Monday, December 29, 2008

Investment Property Highlights - 2008

As the year draws to a close we have taken a step back from an incredibly busy couple of weeks to look at the past few months.

We started this blog in August this year for a couple of reasons. Having been involved in various sales businesses as well as the property industry we have seen no end of scams, schemes and dodgy business practices go on. We have also seen a large number of opportunities go unnoticed, as well as a large number of investors being hauled into things they really don't understand.

The whole point of this blog has been to enlighten the public as to what is going on in the world of investment property, good and bad. Sadly during 2008, most of our time has been occupied covering the doom and gloom and the shadier side of the business.

In August we covered Panama and the "Sheep Factor". Rumour has it now that some developments may not be finished now due to lack of financing. We also covered what the collapse of Fadesa meant to purchasers buying outside Spain. Possibly the first of many developers to go by the wayside.

September bought us the collapse of another developer, Colonial, followed rapidly by the Viva Estates and Ocean Estates, not forgetting the infamous Inside Track/Instant Access saga. Vivas' Expo centre has now completely closed and been stripped of furniture, Instant Access is still trying to squeeze more money out of clients and fend off the heat by simply changing directors.

October saw the exposure and gall of Red Hot Homes resurfacing, rearing its ugly head again. To this day, the site has been modified slightly (mainly to remove the mention of Channel 4) We also saw Dubai developers claiming there would be no knock on effect for them from the recession.

November was a quiet month, the main focus being on Dubai, the rumour and the confirmation of massive job cuts by DAMAC, we did state here that there would be a substantial drop in prices in the region, only to see 50% off sales a couple of weeks later.

December has been an insane month. We started with another company called inside track that had mysteriously disappeared with everybodies cash, followed by coverage on fractional ownership. This article did generate a response from the company, inviting us to attend their seminar free of charge, as well as admit their website needed updating Needless to say we declined on the account of the need for anonymity required for this type of reporting. Their website (at time of writing) has still not been updated.

To date, the biggest post of the year. (UPDATED 08/01/09) Has had to be removed due to unfounded legal threats against innocent parties.

The final article of the year though is one we are surprised no-one had picked up on. Fortuna Land and Oanna Group has been running for some time and received huge press coverage in the UK and abroad. All the "authorities" in the industry were happy to republish the badly translated articles by El Pais, yet no-one did any research into the background of it all and actually inform people how it all came to be. Granted, it took us a while, but fantastic reading if a little astonishing.

What can we expect from 2009?

Well doubtlessly many more companies are still to fold or go into difficulties, we'll report as we hear about them. No doubt there will be more scams and cons to cover too.

On the positive side?

Brazil. A slow burner admittedly, but it has the economic infrastructure to become a major player in the world in general, saving any natural disasters or political uproar, the safest bet for the mid term.

The US Dollar. With Barack Obama about to take the hotseat, we will without doubt be seeing some "feel good" economy factor. The Dollar is highly likely to rise during the first quarter of 2009, so if you are sat on Sterling at the moment going down in value, a bit of currency trading might be an idea. When you sell your Dollars though, go into Euro until the Pound sorts itself out.

A happy new year to you all, the comments we have had so far have been positive, both from the public and the industry. It is a great shame we have to remain anonymous, but having seen some of the lawsuits that have been flung about in the past, we'll stay the way we are for now.

If you would like our reports as we publish them, (and like us, haven't got this "RSS" thing figured out yet,) click on our home page here, Investment Property Rumours On the right hand side you will find a box that says "enter your email address" from FeedBurner. Enter your email, confirm the subscription, and every time we publish you'll be sent it in your email!

Tuesday, December 23, 2008

Fortuna Land and Oanna Group – How It All Started

As most of you will have seen in the press by now, Fortuna Estates in it's various guises has been widely reported on by the press in most of Europe, with several bloggers and apparent authorities simply copying and badly translating the El Pais article, each adding some interpretation or another as they go.

Now some of that has died down, The Investment Property Rumour Mill brings you the actual story, with many tantalizing connections to the boiler room industry, A world famous arms dealer, One of the largest banking cons in living memory, a car rental company, one of the largest telephone company scams of all time, all stretching from sunny Spain as far as the Philippines, Sri Lanka, Monaco the USA and beyond!

For those of you that don't know, Fortuna Land and it's many alternate guises was for all intents and purposes, a landbanking company. Basically offering investment opportunities into land that was "assured" to get planning. Not the first time we have heard of this, several have made the British press of late, UK Land Investment (UKLI) and Hambrook and Greenstock to name a couple ordered to cease trading or be conveniently liquidated.

