The BBC’s You and Yours consumer affairs programme reports that multiple investors in Dolphin Trust (known as Generic Property Group, sorry German Property Group, since April 2019) are months late in receiving the repayment of their capital.
According to the investors who allege late payment, the repayment problems appear to have begun in the second half of 2018.
The investors were sold the Dolphin bonds by salesmen who were being paid commission of up to 20%.
Charity worker Samantha Hields had saved up a pension of £16,000 and, after being made redundant, was given an offer she could not refuse.
A salesman called her out of the blue and told her she could boost her savings by lending the money, securely, to a company redeveloping listed German buildings into luxury flats.
“He said it would double my money, and my money would be safe, as long as I was happy to invest it for five years,” she says.
She was expecting the money to be paid back to her in September last year. So far, she says she has not seen a penny and has not been given any information about what has happened to it.
The BBC also alleges that work has not started on some of Dolphin’s buildings despite Dolphin having owned them for many years. Dolphin intends to fund returns to investors (and its high commission levels) by redeveloping German buildings.
Visits to those buildings by Anna Kluehspies, a reporter from the German public broadcaster BR, found that although one was finished, and another was near completion, no work had been started on the rest, despite them being owned by GPG for more than five years.
Separately, another property not on the list of those supposedly in Project 80, a Bavarian monastery, was purchased by Dolphin in 2017 for €1m is located in Schonthal, a rural village close to the border with the Czech Republic.
The mayor of the town, Ludwig Wallinger, told Radio 4 he was disappointed with the lack of engagement he has had from Dolphin since it took it on.
“Strangely, Dolphin never came to look at this building before they paid for it,” he says.
“The last time I heard from anyone was in spring 2018, when they asked me what I thought they could do with it.
“They suggested perhaps luxury apartments, to which I laughed, because this area just does not have the market for upmarket flats.”
Dolphin states that 20% of its investors are affected by the delays. It also states that it now pays a lower rate of commission.
GPG responded to You & Yours’ investigation saying that the investors’ money is safe. Investors’ capital is not at risk, because it is secured against property on the German Land Register, it says.
It says only 20% of its customers are affected by delays on projects, which have been caused by various issues with planning and construction work.
Addresses are not always provided to investors, it adds, because that information is not always relevant. However it says it does plan to provide customers with addresses in the future.
It adds that there is no legal obligation to inform loan customers if funds are reallocated to new properties.
Dolphin says it is currently involved in real estate investments of 60 properties. There are currently delays in 10, they say for the other 50 everyone will get their money back on time.
GPG also says introducers are now paid a lower rate of commission.
In February 2019 – in other words, months after the investors in the BBC article allege they were due to be paid back and weren’t – a number of former Dolphin Trust staff formed Grounds Investments plc.
Dolphin CEO Charles Smethurst, CFO Thomas Prax, and director Christopher Moss, have all either served as directors or have held shareholdings (direct or indirect) in Grounds.
Like Dolphin, Grounds Investments plc invests in German property.
Grounds Investments plc is itself not regulated by the FCA, but offers an ISA product via Nicola Horlick’s Money & Co, which is.