Dolphin Trust is kaputt, FCA / FOS / FSCS confirm in joint statement

A joint announcement by the FCA, FOS and FSCS has confirmed that Dolphin Trust (which recently renamed itself to Generic, I mean German Property Group) has entered preliminary bankruptcy proceedings in Germany.

The F-pack encourages investors who invested in Dolphin via an FCA-regulated SIPP or financial adviser to make formal complaints.

Dolphin’s bankruptcy comes as little surprise. Repayment problems started in late 2018, and an administrator was appointed as problems mounted, who said in August 2020 that Dolphin’s accounts were a “total mess”.

Dolphin Trust bonds were extensively flogged to UK investors via a cast of dubious characters including unregulated introducers and pension liberation fraud schemes such as London Quantum. Dolphin Trust paid out up to 20% of investor funds as commission, according to the BBC.

The unregulated investments were also sold to investors in Ireland and South Korea, where the scandal claimed the head of a prominent bank CEO.

How do I get my money back from Dolphin Trust / German Property Group?

As the FCA has indicated, if you were advised to invest in Dolphin by an FCA-regulated company, or invested via an FCA-regulated pension provider, you may be able to recover your money by making a formal complaint to them.

If the company refuses to provide compensation, the complaint can be taken to the Financial Ombudsman, which can order compensation up to a defined limit. If the company is unable to pay, you would be covered by the Financial Services Compensation Scheme up to £85,000 per person.

Investors should avoid Claims Management Companies (CMCs) as they are unnecessary, often have a lower success rate than direct complaints, and charge eye-watering fees. The FOS and FSCS process is slow but straightforward.

Otherwise the standard procedure is to write off the investment and treat any recovery as a bonus.

If anyone contacts you claiming they can get your money back from Dolphin / GPG (other than via the above channels), it is a scam.

Dolphin Trust accounts in “total mess”, no money left, says administrator

The administrator of Dolphin Trust (latterly known as German Property Group, and referred to here by its more well-known and less generic name) has revealed that the accounts are in a “total mess”. As reported by FT Adviser:

In a letter in August partner Tim Beyer wrote: “Please note that we have found a total mess over here. It will take at least to the end of September before the insolvency court will have issued court orders for all companies of the GPG group. 

“And due to the fact that the bookkeeping, the documentation and all other relevant information regarding assets, money, etc. are incomplete, not available in the first place or just a total mess, we probably need at least until the beginning of 2021 before we are in a position to talk about any concrete investment or assets.”

Beyer also revealed that the Dolphin companies have been emptied of funds.

“And all of this we have to do with nearly no money on the accounts of the companies of the GPG group,” he said.

Dolphin Trust / GPG and its personnel extensively raised funds in the UK via a combination of unregulated introducers, fraudulent pension liberation schemes, and Nicola “Superwoman” Horlick’s Money & Co platform, where it used the name “Project Seascape”.

An attempt to enter the Intelligent Finance ISA market, again via Horlick’s Money & Co, this time using the name “Grounds Investment plc”, resulted in an abrupt reverse ferret. All Grounds funds were returned to investors in August 2019, only a few months after the launch. By that point Dolphin’s problems were already out in the open, after the BBC reported on them in May 2019.

The UK’s Financial Services Compensation Scheme is now likely to be on the hook for any Dolphin investors who were missold their investments via FCA-regulated companies. The FSCS has indicated that it may assume that Dolphin investments as being worthless and take over any recoveries on behalf of investors.

Dolphin Trust fallout continues to spread; Korean bank CEO steps down

The CEO of the brokerage arm of Shinhan Financial Group, one of South Korea’s largest banks, has stepped down in an ongoing scandal partly involving the funnelling of investors’ money into Dolphin Trust (aka German Property Group).

Shinhan funnelled $306 million into Dolphin Trust via derivatives, according to The Korea Herald.

But the return on investment now looks bleak due to the repeated extension of maturity caused by the German authorities’ apparent reluctance to approve the project and other complications within between related parties.

Dolphin Trust first started defaulting on payments to investors in the latter half of 2018. In February it told investors that a buyout offer had been received but I’m not aware of any more recent news about this.

On 12 March Dolphin’s LSE-listed offshoot, Vordere plc, applied to de-list from the stock exchange. In a letter to shareholders it announced:

As Shareholders will be aware, trading in the Company shares has been suspended since 5th July 2019.  At that time, the Company had been seeking the necessary approval of the Financial Conduct Authority (“FCA”) to a Prospectus to enable the listing of the German Shares.  When your New Board was appointed it became apparent that your Company was a long way off agreeing the terms of an FCA approved Prospectus and, having investigated the matter in considerable detail, your New Board are now of the view that the prospects of securing an FCA approved Prospectus are highly unlikely and, therefore, consideration needed to be given to alternative strategies.

After much consideration and discussion with the Company’s advisers, your New Board have concluded that it is in the best interest of all Shareholders that the Company be de-listed.

