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BREAKING NEWS: Supreme Court of Spain confirms the illegality of 12 equity release mortgages

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The Supreme Court of Spain has upheld the illegality of 12 mortgage loans valued at six million euros, granted to British families mostly in Malaga province between 2004 and 2007, and orders land registries to cancel all mortgage records.

The case was dealt originally by a Court of First Instance in Bilbao -and later the Appeal Court in the same city- as all loans were granted at a local notary, and the representatives of the lender, SL Mortgage Funding nº1 Limited (SLMF), were also based in the Basque city, according to Lawbird Legal Services SLP.

These loans were sold to attain a reduction in potential inheritance tax, as mortgages would reduce the taxable value of the property, but also -in some cases- to supplement the modest pensions received by the owners of the properties.

SL Mortgage Funding nº1 Limited (SLMF), based in Chester (UK), had not applied for the necessary regulatory permits to legally raise funds from the public and provide an investment service – activities reserved and regulated by the Bank of Spain and the CNMV (financial regulator).  Despite this, SLMF would lend but at the same time retain most of the proceeds of the loan, which would then be invested in speculative products with The Premiere Group, in the Isle of Man.

According to the lawyer Luis Gonzalez of Lawbird Legal Services SLP, working on behalf of the claimants, the ruling confirms that operating in breach of mandatory banking and financial regulations makes the offender a ‘boiler room’, even if the company was legally operating in its own country. It also allows the victims to “end the nightmare” which has blighted them and their families for the best party of 15 years.

The Supreme Court establishes another important factual point: that SLM was indeed an investment services’ company because “the combination of a loan and its application to an investment fund is a financial instrument of those listed on article 2 of the Stock Exchange Act”, being immaterial if claimants had or not sued related investment companies since who really managed the fund was SLM, and those investment companies were nothing but agents acting for and on behalf of SLM.

Finally, the Supreme Court determines that SLM operated as a Collective Investment Fund since they a) raised funds from the public, b) invested those funds in an investment scheme and c) subjected the distribution of profits to the outcome of the fund.

The sale of this product was conducted via commission-earning financial advisory firms (Hamiltons Financial Services, Henry Woods Investment Management, and others), based in Estepona, Marbella and Fuengirola. SLMF also recommended a network of lawyers which would downplay the extent of the lack of licensing requirements of the bank and the product.

The Spanish Supreme Court has the ultimate appellate jurisdiction over all cases in Spain. This means that the dismissal of the appeal is the end of the process to have the “SITIRS” product reviewed judicially; the only exception to this rule is a very restrictive appeal to the Constitutional Tribunal in the event that the appellant could prove violation of fundamental rights and freedoms, a very unlikely scenario in a case involving a bank.

International Property Finance (Spain) Ltd. loses right to file an answer to a claimant’s civil suit

International Property Finance’s bid to have its response writ accepted by a Fuengirola Court has been rejected for being filed late. “IPFSL”, an Rothschild’s offshoot that operated in Spain without regulatory clearance, failed once again to respond within the time limits of civil litigation procedural law.

Strangely enough, “IPFSL” registered its interest in the equity release case on the 19/11/18 but only submitted its response to the claim writ in February 2020, that is, almost 14 months later.

Lawyers acting for the claimant, Lawbird Legal Services SLP, believe Rothschild bank does not wish to have to defend claims filed against a non-regulated dependent entity -a decision largely based on reputational motives- and yet, are trying to delay the case as much as permissible under existing laws.

Co-defendant Swiss Life Luxembourg S.A., where the proceeds of the mortgage where invested through, is also in default and will not be defended in the up and coming trial, to be held within the year.

Nykredit and Landsbanki rejected again in bid to remove cases from Spanish Courts.

Nykredit Marbella | The Equity Release Victims Association

Nykredit and Landsbanki, desperate to avoid Spanish judges examining their corrupted mortgage loans -sold as benign “equity release” tax-avoiding legal instruments- have seen their motions to relocate the cases to friendly Danish and Luxembourg Courts totally rejected.

Court number 2 in Marbella denied relief to Nykredit Realkredit on the basis that all contractual documents were signed in Marbella, despite the bank resorting to the classic cheat clause confirming key contracts were all fictitiously signed in Denmark (when clients had never been there before). But clumsily too, the bank had inserted a clause in the mortgage contracts signed before a Spanish Notary with an express submission to Spanish Courts.

For its part, Landsbanki classic but doomed strategy of attempting to have notoriously biased Luxembourg judges deal with Equity Release cases was equally ejected, citing a 2014 Malaga Appeal Court ruling that meticulously examines the financial transaction and deems Spanish Courts as the only ones competent to resolve the dispute.

