Here are the corrections from the errors in the story below, which has now been taken down by AIBForEx and Business World, but may have been picked up by investors earlier.

1. Anthony Joyce is currently representing a group of investors called KRI, these are investors in the Kensington Royale Development in Sports City. He is no longer representing the Concerned Dubai Sports City Investors Group, more recently known as the Dubai Action Group, and they are in no way connected to the current action being undertaken by the firm.

2. Whilst Anthony Joyce is currently liaising with MED there are no plans for him or any representative of his firm to travel to Dubai.

3. KRI does not consist of two separate groups, from the Republic of Ireland and Britain, they consist of investors from eight different countries across the globe.

4. At the moment no developer in Dubai is being sued by Anthony Joyce & Co, the KRI Group, or the Dubai Action Group / Concerned Dubai Sports City Investors Group.

If anyone requires any details on either of the parties concerned above then please contact Simon Palmer of Republic PR.

This was the story that appeared….

Irish investors sue Dubai developers

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Mr Chatterjee presented his proposals to approximately 150 investors, over a series of meetings during his two day stay. In summary the proposal is as follows: Innovation SEZ Developer Ltd has taken over the shares in the three development companies responsible for building Eagle Heights, Bermuda Views and Profile Residence. They have declared that they will build out our buildings if they get sufficient numbers of investors to sign up to their proposal, which includes a new payment schedule.

Innovation SEZ Developer Ltd intends to shortly send out an addendum to our current contracts for approval and signing.

Whilst the Dubai Action Group is interested in examining this proposal we cannot recommend it to our members until we have had the opportunity to study the written documentation in detail.

We believe a cautious and measured approach to any proposal containing adjusted payment schedules is vital given our experience to date.

We welcome all comments and suggestions from our members and a more detailed email will go out to members next week.

Kind regards,

The Committee for and on behalf of the Dubai Action Group

The problem was that the Government left in unregulated so anyone could sell property investments worth hundreds of thousands of euro. There were no rules, no qualifications, no professional body and no licenses needed. The guy selling you a two hundred thousand euro could’ve got out of prison for fraud the day before or sold nothing more than washing machines in his life.

Even if you were buying one euro share from a stockbroker he would need to regulated by the financial ombudsman and he could tell you that the share price was going to rise and in fact he even had to warn you that it may go down. This was not the case with overseas property. Agents in this sector would say the property would rise 100% in 5 years, that investors would make X amount of money, and that finance and guaranteed rents were available when there was no way of telling if they would when the development was finished and there was no way of enforcing this.

Many properties were mis-sold due to the lies people were told and it is the agents that have run off with their commissions to their apartments in Peurto Banus (they wouldn’t have dreamt of buying in Dubai or Bulgaria), hoping to wash their hands of responsibility and leave the investors to deal with developers. They agents won’t get away with this law can still take their assets, and their will be fraud cases.

I am currently working on six overseas property legal and litigation cases with the Dublin legal firm Anthony Joyce & Co. Recently The Sunday Business Post did a full page on several of these case in the article below. I have included a link so that it can be viewed on The Sunday Business Post’s website.

http://archives.tcm.ie/businesspost/2010/06/06/story49693.asp

A MURKY WORLD - the overseas property business

Sunday, June 06, 2010 - By Ian Kehoe Chief News Correspondent

In his native India, Probir Chatterjee is a little-known figure. Yet, over the coming days, more than 250 Irish people will file into the Carlton Hotel at Dublin Airport to hear the accountant speak.

The reason? Chatterjee’s firm, Smart Investments, is attempting to kick-start a number of stalled property developments in Dubai.

His audience will be made up of Irish investors who put down deposits for three schemes in Dubai’s Sports City complex – Bermuda Views, Eagle Heights and Profile Residence.

Chatterjee is likely to have an attentive audience as he outlines a plan to take over the delayed developments and complete them, giving certainty to the investors at last.

Through an Irish-based selling agent called Larionovo, hundreds of Irish people invested money in apartments and villas in the three developments.

Enticed by glossy brochures and talk of a guaranteed return, many put their life savings into the property projects. Others stepped up to buy multiple properties, paying out hundreds of thousands of euro upfront.

In late 2008, Larionovo collapsed into liquidation. The Dubai developments, which were being spearheaded by a local firm, stalled. Since then, the investors have struggled to get any information about the development or the whereabouts of their funds.

For all concerned, the Dubai investment dream has turned into a nightmare.

‘‘A few years ago, I asked Larionovo about the progress of the development,” said Tony Hynes, a Dublin businessman who invested in one of the schemes.

‘‘I was shown a picture of a six-storey building that was almost complete. A few months ago, I went out there myself.

All I could find was a hole in the ground. I don’t know what building they showed me, but it certainly was not mine.”

Hynes is the chairman of an action group set up last year to investigate the Dubai debacle and try to recover funds from the project. It has discovered a maze of companies, with intricate shareholdings and impenetrable operations.

