Overseas property investors who fell foul of a Mallorca property scam feel ‘unprotected by the law’.
The property scam, thought to be the biggest of its kind in the Balearic Islands, involved up to 200 landlords with cumulative losses of around €4 million.
Real estate company Mallorca Investment was offering off-plan properties in various areas in the Balearic island at below-market prices. Clients were told that they needed to hand over 10 per cent of the sale price as a deposit. However, construction on the properties never began and the firm continued to siphon money from the landlords.
Six people from developer Lujo Casa and real estate agency Mallorca Investment have been arrested by the Civil Guard. According to sources from the investigation the amount of money taken from the victims amounts to more than €4 million
The owner of Mallorca Investment is currently being held in police custody before his case is brought before a judge. He is suspected of fraud and money laundering.
There were originally around a dozen claimants but more have joined, with suggestions that the total number of victims could be around 200.
The average amount that each person has lost is around €30,00. However, in one extreme case a foreign man handed over more than €200,000 on the promise of a luxury apartment close to the sea. The victims range from young couples looking for their first home, retirees and families with young children.
The victims feel unprotected due to changes made to the law in 2006 which means that anyone who lost money in the purchase of an off-plan property is not able to reclaim the funds from their insurance company or bank.
A victim’s statement reads: ‘We suspected that we were looking at a case of fraud. After determining that construction had not begun, that a number of the plots of land were not theirs, and that any changes we wanted to the plans were possible and free. We met with a lawyer who confirmed what we already suspected: that this had the look of a pyramid scheme.’