A very special luxury resort was to be built in the middle of the Canadian forest and lake landscape of Nova Scotia. Ice hockey academy and golf course should give tourists from all over the world an unforgettable holiday experience on Canada’s east coast – and investors rich returns. A project in which many small German investors also took part. It was marketed by a franchisee of the Hamburg luxury broker Engel & Völkers – a name that inspired trust among investors.
But now many investors regret investing their money in the Forest Lakes Country Club. Because a good two and a half years ago, the Canadian developer filed for bankruptcy, the project had failed. Engel & Völkers denies responsibility and says today that it “did not design or sell the investment products”. According to the company, the former licensees were never permitted to sell investment products using the brand. From a purely formal point of view, the brokerage house has nothing to do with the million dollar scandal.
Since the failure, aggrieved investors have been at court with the responsible franchisee. The shares in the luxury resorts were marketed by Engel & Völkers Resorts GmbH, and later by EV Resorts GmbH. Various lawsuits are pending at the Hamburg Regional and Higher Regional Court. And a new verdict is fueling investors’ hopes of seeing at least some of their money back.
The managing director of the two real estate companies, Ralph Viereck, was ordered to pay damages in one case. The value in dispute is over 320,000 euros. This emerges from a judgment that is available to WirtschaftsWoche. The Hamburg Higher Regional Court found that the requirements for an appeal were not met. Viereck left an inquiry by WirtschaftsWoche unanswered about the verdict.
Promised returns of 30 percent
The judges have thus rejected the real estate manager’s appeal and are following the reasoning of the Hamburg district court. Accordingly, the investment should be considered a deposit business. According to the German Banking Act, these are “unconditionally repayable funds from the public”, i.e. the investors.
In their justification, the judges also point out that investors were promised repayment regardless of the commercial success of the real estate project. In the brochures, Engel & Völkers Resorts promised investors high returns: secure increases in value of 30 percent within two years.
The investors did not sign the contract with Engel & Völkers Resorts, but directly with the Canadian project developer TFDC. Its backers were already on record in the US for large-scale financial fraud – a fact that investors only found out years later.
Even if the real estate company from Hamburg was not an official contractual partner, the judges still hold managing director Viereck responsible because the investors “would not have made their investment without the activities of EV Resorts GmbH”. In other words, without the intermediaries, they would never have ended up with a Canadian property developer with a dubious past.
The flop of the real estate project Forest Lakes Country Club brought investors around 100 million euros. The Hamburg fund house Steiner + Company, with which Viereck worked for years, collected a large part of the money. Steiner + Company had attracted attention several times due to dubious activities, which WirtschaftsWoche also reported on. Up to 8,000 investors have invested in the project via the fund of funds of the issuing house.
The site in Canada continues to be at a standstill. The legal processing of the million flop is now in motion. This is entirely in the interests of investors. After the first verdict, the question now is whether there is still enough money to be gotten from the intermediary.
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