Fortuna was just that little bit different though. With figures that have substantial connections in some unusual areas, the history behind the formation of Fortuna, how some of the funding was doubtlessly raised in the first place to get the operation off the ground to finance it's high profile
advertising and marketing campaigns reads like a fantastic tale of fiction suitable for a Hollywood movie.

The plot starts in several places (as far as we can trace, although there could well be more history to this!) to a boiler room (a fake stock promoting company selling worthless or non existent stocks and shares) called Goodman Hart. Goodman Hart were selling shares in a company which many would have heard of, Spantel. Spantel does still exist to this day offering telecoms services. The stock itself however, (SPAL listed on the over the counter board in the USA) is worthless after being artificially manipulated and sold to investors.

Goodman Hart is believed to have run under various names, and offered several other investments to unsuspecting punters in a bid to "switch" them out of the failed investment at a price, EDHC (European Diversified Holdings) and Adrentacar.

The main people behind the scenes at the time, were Jerome Andre, Frank Palumbo, and in the distance, and old friend who technically controlled Spantel, a Mr. Mohamed A Khashoggi. Son of arms dealer, Adnan Khashoggi. (Adnan is very well known for the manipulation of BCCI Bank of Credit and Commerce International years ago, as well as the Iran contra scandal)

Frank Palumbo was a barred securities dealer, banned by the NASD for fraud (National Association of Securities Dealers) in 1992 for artificially controlling stock in three companies. (Now believed to be in Monaco)

Jerome Andre (Currently believed to be in hiding in Sri Lanka) was a relative nobody prior to Goodman Hart, the history on him is a little vague. Once he started making money though, was well known in the bars of Marbella and Puerto Banus, the casinos and brothels. Remembered by many salesmen apparently for saying whilst drunk in morning sales meetings "you need an addiction to succeed in this business, if you don't have one, don't come back until you get one!"

As time went by the heat increased, clients were sick of hearing why their stocks weren't making any money so new salesmen were bought in on a constant basis. One such fraudster who had previously run his own deals, and recently arrested in Spain on another charge is Mark Stephen Dalton. Dalton was previously arrested running an investment scam, Rutherford Limited with another convicted fraudster, Radin Akhbar, as exposed by Tony Hetherington of the Sunday Mail. Another heavy salesman was an old chum of Palumbos days at Gant, Ron Jones. Ron is now believed to be in the Philippines pushing yet more failing stock after a half hearted attempt to set up a franchise in the Marbell Center in Marbella, allegedly with Hooters involved. Ron Jones is also reportedly at least partly responsible for bringing another company to the table, Adrentacar, again a company that never listed and was nothing more than a couple of hire cars at Malaga airport.

Eventually, the clients got too weary and the sales pitches weren't working anymore. Time for a new ruse. Fortuna was born.

A myriad of companies was set up in Spain, Cyprus, and even an old company of Jerome’s, Dancing Brave SL was wheeled out of the cupboard to launder and clean the money.

Frank and Mohamed appear to have left the picture at this point, Jerome had been extradited to face charges in a couple of European countries, and returned to run the show, or at least what was left of it.

It would seem that Jerome needed some other names to use as "fall guys" for the project, as well as other front men for the selling itself. This is where DANIELE EMBOULAS, ATUL SHARMA, ABDULRAHMAN AL ANSARI and T. JAMES. A. SATHASIVAM all come into play. Each playing their part to either go on the books or add credibility to the companies, a list of some of which are as links at the bottom of the page.

What is the state of play now?

Well, the forums and chat rooms around the world are at the point of melt down with all of this, none however have tracked back as to how it all started or was funded. Most of the time the answers are found in the trail preceding the fraud. All of the companies were registered within the requirements of the law at the time. If you wish to see them there is a few links at the bottom.

What if I'm a victim?

There are a few options it would seem.

Join the (rather confusing at times) forums and boards, see if you can team up with strangers and string a case together.

Hire your own lawyer

Take up with a mediation/law firm.

The chat rooms are all over the place, the largest we found being, (so much so they have had to move part of it to prevent the crashing of their site.) The dangers there though is no-one posting, or what they are posting can be easily verified. It could be you end up in another scam. One would suggest erring on the side of caution as you would know these people no better than Fortuna!

Hiring your own lawyer is likely to be costly to say the least, and unless you are able to consolidate and confirm a lot of information yourself, you are likely to just end up even further out of pocket.

