Last Wednesday the Spanish police arrested the management of a property investment company called Riviera Coast Invest as they tried to board a private jet bound for Morocco. The 6 directors arrested are accused of swindling 1,000 clients out of 60 million Euros.
Riviera Coast Invest sold what it claimed were investment properties to small investors, promising guaranteed yields on buy-to-let student flats of 6% or more over 10 years. It turns out that all the properties were mortgaged, and Riviera Coast Invest did not use the money taken from clients – between 40,000 and 85,000 Euros per client – to cancel the mortgages.
For a while the company paid investors a dividend of around 170 Euros a month, but payments dried up in April. Investors then found out their investment properties were still mortgaged, and raised the alarm. The company is also alleged to have falsified bank guarantees.
Small investors in the Valencian Region and Andalucia are the main victims of this swindle, which does not appear to have snared any foreign investors.