Property fraud: notaires accused

THREE notaires and a firm of financial advisors are facing criminal charges in a fraud case involving the sale of furnished flats in the south of France.

Jean-Pierre Brines and Cyril Courant from Aix-en-Provence and Philippe Jourdeneaud from Marseille are accused of working with Apollonia, a local firm of property and financial consultants, to persuade an estimated 2,000 victims to invest in newly constructed rental accommodation in the region.

The investors were mainly middle-class professionals – doctors, dentists, researchers, teachers and police officers – seeking to benefit from the tax concessions available through this form of investment.

They were each asked to take out a substantial bank loan, in some cases up to e2m, with the assurance that the rents would cover their interest payments.

When the rental income fell short of the projections that were given, many found themselves with huge mortgage obligations they were unable to meet.

The victims set up their own campaign group in 2008 and made a formal complaint to the police authorities. Shortly afterwards, in February 2009, the directors and associates of Apollonia were arrested.

Local magistrates have been continuing their investigation into the affair, which has more recently resulted in charges being brought against the notaires responsible for processing the sales.

The magistrates consider the notaires gave credence to the activities of the company.

In particular, it seems the properties were given valuations of up to 50% over their true market value, and that there some of the applications for bank loans had been falsified.

There are also accusations of a lack of due procedure, with sale documents apparently having been processed in bars and cafés without the notaires present, based on assurances from Apollonia to its busy victims that it would take care of all the formalities.

It is alleged that the notaires either knew what was taking place, or that they failed in their duty of care to the investors.

Some banks, notably Credit Mutuel and HSBC, are also accused by the campaign group of processing bank loan applications without proper verification of the borrower’s income. The victims have now launched formal civil proceedings against the banks.

Appolonia has been in business since 1997 and reported a turnover of e36m in 2006, of which e33m came from commissions paid to them by developers.

On this basis, the notaires would have processed a substantial number of property sales, for which they would have received millions of euros in fee income.