Acting lawyers Juan Martínez Soler from Lawbird Legal Services, acting vs. Landsbanki, and Victor Bazaga Ceballos and Roberto Lopez, from Bazagalegal, acting vs. Nykredit, expressed their satisfaction at the correct and just rulings.

CAIXABANK SENTENCED TO REFUND MORE THAN €400,000 TO A RETIRED COUPLE

caixa banck productos y servicios colectivo asociacion española pediatria

On September 23rd, the First Instance Courts No 2 in Novelda (Alicante) pronounced a sentence whereby a false equity release scheme, signed up by an octogenarian British couple in 2007,  was rendered void ordering Caixabank to refund the full capital value of the product.

The plaintiffs´ lawyers, Antonio Flores and Juan Martinez Soler, from Lawbird Legal Services, a Marbella based law firm, argued in their claim that the cause of the contract was false, in the sense that product consisted in the provision of a loan to retired expatriates residing in Spain as if it were an indispensable requirement to avoid Spanish inheritance tax.

In addition, the judge considers there is sufficient evidence to demonstrate that the bank never paid most of the loan capital, but retained it to invest it at the borrower’s risk on complex and highly speculative products, without the latter knowing.

Additionally, the sentence resolves that there is no recorded evidence that the bank truthfully reported the borrowers about the true nature of the product or the compliance of the banking and financial transparency regulations.

On declarations to this paper, Juan Martinez Soler concludes that the pronouncement reveals that “The cause of the product is radically false, as in accordance with the Spanish tax regulations concerning Inheritance Tax, payment cannot be avoided by mortgaging a previously owned property”. For its party, Antonio Flores adds that “the dishonest trick advertised by the bank in this case, becomes void pursuant to the Civil Code, for advertising a financial package leading to a clear fraudulent purpose”.

Court 4 in Fuengirola voids 9 equity release mortgages taken out by British pensioners 


Esperanza Broz Martorell, presiding over Court of First Instance 4 in Fuengirola, has declared that 9 mortgage loans worth close to 4 million Euros taken out by British property owners with Chesire-based lender SLM are totally null and void and makes an order to the land registry for the removal of the lender’s charge. Additionally, the Court makes a specific order preventing SLM from claiming the sums advanced to the borrowers, who will not be therefore forced to return any sums.

At the request of the claimants’ counsel (Lawbird Legal Services S.L.P.), the Court accepted the cross-examination of various witnesses -lawyers who acted for SLM, former Hamilton’s Financial Services’ employees, an ubiquitous Mr. Sam Atkisons, current SLM director- and substantial contractual documentation as well as promotional literature, none of which was contested by SLM.

The Court went to consider that the claimants had taken out -between 2006 and 2007- a single product denominated SITIRS (Spanish Inheritance Tax and Income Release Scheme), of complex financial nature, where the grant of a mortgage-backed loan (given to mostly pensioners of limited income) “was inextricably linked to a predetermined purpose for at least 95% of the loan, it being the purchase of shares in a fund that had been previously designated by SLM”, shares that were also pledged in favour of SLM.

According to the ruling, the following were applicable to this case:

  • SLM sold the product in Spain via agents, financial services companies such as Hamiltons Financial Services who, in this case, operated as a tele-sales company. 
  • SLM paid a one-off commission to the agents and for that very reason, cannot be described as “independent financial advisors”.
  • SLM was unable to prove that the investors understood the risks inherent to the product they were acquiring, nor did they establish -beyond reasonable doubt- any previous financial experience by the claimants.
  • SLM provided generic documentation on risks and did not specify all other potential hazards involving the complex financial contraption.
  • Claimants faced the brunt of the financial risk as SLM had secured its investment via a mortgage loan on the property and a pledge on the shares within the investment.
  • SLM held the shares within the investment, giving rights over those to the individual investors.
  • SLM operated unregulated and outside the legality, depriving customers from the protection offered by specific legislation.

The above circumstances satisfied the Court that these loans were illegal in Spain and therefore, should be set aside and declared void. In addition, the Court accepted that SLM committed civil fraud as they withheld vital information from their customers who, had they’d known the extent of it would have never signed up for the investment-linked mortgage loans. 

The ruling is not firm as SLM has 20 days to appeal to the Malaga Appeal Court.

Rothschild lawyers prepare for Court war

Rothschild Bank International Limited Logo

N.M. Rothschild & Sons has taken the legal defense of the Equity Release (ER) cases in Spain as a matter of life or death.

