Police bust Ponzi scheme
February 19, 2013
Some 1,200 German officials participated in nationwide raids on Tuesday against a network of firms based primarily in Frankfurt and Hamburg, which allegedly defrauded thousands of investors of more than 100 million euros ($133 million).
Police and investigators carried out 130 searches, primarily in the states of Hessen, Hamburg and Bavaria. But the states of Baden-Württemberg, Rhineland-Palatinate, North Rhine-Westphalia and Brandenburg also saw raids.
The focus of the operation was reportedly the Frankfurt-based real estate firm S&K Sachwert AG and the Hamburg-based investment fund United Investors. The two companies were allegedly at the center of a scheme which saw thousands of investors buy shares in an S&K real estate investment fund. The investors were promised a 12 percent return. That money was allegedly paid out to older investors through the money of new investors.
S&K also allegedly used bogus financial experts to give their investments good reviews. The company claims that it has a portfolio of 1.7 billion euros.
“We can prove that S&K used a financial expert, who had absolutely no accreditation, to rate several real estate investments,” said Marc Gericke, a lawyer who represents many of the victims. “This expert suspiciously assigned the real-estate investments a value that was more than the actual market price.”
The authorities seized 100 million euros, including real estate, cars and bank accounts. Six men were arrested in the raids in Frankfurt and Hamburg, including the two founders of S&K. At least another 44 people are under investigation.
slk/dr (dpa, Reuters)