The Daily Telegraph - Your Money
Lloyds accused in toxic £1.5bn German property scandal
A Lloyds Bank account is accused of being at the centre of a German property investment scandal that cost British investors £320m, with victims claiming the bank has failed to help them track down lost funds.
Globally, more than £1.5bn has been invested in German Property Group, more commonly known as Dolphin Trust, but the firm, which sold loan notes to fund the purchase and renovation of derelict German buildings, filed for bankruptcy last July. Last week, this newspaper revealed how investors had been deliberately cheated.
Some sent funds to a Lloyds account that was supposedly held by a German law firm called BK Law. Investors were told by Dolphin and financial introducers that the money would then be transferred to a secure “escrow” account. However, BK Law told some investors it never received their money.
Letters seen by Telegraph Money show the Lloyds account holder was in fact a money transmission service called Whites Group, which has confirmed this to be the case. In letters to the investors, Whites Group claimed to have sent the money directly to Dolphin Trust and not to BK Law.
The German Property Group Creditors Association, a group of investors, claimed Lloyds had allowed its banking facilities to be used to take money from unsuspecting investors. Many sent cheques written out to BK Law, which should not have been cashed if it was not the account holder, they said.
Peter Mattil, of German law firm Mattil & Kollegen said a majority of British savers who have come forward paid money into a Lloyds account.
Mr Mattil said: “We don’t know where the money went. It’s going to be very difficult for the liquidators to track the money down.”
Telegraph Money has invited Lloyds to comment on the allegations.
Law group New South Law is currently looking at the involvement of Lloyds in connection to the investments made into GPG. James Kingston, of the law firm, said: “In general, if I write a cheque to person A but person B receives the money, then the receiving bank will be liable for making sure the money is sent back.”
However, it is hard to say where the responsibility lies with bank transfers.
Mike Peale, 59, whose name has been changed, placed his whole pension into the property scheme and is now £279,000 out of pocket.
Mr Peale said: “We were told our money was going to a group called BK Law. It was meant to act as a guardian and Dolphin was never meant to directly touch the money. But BK Law has told me it never received my money.”
The creditors’ association described the problem as “horrific” and said Lloyds should have provided more help to track down the lost funds.
Insolvency administrators have said GPG “gradually developed into a pyramid scheme”. They said data collection has been “extremely difficult” as there had been no proper book-keeping.