Vordere shareholders will therefore no longer be able to sell their shares via the LSE, although Vordere says it will put in place an alternate trading platform in place, and investigate the possibility of the company making a buy-back offer.

Vordere is currently mulling legal action against three former directors, Nicholas Hofgren, Stuart Cheek and Graeme Johnson, the former two of which were directors of a Guernsey-based Dolphin company.

Dolphin Trust to make exit offer to investors; warns of potential for total losses

Troubled German property scheme Dolphin Trust (now known as German Property Group) has frozen payments to investors in Ireland and told them it hopes to recover their money after receiving a buyout approach for their property assets.

According to The Times, an introducer has told investors that they risk losing everything if they enforce their loans to Dolphin Trust.

Dolphin Trust has been offering its loans to investors since at least 2013, when it was offering 12% per year for a 5 yar term. An investor told the BBC in 2018 that it successfully returned their money.

How Dolphin Trust went so quickly from paying out 12% per year (and 20% commission) to introducers telling investors that there is not even enough money to pay administrators is not clear. Dolphin is already paying restructuring specialists CFE to manage its cashflow problems.

Dolphin Trust has taken in nearly a billion euros from investors in Ireland, Britain, South Korea, France, Singapore and Russia.

Dolphin’s tentacles

A cuddly dolphin, yesterday.

Dolphin Trust has or had three offshoots in the United Kingdom in particular:


  • Project Seascape, a P2P investment offered via Nicola “Superwoman” Horlick’s Money & Co
  • Grounds Investments, which abruptly and mysteriously reverse ferreted and returned investors’ money after attempting to raise money via an IFISA (again using Money & Co as a conduit)
  • Vordere plc, an AIM-listed company which Dolphin gained by acquiring and renaming a company called Acorn Growth plc.

Some Dolphin investors were offered Vordere shares in lieu of repayment of their loans.

Vordere shares were suspended in July 2019. In October 2019 three Vordere directors were ousted by shareholders following allegations of fraud.

On the 16 September 2019, following the Annual General Meeting, one of the Company’s major shareholders, Mr John O’Donnell, requisitioned a General Meeting of the Company for shareholders to consider the removal of three of the incumbent Directors, Nicholas Hofgren, Stuart Cheek and Graeme Johnson, and the appointment of David Irving as a Director of the Company. Allegations of fraud were made and the Company is currently working through the fact finding stage of their investigation into these allegations and will update shareholders once finalised.

Hofgren and Cheek were directors of Dolphin Property Fund 1, a cell of GFC Fund PCC registered in Guernsey.

The investigation into these allegations continues, with the company recently obtaining an injunction in the UK High Court:

preventing the former directors from deleting or destroying Company documents and requiring them to deliver up certain Company documents by 14 February 2020.

UK public on the hook

Should Dolphin collapse, one significant loser is set to be the UK general public.

Any investor who was advised to invest in Dolphin Trust by an FCA-regulated adviser, or invested via an FCA-regulated SIPP provider, has a slam-dunk case for compensation, which would be covered by the Financial Services Compensation scheme. (And, incidentally, there is no need to use one of the solicitors or Claims Management Companies jockeying for position in Google searches for Dolphin Trust.)

When the FSCS pays compensation in respect for bad advice or poor pension trusteeship in respect of an unregulated investment, it takes on the right to any returns from the unregulated scheme (so the investor does not get to have their cake and eat it if the investment somehow comes good).

A significant tranche of investors in a German property scheme – those using FCA-regulated advisers or SIPPs – will therefore be bailed out by the UK general public via the charges they pay for regulated investments.

It would be tempting to wangle in a Brexit angle here, but the fact is that Dolphin could have been from Burkina Faso or Cape Verde for all anyone cares. Dolphin Trust itself broke no rules as far as its offering to UK investors is concerned; as long as the UK allows securities to be offered to the public without requiring those securities to be regulated, there is nothing to stop overseas unregulated investment schemes from attracting investment from UK investors, except finding a UK adviser or unregulated introducer to do the work of sourcing them (taking on the legal liability of ensuring suitability or exemption from financial promotion rules).

The Brexit angle is that now the UK has left the European Union, there is no reason whatsoever not to require all investment securities advertised in the UK to be registered with the Financial Conduct Authority – whether from the UK, Germany or Timbuktu.

Unregulated Irish pension trustee threatens to foreclose on Dolphin Trust; fallout hits South Korean banks

Unregulated German property scheme Dolphin Trust (now known as German Property Group; for clarity we will continue to use its less unnecessarily generic name) continues to struggle with repayments, according to media reports.

Wealth Options Trustees, an “investment wholesaler” based in Kildare, Ireland, has threatened to foreclose (presumably on behalf of Irish pension investors) in the event of non-payment.

Dolphin Trust’s CEO Charles Smethurst has admitted to “short-term cash-flow difficulties” according to WOT.

Dolphin Trust’s short-term difficulties started in the latter half of 2018, according to unpaid investors who spoke to the BBC last year.

WOT runs small pension schemes for members in Ireland, serving the same function as a SIPP / SSAS provider in the UK. How much it facilitated being invested into Dolphin Trust is not known.