In a very generous interpretation of Spanish procedural laws that allow parties to bring those witnesses deemed useful in support of their arguments, the following individuals have been lined up for an up and coming Court hearing to take place in Denia:

  • Dean Murphy, former boss of Hamilton’s Financial Services, in charge of selling hundreds of fraudulent ER contracts. Currently based in La Cala de Mijas, Málaga.
  • Stephen Dewsnip, former manager Rothschild Bank International Limited that operated, knowingly, without a license in Spain. Currently living in West Sussex.
  • Peter Rose, former director at Rothschild Bank International Limited, currently living in Guernsey.
  • Claire Whittet, currently working for Rothschild Bank International Limited.
  • David Shannon, currently working for Rothschild Bank International Limited.

ERVA lawyers have cast doubt over the convenience -for Rothschild- of deposing those who explicitly extolled the false virtues of the Credit Select Mortgages, namely:

  • IHT-friendly.
  • Fully apt for risk-averse pensioners.
  • “Different” from a normal mortgage, as Rothschild would “not look to treating customers as regular borrowers”.

In all logic, those no longer under the umbrella of Rothschild will surely feel that being subjected to harsh cross-examination from the victims’ expert counsel, after moving on with their personal and professional lives, will be both stressful and unnecessary, unless of course their is some financial gain in it.

The Denia judge has the right to use his discretion to decide on the pertinence of Rothschild’s witness requests.

Landsbanki fails to transfer Equity Release cases to Luxembourg

Landbanki Luxembourg

It has been a while since our last post, but things have been fairly quiet in the litigation front, save for Landsbanki’s cases.

Undeterred by recent rotund judicial response against Equity Release contracts, liquidators for the Icelandic defunct financial predator remain undeterred and a still trying to collect their investments or, if needed, steal pensioners’ properties from under their feet.

For Landsbanki, cunning has become a second nature and consequently, their very latest devious strategy is to contest the jurisdiction of Spanish Courts in favour of the bank-friendly tribunals of Luxembourg, invoking EU-bankruptcy laws.

So far though, ERVA lawyers have managed to throw out no less than 8 motions filed by Landsbanki to have the cases relocated to Luxembourg Courts. The Courts involved are in the Malaga, Almeria and Alicante provinces.

2 further motions were accepted by the Courts but are likely to be reversed on appeal.

On finding in favour of the victims of the equity release fraud, the Courts upheld existing case law on the matter (two rulings of the Court of Appeal of Malaga of 2013 and 2015) as well as legal precepts invoked by the counsel of the victims.

Specifically, the Courts have convened that:

  • EU-bankruptcy laws do not apply to contracts signed by consumers, who still have the right to choose to litigate where they live.
  • EU-bankruptcy laws do not apply to legal agreements or contracts that were entered with the company prior to it becoming insolvent.
  • Spanish laws grant exclusive jurisdiction to national Courts where dispute over property registered rights is concerned.

 

 

OLD MUTUAL INTERNATIONAL (ISLE OF MAN) LOSES JURISDICTION BATTLE

The Isle of ManA very worried Old Mutual International Isle of Man has lost its bid to have the Spanish Courts deny jurisdiction to judge the illegality of the “Executive Investment Bond”, as reported by the El Confidencial online newspaper., despite an anti-suit injunction issued against the claimants in Spain, their lawyers and any other person that was made aware of the injunction to coerce them into dropping the case in the Mediterranean country.

A great post on this breakthrough event can be read on Angie Brooks’ latest blog post.

Below is an online translation of the article, as published yesterday.

The tiny Isle of Man challenges Spain: jail for suing its firms in Marbella

A judge threatens to imprison an expatriate couple who have filed a Court case on the Costa del Sol to recover a failed investment. The threat can be extended to lawyers and court staff. 

Photo: The Isle of Man, photographed from the satellite by Google Maps.

RAFAEL MÉNDEZ

TAGSMARBELLA

READING TIME5 ‘

23.04.2018 – 05:00 H.

The Isle of Man is a small ‘offshore’ territory between Ireland and England. It does not belong to the EU, but to the United Kingdom, which provides defense and foreign policy. Despite having only 75,000 inhabitants, it has shown pride. At least one of its judges, who has threatened a group of British retirees who sue in Marbella against one of their companies, Old Mutual Isle of Man, which they accuse of tricking them with a complex financial product – another one – sold to retirees Britons on the Costa del Sol. According to the judge, if they go ahead in Spain, they face imprisonment or seizure of their property in the United Kingdom, and so do their lawyers and even the court staff.

The Costa del Sol is the paradise for British scams. Tens of thousands of expatriates live in its bubble, without knowing the Spanish language or laws, and often trust compatriots and their financial products. Some have suffered the rigor of the Spanish pickax, others hired reverse mortgages with Rothschild who have ended up in court and others left their savings in the hands of Naughty Nigel, a rogue poker player who said investing in an eye bag with an eagle eye .. There are countless examples.