Mediation companies? We will admit whilst we are not the biggest fans of such companies (ambulance chasers as well call them) there is something to be said for them if you follow a few simple rules.

Mediation companies that work on no-win, no-fee are always more expensive in the long run, and will not take cases they are not already working on or have had some success with.

Companies that charge an upfront fee? Check them first! Some are cons from the start. Whist there isn't a great deal of multi country legal paperwork covering this area, a good place to start is checking if they are registered or regulated.

How can I avoid being taken by future scams like this?

The method of pressure selling on the telephone has been around for many years, but perfected by timeshare and even more so by the boiler room industry, finely tuning very specific scripts which salesmen read, time after time to unsuspecting victims. There are several things to consider when it comes to avoiding these scams. If you have been scammed once, you will be on a list that will do the rounds with other companies, so every phone call or e-mail you receive should be treated with caution.

If it sounds to good to be true, without doubt, it is.

In the real world as far as stockbrokers are concerned, they are not permitted by law to "cold call" you to offer investments.

The property industry has a long way to go before it has any kind of universal regulation to protect investors, until then, ask for all the documents, go see the property if you can, get a local lawyer that speaks the language of the country you are doing business in. An English lawyer in England trying to assess an investment in Spain has no chance at all of ensuring everything is correct. The laws are too different.

We are approached regularly by law firms and mediation companies offering their services, as well as the press looking to sensationalize some of the stories we publish. We have refrained form accepting offers to ensure that we only offer clean sound fact as far as possible, and state when rumours are rumours.

The same thought should be applied to recovering money from investments as it does to making them in the first place. Research. If you don’t know or understand, don't do it!

Some useful links.

Company Registration for Dancing Brave SL

Company Registration for Fortuna Est 2002 SL

Company Registration for Fortuna Properties SL

Company Registration for Fortunaland Investment SL

Company Registration for Oanna Spain SL

See some picture of the fraudsters

We would have supplied a link to the original Oanna website, but it has been suspended by the hosts.

There are other company names that have been used by Fortuna and Oanna, most of which to purchase land or launder money, many with similar names, some in Cyprus, others in Spain and doubtlessly more will appear. We will be returning to this as more information is uncovered, and apart from anything else, this is turning into an epic in its own right!

Monday, December 8, 2008

Fractional Ownership - Pros or Cons?

The inevitable is knocking at the door folks! With the downturn of late in the overseas property market resulting in companies going bust, disappearing, downsizing and generally crying in their empty offices it had to turn up in Europe sooner or later.

Fractional Ownership.

What is it?

In a nutshell, you take a resale property, or indeed a new property, and sell sections of it. The idea being that you can own 1/4 of a 1 million Euro property for just 250k. Sounds like a fairly good idea, understandable given the lack of money around at the moment.

Where did the idea come from?

Originally the idea came about from the aircraft industry. Owning your own private jet is not cheap at any level, but if you use it as a work horse, part ownership is a good idea, mainly because even the busiest professional is not going to spend their entire life in an aircraft, and it is an excellent offset for tax purposes, as well as reducing long term costs.

So what is different here?

Well, at the very start, not a lot, the principles of buying the asset in the first place if you are a cash buyer are much the same for property, aircraft or yachts. The difference starts soon after, or even at the dotted line if you are looking for finance. Raising a mortgage on a split asset is not an easy thing to do at the best of times, let alone in today's lending environment. If you are cash buyer, there are other things to take into account, the primary one being the differences between a property as opposed to a boat or a plane.

Boats and planes have definable lifespans, scrap values, and calculable costs. Planes and boats can also have business loans raised on them in most cases, whereas your luxury villa on the Algarve cannot. Houses and property in general are supposed to rise in value on the whole, giving the owner equity.

Surely this is a good thing?

At first glance, one would think so and in some areas it is true. If you are a lifestyle buyer, wanting a holiday retreat for your own use, then yes, the whole thing makes a modicum of sense. The fractional concept appears to work very well in Canada and the USA, and there is legislation in place to govern it, South Africa in the most part seems to be getting there with its laws too.

Ok, so where is the catch?

Over the past few weeks we have seen a substantial increase in "Fractional Investment" ideas. A few of the old obvious scams like banana plantations in Panama, ethanol plantations in Brazil, "Make nine times your money in 5 minutes" "Be a millionaire with 10k in 6 years" etc etc.

