SCAMS IN THE CITY
A German and his Indonesian wife convinced an Australian and his Indonesian wife to invest over US$700,000 in the expansion of a resort in Bali. They then used the money to buy a house in New Zealand.
German Expat and Indonesian Wife Jailed for Bali Resort Swindle
German national Gordon Gilbert Hild (38) and his Indonesian wife Ismayanti have been jailed for swindling Rp.8.5 billion (around US$640,000) out of an Indonesian woman and her Australian husband over an investment in a Bali resort.
Hild and Ismayanti were tried and convicted at South Jakarta District Court, rather than in Bali, as the case stems from a failed business partnership made in Jakarta.
On February 13, the court sentenced Ismayanti to 2.5 years in jail. Hild’s verdict was due on the same day, but he was apparently too sick to show up. Instead, he appeared on February 20 and was sentenced to three years. The couple’s lawyer said the two are planning to appeal.
Back in August of 2010, Hild and Ismayanti opened the Kelapa Retreat in Pekutatan village, overlooking black sand beaches on the southwest coast of Bali. It seemed like a dream business in a perfect location. Located about 80 kilometres northeast of Ngurah Rai International Airport, the ‘luxury boutique hotel’ initially had just eight units and a restaurant.
It was later expanded to 23 private villas and became a popular resort, receiving overwhelmingly positive reviews. By February of 2017 it had amassed 228 TripAdvisor reviews, of which 197 were ‘excellent,’ 25 were ‘very good’ and none was terrible.
The main resort is still operating despite the travails of the owners. Advertised room rates range from US$302++ to US$675++. The plus-plus stuff means another 21 percent is added to the bill, so actual prices range from US$365.42 to US$816.75. If you phone and ask for a deal, the local price ranges from Rp.1.5 million ( US$115) to Rp.4.5 million ( US$340) per night.
Invitation to Invest
After the resort became a success, Hild and Ismayanti had a meeting in Pondok Indah, South Jakarta, with Australian businessman Craig Curtis, an executive in the concrete industry, and his Indonesian wife Yenny Sunaryo. The two were invited to invest in an expansion of the resort, to be known as Villa Kelapa Retreat II, featuring 16 rooms.
Hild and Ismayanti said the new hotel and villa complex would be operating within two years. They promised to draw up a partnership agreement and establish a foreign investment limited liability company, known locally as a PT PMA.
Sunaryo subsequently made a series of transfers to Ismayanti’s bank accounts, from 2013 to 2015, totalling Rp.8.5 billion (then equivalent to about US$714,000). She and her husband then waited for the partnership agreement and establishment of the PT PMA, but the documents never eventuated. Their calls to Ismayanti’s cell phone went unanswered. When they tried to visit Villa Kelapa Retreat II to check the progress of their investment, they were allegedly turned away. Disappointed, they initiated legal action. On March 17, 2016, police sealed off the entrance to Villa Kelapa Retreat II, putting up a notice that the land and buildings were part of a criminal investigation by Jakarta Police. Local politicians expressed concern that the dispute could lead to employees being laid off, pointing out that all 67 staff at the two resorts were locals.
Hild and Ismayanti were charged with fraud and embezzlement under Articles 378 and 372 of the Criminal Code. They went on trial separately in Jakarta in November of 2016. Hild was initially to have been detained, while Ismayanti was spared detention as the couple has a three-year-old son. Hild’s lawyer said his client was sick, so judges permitted him to be held at the detention wing of South Jakarta Prosecutor’s Office, which is usually just for corruption suspects and is more pleasant than regular detention centres. He was later placed under city arrest on humanitarian grounds at the presiding judge’s discretion.
The German told the court that the money transferred to his wife’s account had been put toward the purchase of a US$900,000 property covering 804 square meters in New Zealand. Ismayanti said Sunaryo had been informed the money was used as ‘a deposit’ for the New Zealand house.
State prosecutors demanded four years’ imprisonment for Hild and 3.5 years for Ismayanti. Chief prosecutor Umriani said Ismayanti had never kept her part of the deal to make a partnership agreement or a company, despite receiving the money. Sunaryo’s lawyer Tomy Alexander rejected the two defendants’ claim that they intended to repay the money, saying the intention existed only in their imaginations. He said his client had made it quite clear to them that the case would not reach court if they reimbursed her investment.
Alexander said that in addition to suffering a loss of Rp.8.5 billion (around US$640,000), Sunaryo also risked losing her ownership of a 40 percent stake in Kelapa Retreat II, including ownership of 50 percent of two hectares of land at the site.
The court heard that after the initial agreement, the two defendants had said there was a miscalculation and asked for a larger investment. They said Sunaryo should have invested an additional Rp.1.5 billion (around US$114,000) as proof of her commitment to their partnership. “And when she reported the case, we were also ready to return the money that was invested, but she did not want [that],” said Ismayanti.
Alexander countered that Sunaryo had been trying to resolve the problem long before the case reached court, but Hild and Ismayanti had allegedly cut off all communications and could not be reached. The lawyer said four notaries in Bali and Jakarta had been engaged to facilitate the paperwork, but nothing materialized because Hild and Ismayanti always dodged them with a variety of excuses.
Presiding judge Made Sutrisna found the two defendants guilty of fraud because they had deliberately misused and failed to repay the investment money. He said the new villas had opened without Sunaryo’s knowledge, even though she was a business associate. He said she was told they were still in a pilot stage, whereas they had earned a profit of Rp.1.2 billion ( US$89,000). Withholding this information was deemed an act of deception and fraud.
The judge rejected defence arguments that the case should have been in the civil realm, as the proposal made by Hild and Ismayanti clearly stated their obligations, which they had failed to meet. “The defendant [ Ismayanti] then precisely terminated the contract unilaterally, so the judges reject all the arguments made by the defence attorney.”
Sutrisna said the only mitigating factors in Hild and Ismayanti’s favour were that they had no prior convictions and they have a young child. Ismayanti looked weary but calm as her verdict was announced in the absence of her husband. A week later, she was present for his sentencing.
Prosecutor Umriani said the verdict gave a sense of justice to the victims. Sunaryo’s lawyer Alexander welcomed the ruling, saying it helped to provide a sense of legal certainty to investors in Indonesia’s leading tourism destination. He expressed hope the verdict could also serve as a deterrent to other potential fraudsters and encourage greater investment.
Kelapa Retreat Bali ( image via TripAdvisor)