The Costa del Sol is the paradise for British scams. Tens of thousands of expatriates live in its bubble, without knowing the language or the laws

Others invested in Old Mutual Isle of Man, an insurance company that sold them a complex financial product from Man, an offshore territory with thousands of companies. When the investment went bad, they resorted to the Spanish courts, which have condemned banks and financial companies to return the money as soon as it was proven that the client’s level was that of an average investor.

So did an expatriate couple, journalist and physiotherapist, based in Marbella. On July 31 last, they filed a lawsuit claiming the nullity of life insurance with Old Mutual in a court in Marbella. His lawyer, Juan Martínez Soler, Lawbird office in Marbella, argued that the Isle of Man is not EU territory and although the contract stipulated that the differences would be resolved there, that clause is null, as many abusive in these contracts.

In the lawsuit they argued that Old Mutual was never authorized in Spain to operate as an insurance agent despite offering them from an office in Marbella through mediators such as AFS Europe Alliance. According to the document, “the information available to the public regarding the authorizations to operate in Spain is objectively false.” ASF Europe Alliance, which traded them, is registered as an advertising company, but neither the CNMV nor the general insurance directorate had evidence of them, as the plaintiffs put it.

They had contracted in 2011 a policy called ‘executive investment bond’, a life policy in which, when the insured dies, the beneficiaries of the insurance receive the investment plus 1%. In total, he invested 688,000 pounds sterling (about 780,000 euros), from which he withdrew 490,000 pounds, for which he claims the 198,000 pounds (207,000 euros) that he lacks. In the lawsuit, the investors maintain that they do not come to appreciate how Old Mutual moved money – that would be “how to try to establish the malpractice of a false surgeon” – but that it did not have any permission to operate in Spain. They claim that the contract was abusive, by imposing a judge on the Isle of Man and not in Marbella to settle the disputes.

In addition, the insurance law establishes that “contracts made by unregistered entities, such as Old Mutual in Spain, will be null and void”. The Marbella court admitted the claim and the slow pilgrimage of these things began. Until then, it would be another case of British claiming on the Costa del Sol money lost in strange offshore investments (there are Danish banks and companies based in Gibraltar in similar lawsuits).

The insurance law establishes that “contracts made by unregistered entities will be null and void”

But last January the script took an unexpected turn. Old Mutual filed its own brief in a court of the Isle of Man to stop the legal proceedings in Spain. And they gave them the reason. On January 31, the high court of the IBut last January the script took an unexpected turn. Old Mutual filed its own brief in a court of the Isle of Man to stop the legal proceedings in Spain. And they gave them the reason. On January 31, the high court of the Isle of Man issued a criminal warning advising the marriage that, if they followed their suit in Spain, they could be convicted “for contempt, being imprisoned, fined or having their property seized.”

Not only that, but the judge warned that the same could happen to “any other person knowing this order helps” the plaintiffs. Ultimately, this also applies to Spanish Justice personnel. “It’s absurd, the Isle of Man threatening the Spanish court with criminal actions, it’s never seen”; reasons Antonio Flores, director of Lawbird. The Marbella court is now analyzing the jurisdiction over the case.

A spokesman for Old Mutual said via e-mail that they are not trying to dissuade anyone from the lawsuit, but that it should be done on the Isle of Man: “Old Mutual International is not trying to prevent the lawsuits from continuing.” The lawsuit only affects where the lawsuit should look , and the high court of the Isle of Man has ordered it to be on the Isle of Man. Any subsequent risk arises from the continued refusal to comply with a Supreme Court order.This rejection is regrettable, but has nothing to do with Old Mutual International “

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Nykredit and Sydbank Cheated Foreigners with Mortgages Worth Millions

Oficina de Nykredit en Marbella

Two Danish Companies persuaded British property owners to take out mortgage loans they could not repay

Following the Appeal Court ruling against Nykredit and Sydbank where both defendants have been branded “clandestine operators” for operating without a license, Spanish national press have extensively covered this extraordinary story of fraud and deceipt. 

The following media have written about this deception:

 

SLM Loses Again: Appeal Court reverses Court of 1st Instance Ruling

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The Appeal Court in Malaga has ordered the cancellation of a mortgage loan that was granted in favour of Surrenda Link Mortgages (SLM) on grounds that this company offered loans for investments but also, were linked to the management of the those investments when they were not licensed to do so, in Spain.  The ruling reverses a previous ruling by a Court in Marbella that ruled that SLM was not at fault.

SLM acumulates several adverse rulings, in spite of which they keep insisting that their Turnk Key Mortgage is and was lawful.

The claimant was represented in Court by Salvador Martinez Echeverria.

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