What is alarming is the new "Investment" angle being used to lure struggling agents or brokers into promoting something that has little or no legislation behind it. On top of that, the promotion to prospective agents is through an "Inside Track" style of seminars at £95, offering insight to how "intelligent products" can bring "swift revenues" in a difficult market if packaged and sold correctly.

The mailshot we received here really does go for it, saying the "Fractional Awareness Days" will tell you how to sell a SIPPable fractional, and even how to deal with the "t-word" (Basically explain away how it's not like timeshare)

Now don't get us wrong here at the Investment Property Rumour Mill, We do know people that own fractional property, granted they are Canadians, funnily enough in Canada where there is legislation and finance tools in place. Also substantial legislation for agents too, far more than there is in the UK and certainly more than Spain where many agents are still based.

Fractional ownership can work for some, in just the same way that timeshare can work for a few.

So what is there to worry about?

Well, the company bringing the mailshot to the table is none other than Richmond Green Marketing, the ones we reported on before in connection with OPP (The self proclaimed aficionados of the overseas property industry). RGM are not the main players behind this though, and appear to have a page just for the promotion in the back of their site that isn't linked in from anywhere else. Best Group Limited appear to be the suppliers of this "tool" with there address at Salisbury House in London, but a postal address in Chester, and a domain registration in South Africa.

The site itself does seem to be specifically vague, talking about PenTICs and how they believe they are unique, stating that ski lodges have great track records, (so that must mean everything is like a ski lodge?)

The next question answered on the site is how easy is it to sell a PenTIC? Apparently they'll handle it for you if you wish. Now isn't that nice of them? No info on any other way of selling it, nor quite how they go about it or what they charge (Remember the calculable costs for fractional aircraft?)

Then we go on to have our minds put to rest about "management fees spiralling out of control" The response to that? "in some locations they fix them for a number of years" (Ok) but in others "We might link them to inflation" Might? sounds to me that someone hasn't quite thought this one out have they?

Of the products they have, there is waterfront South Africa, Caribbean, New Zealand and Panama. Having had a quick google, there seems to be a distinct lack of ski lodges in these locations, maybe our geography is a bit out? (Or global warming)

Best do have some fine testimonials on their site, even one about All Blacks player Zinzan Brooke, but if we look back a few years at Viva Estates with Ian Botham, and more recently Red Hot Homes with Kirstie Allsopp, and the general media hype that went into Inside Track in the early days, where are these companies now? Either sat on your cash in Panama, hiding under a rock selling leads from a bedsit in England, or inventing ever more devious ways to extract hard earned cash from the public, or getting agents to work for them and not pay them!

With this particular post, we will be surprised if we don't get some posts from Best or RGM and so on, and as usual, The Rumour Mill is not responsible for their opinions, but then we have sailed very close to the wind with a number of high profile companies, and we haven't had to remove any posts yet.

The public are likely to be badgered to death with this by agents far and wide promising riches and lifestyle beyond your wildest dreams for a fraction of what it could be.

As always, buyer beware. Whether it's a whole house, 10/52 of a house, or a spaceship with a side car and a walrus detector, if you don't understand it, don't invest in it!

Thursday, December 4, 2008

Another Mysterious Inside Track

Well well, it never rains, it pours!

This week we see a story about another Inside Track. This time in the Middle East. Developers Al Barakah responsible for the "tallest tower in Ajman" Police are looking for the CEO Imran Khan after allegedly defaulting on $3.8 million USD worth of cheques.

The story goes according to the Dubai 7 Stars blog and The National Newspaper that the company was offering 50% profits in 6 months. Nothing illegal about that of course, the likelihood of it however takes a bit of believing to say the least!

Buyers however still bought in their droves, some buying entire floors of buildings in the traditional greedy sheep mentality that gripped the Dubai market place.

Now buyers with their bouncing cheques are flocking to the police after not being able to find Kahn. Strangely his house is empty! To rub salt, or maybe sand into the wounds, Al Barakah is registered in Ras al Khaimah (RAK) a tax free offshore zone, as an offshore company, the marketing company, aptly named "Inside Track Real Estate Brokers LLC" is a limited liability company in Dubai, quite likely as an offshore company too.

Perhaps Mr Kahn has an offshore company in Panama too like our other inside track chums?

Apparently staff at the sales agency has received death threats and not been paid, no projects are registered at the Ajman land department and no-one has anywhere too turn. The official real estate body in the region RERA is reported to be coming up with some cunning plan or another to deal with all of this, but considering it has only thought of 12 laws and decrees since 1997 on its website, it could be a little while.

As they say in Arabia, Enchala! (God Willing)