‘‘Look, I accept there is a risk associated with any investment, but we were given lots of promises that turned out to be lies,” said Hynes. ‘‘We were told it was backed by the Dubai government.

Not true. We were told our money was in a safe account and was not being touched. Not true. It was actually being used to fund the development.”

Hynes has already given up hope of getting his money back from Dubai.

He said the best option was finding a partner like Chatterjee to finish the development.

‘‘I am not getting my money back, so I am trying to get the keys instead,” he said. ‘‘Next week’s meetings are crucial. Hopefully, in two years, it will all be over and I will be in possession of the apartments. Hopefully.”

If a deal with Smart Investments can be agreed, Hynes and his action group could yet salvage something. Others might not be so lucky.

During the years of economic boom, Irish people were among the biggest buyers of foreign property in the world.

The numbers vary, but industry estimates put the number of Irish-owned foreign properties at somewhere between 150,000 and 250,000.

They ranged from condominiums in Chicago to villas in Cape Verde, from Bulgarian flats to penthouses in Poland. Geography was no restriction – properties were purchased in places as diverse as Dubai, Morocco, Hungary, Turkey, India, France, Italy and Portugal.

But as the economic climate has changed, a series of overseas property ventures have come undone. Some developments, like those in Dubai, have failed to materialise. Others have plummeted in value, leaving thousands of investors nursing big losses.

A murky world – that’s how lawyer Tom McGrath described the overseas property business. During the boom years, he provided legal advice for people buying abroad.

Now the market has soured, he is spending much of his time helping clients pick up the pieces.

‘‘People bought into the market, they bought into the flash property shows, the fancy talks, the gushing newspaper articles,” said McGrath, a partner with McGrath O’Donnell & Associates in Dublin. ‘‘But at the bottom of it all, there was simply no regulation.

‘‘People were doing things they would never dream of doing if they were investing in Ireland. I know one person who bought an apartment in Bulgaria from the back of a fruit van.

People ran away with themselves,” he said.

In the case of Kuvera Ireland, around 250 Irish investors bought into the sales pitch. The company took over a hotel in Dublin 4 on September 15, 2007, to launch plans for two luxury developments in India called Mountain View and Orchard View.

Kieran Murphy, the man behind Kuvera Ireland, spent the day meeting potential customers and introducing them to Dr Ajit Jha, the boss of Kuvera India and his partner on the ground.

The show and the figures must have been impressive -Kuvera raised €8.9million for the apartment scheme in Rudrapur, a special economic zone in north India.

Kuvera Ireland brokered the deal and investors were told that contracts for the building work existed between the investors and a construction company called VG Buildtech.

Between them, Mountain View and Orchard View were to comprise 580 apartments. As of last week, the site consisted of a boundary wall with some small preparatory works. Nothing had been built.

‘‘Two weeks into the project, Kuvera knew there was a problem.” said John Plaice, who invested in the scheme and now chairs an action group set up to recover money from Kuvera. ‘‘The problem was very simple. Foreigners could not buy properties there, but they tried to work around it with leaseholds and so on. There were literally problems from day one.”

The fall-out from Kuvera ended up in the High Court in Dublin, where an order was obtained freezing Murphy’s assets.

A settlement was eventually reached between Murphy and the investors, under which he agreed to hand over assets.

Under the settlement, the investors were to take possession of properties at a golf resort in South Africa, five British properties and €143,00 0 from a South African bank account.

Murphy’s shares in Kuvera India and equity in VG Buildtech were also to be ceded.

Almost a year on, the transfers of the various assets are close to completion.

However, the Kuvera case shed startling light on how some property deals were structured.

Under the so-called ‘Kuvera reward programme’, investors were promised flights and holidays at five-star hotels if they convinced others to invest in the company’s Indian developments.

‘‘The deal was a good one if it had worked,” said Plaice. ‘‘But it did not work, and we are still getting to the bottom of what happened, and why it happened.

Money that should have been in an escrow account was used on sales and marketing.

The whole scheme was based on getting more people involved. The market slowed and no new investors were found. The whole thing became exposed. There was a huge element of trust in the investment.

We were badly let down.”

Anthony Joyce, a Dublin solicitor, represented the Kuvera action group and has since spent a lot of his time dealing with disgruntled investors in other property ventures.

‘‘If there is a fraud or a perceived wrongdoing, we can take a legal course of action,” according to Joyce. ‘‘But in lots of cases, I simply can’t help people.

The scheme is legitimate, but individuals can’t afford to make the payments. ‘‘But there is a difference.

At least you get the keys if you keep on paying. But there are a lot of cases where you pay your money and you might end up with nothing.”

Two weeks ago, Joyce was retained by Irish investors concerned about construction delays at the Kensington Royale development in Dubai Sports City.

The five-star, 18-storey development of 252 units is being developed by Middle East Development in the United Arab Emirates, and was originally due to be completed early last year.

