News Articles



06/12/2011 - BUILDERS SENTENCED IN PROPERTY SCAM



By Nikki Luxford-Costa Blanca News

AN ALICANTE court has ruled in favour of defrauded property buyers in La Llosa de Camatxo, sentencing the two builders-promoters to two years in prison and to pay back the deposit paid by Keith and Marilyn Brown.

The two builders, Peter and Benjamin Schmidt, took 66 deposits from unsuspecting property buyers, totalling more than four million euros.

The Browns independently decided to take legal action against the Schmidts, and on Thursday a judge ruled that the Schmidts will have to return the deposit paid of 66,100 euros plus interest.

It is believed the Schmidt's will appeal against their sentence, but for some homeowners in other Costa areas affected by similar scams, they are quietly confident it will help proceedings when their cases come to court.

Acting under the company name of Construcciones Monte Puchol SL (CMP), the Schmidts took deposits ranging from 66,000 euros plus, telling potential homeowners that building licenses were in place.

When buyers visited their plots to see progress, they were later informed that licenses had not been granted.

The Schmidts are also suspects in the illegal homes scams in Llíber, Benidoleig and Sagra.

Keith Brown exclusively told the Costa Blanca News how they found themselves in the situation, and their reaction to the ruling.

The couple chose to start their Spanish property hunt late in 2003 after Mr Brown was granted early retirement, and wanting to put part of his pension into a property in Spain with the likelihood of full retirement in the future, began property searching.

With Spanish connections - a son living in Bilbao - the couple were no strangers to Spain and had heard that Jávea was a good place to settle. Therefore, in January 2004 they arranged a private visit to the area.

During this visit they met with various agents to look at numerous off-plan and completed projects, including the development located in La Llosa de Camatxo.

They were taken to the site and told by a salesman that the company had building consent for 60 'masias' in groups of nine or 11. Mr Brown said he was told: "Each group of houses would have its own communal swimming pool, and the site was impressive, situated in an old olive grove.

"With hindsight, we probably should have followed the old phrase, 'if it looks too good to be true it probably is'!"

The couple was also taken to a site in Llíber and was impressed with the houses being constructed.

After returning to the company's office, they were introduced to office manager Victoria Acres and by Thursday of the week, the Browns had decided to buy one of the houses; a two bedroom masia with a completed price of 218,000 euros.

The office manager then suggested the firm of local lawyers to use and Mr Brown said: "There was no reason to doubt that they would give good legal advice."

Paying the 3,000-euros refundable holding deposit, the Browns returned to the UK and organised to pay the balance of 5,000 euros expressed as refundable deposit.

Once in the UK, they explain how they were expecting to pay 27,000 euros upon exchange of contracts, but were shocked to learn they would be expected to pay 55,000 euros but say their lawyers did not indicate that it was unusual. Mr Brown says they felt the pressure was on them to pay, otherwise they would lose their initial holding deposits.

At this stage a total of 66,100 euros (including IVA) had been paid to Construcciones Monte Puchol S.L.

The Browns told their lawyer not to exchange contracts unless all legalities have been complied with, and say it is clear that the lawyer did not check whether there was a building license in force. In the contract, there was a clear clause to state that a building license was in force.

After signing the contracts they expected building works to commence, however no construction took place at all on the site, and their concerns were raised when told by their lawyers some weeks later that the land was classified as rustic.

Mr Brown said: "It was in September 2004 that the realisation started to dawn that the clause regarding building consent was a lie.

"We were told by both CMP and our lawyer that the company had 'positive administrative silence' from the Valencian government which indicated that the Valencian government agreed to the development but at that time they could not commence building - this was an untruthful and misleading statement."

As issues were being raised on the La Llosa de Camatxo development, the couple was given the option of signing a contract with a newly formed company, Aitana SL. Owned by the Schmidt's, it would allow them to transfer their interest to one of two different developments to be constructed where building consent had been granted.

The Browns claim their lawyer positively encouraged them to change and told them it would be the best way of protecting their investment. Keith Brown said: "The sites were at Sagra and Benidoleig. We visited in April 2005 to consider that possibility, and CMP agreed to pay the air fare and sent us a cheque for the amount of 237 euros. The cheque bounced, and by this time we were beginning to lose faith in the Schmidts and anything that they did."

The couple then began to hear horror stories about two developments in Llíber and decided not to sign a new contract in order not to lose any legal rights under the original contract, or any more money.

 

In November 2005 the Browns decided to instruct another lawyer to recover their losses, and six years later have finally seen the case heard. Pleased with the result, the couple said how they are appalled that the Schmidts got away with their fraud for so long and said: "We wonder where all the money has gone and would not be surprised if much of it had been taken abroad.

"We would hope the Spanish authorities would conduct further investigations into the Schmidts activities, and we are surprised that the state authorities in Spain have not investigated the matter as there is so much money involved."

The Browns are disturbed that it has taken six years for the case to be heard, and have still not recovered their losses.

Although the couple were confident the court would find the Schmidts guilty of fraud, they are surprised they have had to pay the costs of bringing their case and said: "In the UK if a fraud is committed the police investigate the case and the Crown Prosecution Service will pay the costs of the action."

The couple are reluctant to give details of any further action, as they say they were let down by their original Spanish lawyers, one of whom gave evidence for the Schmidts in court. This lawyer has admitted negligence on his part and the Browns believe that had this lawyer done his job properly they would never have signed the contract and would have demanded their original holding deposit back.

Others who purchased in La Llosa de Camatxo have paid higher deposits, some totalling up to 100,000 euros.

Through the scam, the Schmidts have not only caused people to lose life-savings but have created huge trails of distress and heartache with some buyers suffering mental and emotional problems such as anxiety and depression.

Some have not seen their dreams made a reality, and have died, whilst others have just walked away for the sake of their sanity and expense of taking legal action.

Speaking to another buyer affected, Alan Brown (of no relation) explained that with his wife they paid a deposit of 84,000 euros in September 2003, having been told by the Schmidts that all planning permissions had been granted, and building was to begin. The couple was recommended to the same legal firm and Alan Brown said: "When it became clear that building could not proceed because permission had not been granted, and that no funds were available to provide a refund, we were encouraged and convinced by the Schmidts and our lawyer Juan Poch to transfer our deposit to another of the Schmidt's venture - a block of apartments at Benidoleig.

"This venture also failed when the banks withdrew support."

The couple is pleased the Schmidts have been found culpable and remain hopeful that Spanish law will eventually be able to assist them in gaining a refund.

Another person affected is Linda Topliss who had the same experience and has lost around 80,000 euros in deposits paid to the Schmidts.