Lex Life over hundred Marbella residents, the majority of them Britons, could lose their homes after an alleged 40 million euros Icelandic bank fraud.

Over hundred Marbella residents, the majority of them Britons, could lose their homes after an alleged 40 million euros Icelandic bank fraud.The case is being investigated by San Roque court although the majority of victims are in Marbella. It centres on the Icelandic bank Landsbanki that was recently nationalised in the world financial crisis and its Luxembourg subsidiary Landsbanki Luxembourg SA which is in liquidation and has suspended payments.
These along with the Luxembourg insurance company, Lex Life and Pension SA, have been denounced for deceitful publicity and fraud by the law firm Martínez-Echevarría, Pérez y Ferrero that is representing 28 of those affected, all foreign residents in Spain. The lawyers believe that the number of those affected is over 100.
Amongst those included in the legal action are three investment advisors operating on the Costa del Sol and dedicated to serving Britons in Spain. Britons are said to be the highest nationality group affected and include pensioners and the owners of properties of high value.It was back in 2004 that investment advisors started to sell to the British market on the Costa del Sol a financial product of an insurance company for a Luxembourg subsidiary of the Icelandic bank. It guaranteed the mortgage of the property owners. It consisted of a mortgage on the property of around half a million euros in each case and invested this money in financial products not only to pay the capital interest on the loans but also to earn additional income. The clients were lured by the offer that the loan was self-financing with zero risk and secure income. In the event none of these promises were true.

The offer was widely marketed in the English media on the coast. Those taking out the products were also assured that should the title holder die it would reduce the tax liability of the heirs. The lawyers bringing the action stress that in Spanish law such a device was not possible and hence the offer was a fraud. Indeed the scheme offered to Britons on the coast had been illegal in the UK since 1990. Under the terms of the Landsbanki equity release scheme, borrowers could take a quarter of what they raised in cash, but had to put three-quarters in an investment fund run by Landsbanki.

The Costa del Sol Action Group that fights against financial fraud and mis-selling on the coast warns on its website: “One such project that Landsbanki are involved in is the short term lending currently being advertised erroneously in Spain as “equity release” (the ads talk of reductions in Spanish succession tax and then the borrower is persuaded to enter into a renewable 5 year loan i.e. renewable at the bank’s discretion).”Thanks to the success of the marketing campaign in 2006 the bank opened an information office in Nueva Andalucía. From there all monies were channelled to Luxembourg. The lawyers again say that the capital had not been insured and even less so the auto-financing scheme and the amounts that were paid in lost value. The tragic result is that with the collapse of the Luxembourg based bank those who entered this scheme are left without any cover and are in danger of loosing their homes. Not surprisingly the bank has closed its office in Marbella and cut all communications with its clients.

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