Joyce is also acting for investors who put money into a proposed €100million resort in Cape Verde.

Flash Developments, which is headed by Dublin developer Ciaran Maguire, received deposits from more than 200 Irish and British investors for apartments and villas in the planned Palm View Resort.

Following a 16-month delay in the project getting full planning permission, a number of the investors put together an action group to try to recover their money.

Ten days ago, the investors were stunned when KPMG was appointed as liquidator over Flash.

Maguire said that the development was going ahead, stating that all the ‘‘contracts, development lands and credit lines’’ had been transferred to another company called the Ciaran Maguire Group.

Maguire said that Flash Developments was ‘‘simply a sales and marketing company’’, and its liquidation would not have any effect on the development.

KPMG has initiated a full investigation. ‘‘I have absolute sympathy with a lot of investors,” said Joyce.

‘‘They got caught up in genuine investments that went wrong. Many schemes were plausible on paper. They checked out. But they were undone by the market.”

Often, the court is the place of last resort.

In recent days, 39 investors launched proceedings against Simple Overseas Properties, an Irish property firm, in relation to deposits which were taken for properties in developments in Morocco and Spain. That case, and others like it, highlighted a major problem, according to experts – a stark lack of regulation.

‘‘Some of it is real Wild West stuff,” said Paul McCann, head of specialist advisory services with accountancy firm Grant Thornton.

‘‘There is an assumption that Irish overseas property firms are regulated. Even travel agents are bonded. But it is not the case.

‘‘I think it is now incumbent on the government to introduce regulation, or force companies to be bonded.

Alternatively, the various representative bodies need to start enforcing strict guidelines.

Deposits should not be allowed to be used by developers as cash flow.”

The government is understood to be looking at the system, in an effort to introduce some new checks and balances.

But for people like John Plaice, Tony Hynes and the thousands who have seen their investments evaporate, it could well be too late.

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Well that is putting it mildly, just like Ireland (and possibly even worse) prices have crashed.  A great deal of developers are unable to finish their developments and property owners are losing their shirts and in some cases their life savings.

The problem with the overseas property industry is that it was and is unregulated, this is despite the fact that it deals with some of the largest financial transactions individuals will ever make. The situation is mad.  Let me put it this way: if you buy a €1 share in a listed company you are protected by the Financial Regulator because the company selling the share is regulated and has to abide by strict rules in relation to the selling of that share and the stock market; this means make any claims as to the potential of that the investment in that share i.e. they cannot claim it will rise in value. However, with an overseas property you can be spending €1 million on a property and you are left at the will of the gods. The person selling that property can make the wildest of claims e.g. 100% profit in 5 years, say the will guarantee the rent etc and they cannot be held accountable because the sector isn’t regulated. This is why the up most care is needed.

It is a terrible situation that the Irish government allowed to carry on right under their noses.  Whilst the sector is due to be regulated by the forthcoming NPSRA (National Property Services Regulatory Authority) this has already been delayed and is coming eight years too late.

The lack of regulation has led to a huge amount of miss-selling of investments and fraud within the sector. As usual the small investors are left to pick up the pieces and this has led to a great deal of worry for thousands of people who bought properties overseas.

There is an old story in the financial sector that says: during the American Gold Rush it wasn’t the gold speculators who rushed to California that got rich but it was the middlemen who got rich i.e. the traders that sold the speculators the picks and shovels. Indeed this is the period from whence Levi Strauss made his name selling his first jeans. It wasn’t even the people who manufactured the equipment but the middle men that sold it on. This is starting to mirror the overseas property sector with neither the builders, nor the purchaser making the money but the agents and brokers who acted as the middlemen. And it is these middle men that appear to have taken their profits up front, and in many cases ran off, leaving the small investors behind to bear brunt of problems as things have started to go wrong.

I have seen some of these problems first hand recently with case I’ve been working on relating to an Irish overseas property company called Kuvera.  I saw it again a last month when I attended a meeting that hundreds of Irish investors in Dubai attended in City West after which I wrote this post about the group that has been set up to take action on a number of developments sold by Irish agents Larionovo and Profile Developments http://www.republicpr.ie/2009/09/09/investors-in-larionovo-profile-group-sports-city-dubai/

Since then there has been progress and more investors are being requested to come forward. A website has been set up for those owners who are concerned about the project. Anyone wanting to join the Group and be part of any action taken in relation to the development, should download a membership form from the website and send it in with the joining fee of €200. Here is a link  http://concerneddubaisportscityinvestors.com/

This relates to the following Sports City Dubai developments:

- Bermuda views,
- Eagle Heights,
- Profile Residence,
- Stadium point.

A Committee has also been set up to represent the interests of the investors. They can be contacted via the form in the Contact Us section of the website.  A further meeting of the Group will take place on 3rd November at 7.30pm at the City West Hotel.

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