Hundreds of Britons living in Spain are fighting to save their homes after becoming involved in an alleged multi-million-pound fraud involving the collapsed Icelandic bank Landsbanki.
Up to 600 expats were persuaded to raise money against the value of their properties to invest in a fund run by a subsidiary of Landsbanki.
Many raised hundreds of thousands of pounds in the scheme, which was advertised in local newspapers, and took up to a quarter of the money in cash – sometimes to cover medical bills – while the other 75 per cent went into the investment fund.
The Britons claim they were assured by financial advisers that the returns from the money in the fund would cover the interest they were being charged. Such schemes have been banned in Britain since 1990.
But the expats say that, even before the bank failed in October, the fund was deteriorating and many of them now risk having to sell their houses to meet spiralling debts or see them repossessed. A few are understood to owe millions of pounds.
Lawyers acting for a group of the investors have now launched a legal action against a number of financial advisers and the bank, accusing them of misleading publicity and fraud.
The claims are being examined by a court in San Roque and a prosecutor is investigating whether there is a criminal case to answer.
Among the alleged victims are Gillian and Roy Birch, who moved from Britain to Alicante in 1986 but suffered financially in the late Nineties.
When they saw advertisements for the scheme in local newspapers, they thought it was the answer to their problems. Although initially cautious, they were eventually won over by local advisers after being told that it could save them thousands of pounds in Spanish inheritance tax when one of them died.
They have since found out that the scheme did not affect their tax position. ‘This calamity has totally devastated us,’ said Mrs Birch, 83. ‘We have both been through hardship and danger in our lives. My husband, who is 86, flew Lancaster bombers in the war and I drove an ambulance in the Blitz.
‘We have both worked hard since and were convinced that we would have a tranquil retirement, and now this. We have had many a sleepless night.’
Les Maffey, 72, who moved to Spain in 2000, raised €315,000 (£283,000) under the scheme when his wife, Irene, was diagnosed with lung cancer. Her treatment cost €50,000 (£45,000) but she died aged 65 in 2007.
Because of the poor performance of the fund, higher than expected management costs and the collapse of Landsbanki, he now owes more than €100,000 (£90,000).
‘If I were to sell my property, I would be left with a debt I would have to meet out of my savings,’ he said.
‘As a result of the stress caused by the worry of losing everything we worked all our lives to achieve, my own health is suffering.’
Mike McInnes, who has set up the Landsbanki Victim Action Group, said they hoped a Spanish judge would block any attempts to repossess their homes.
The 62-year-old businessman, who lives near Marbella, said that because house prices had plunged, many investors would no longer be able to clear their debts by selling up.
He said that his home was valued at €800,000 (£719,000) when he and his wife Julie, also 62, took out their loan in 2005. Their debt is currently €500,000 (£450,000), about the same as their house is now worth, and they have a relatively small pension.
He hopes the debts may be written off or significantly reduced if the bank was found to be in breach of Spanish law.
‘We were told our money was safe but there are hundreds who could lose their homes,’ he said. ‘It is a complete mess.’
The Luxembourg subsidiary of Landsbanki, which is in the hands of administrators, declined to comment.
Source: Daily Mail