a denuncia via the Prosecution Service, a job that would have taken a civil servant one morning. To our knowledge, Mottola’s offices are still open, except for the processing claims side of things, which is what he never intended to anyway. This inaction is consistent with nonfeasance in public office, or negligence, which would constitute grounds for a claim against the Spanish State. Documents

Property, Scams , , , ,