Over in South Korea, Korean banks are facing lawusits from aggrieved investors for facilitating investment into Dolphin Trust via a product called “German Heritage DLS”.

German Heritage DLS is based on funds managed by Singapore’s Banjaran Asset Management that invest in historic site remodeling projects conducted by German Property Group, formerly Dolphin Trust. But the company failed to pay the investments back and keeps extending maturities due to the delay in receiving authority’s approval for the projects.

Shinhan Bank, KEB Hana Bank and Woori Bank are alleged to have sold a total of 473 billion won (£312 million) worth of investment in German Heritage DLS / Dolphin Trust, according to Pulse News.

Dolphin Trust’s unregulated bonds, which pay returns in the region of up to 12% per year, have been extensively sold by unregulated introducers in the UK and have also been used as the underlying investment of pension liberation fraud schemes such as London Quantum. (To clarify: the schemes were fraudulent because they claimed members could legally access their pensions before they were eligible to do so, not because of anything to do with the underlying investments.)

Dolphin Trust paid commission of up to 20% to introducers, according to the BBC.

Last year Dolphin attempted to launch a spin-off in the UK called Grounds Investments. The company withdrew and returned investors’ money in August, citing Dolphin’s negative publicity and the collapse of P2P platform Lendy and FCA-authorised Ponzi scheme London Capital and Finance as its reasons for having second thoughts about raising money in the UK.

Dolphin’s Grounds offshoot shuts down and returns capital to investors

Grounds Investments logo

A few months after launching its IFISA investments and misleadingly named “cash investments”, reviewed here in April, Grounds has abruptly shut down and announced it is returning investors’ original capital.

Grounds was closely linked to the Dolphin Trust property scheme (now renamed German Property Group) through common personnel.

Grounds raised investment via Nicola “Superwoman” Horlick’s Money & Co platform. The Grounds website now instructs investors to contact Money & Co.

Dolphin / GPG previously raised funds via Money & Co’s P2P platform under the name “Project Seascape”.

According to Horlick, Grounds has decided to pursue other funding routes as a result of the ongoing series of investment scandals in the UK, combined with the negative publicity Dolphin has received over its failure to pay some of its investors on time (around 20% according to Dolphin).

As you know, there have been a number of negative events surrounding property investment in the UK (Lendy, LCF and then the You and Yours item on Dolphin), so they did not think this was the time to raise money through an ISA offering.

Withdrawing from the market and returning already-raised funds seems an extreme reaction to the collapse of an unrelated Ponzi scheme and scandal-hit P2P platform, but it’s their business.

Dolphin investors continue to complain of overdue payments.

Another Dolphin-related company, Vordere plc, which is listed on the AIM market of the London Stock Exchange, has temporarily suspended its shares since 5 July, pending the acquisition of six German properties for €59,290,000.

In 2017 Vordere acquired a number of German properties from Dolphin Trust companies in exchange for shares in Vordere, which constituted a “reverse takeover”.

It seems a safe bet that the six new German properties to be acquired by Vordere will again be coming from Dolphin Trust.

This is of course assuming that Vordere can raise the necessary funds to buy them; its net assets were £24.2m in March 2019 so it will presumably need to raise funds to complete the acquisition.

Dolphin Trust (now German Property Group) months late in paying investors, says BBC investigation

The BBC’s You and Yours consumer affairs programme reports that multiple investors in Dolphin Trust (known as Generic Property Group, sorry German Property Group, since April 2019) are months late in receiving the repayment of their capital.

According to the investors who allege late payment, the repayment problems appear to have begun in the second half of 2018.

The investors were sold the Dolphin bonds by salesmen who were being paid commission of up to 20%.

Charity worker Samantha Hields had saved up a pension of £16,000 and, after being made redundant, was given an offer she could not refuse.

A salesman called her out of the blue and told her she could boost her savings by lending the money, securely, to a company redeveloping listed German buildings into luxury flats.

“He said it would double my money, and my money would be safe, as long as I was happy to invest it for five years,” she says.

She was expecting the money to be paid back to her in September last year. So far, she says she has not seen a penny and has not been given any information about what has happened to it.

The BBC also alleges that work has not started on some of Dolphin’s buildings despite Dolphin having owned them for many years. Dolphin intends to fund returns to investors (and its high commission levels) by redeveloping German buildings.

Visits to those buildings by Anna Kluehspies, a reporter from the German public broadcaster BR, found that although one was finished, and another was near completion, no work had been started on the rest, despite them being owned by GPG for more than five years.

Separately, another property not on the list of those supposedly in Project 80, a Bavarian monastery, was purchased by Dolphin in 2017 for €1m is located in Schonthal, a rural village close to the border with the Czech Republic.

The mayor of the town, Ludwig Wallinger, told Radio 4 he was disappointed with the lack of engagement he has had from Dolphin since it took it on.

“Strangely, Dolphin never came to look at this building before they paid for it,” he says.

“The last time I heard from anyone was in spring 2018, when they asked me what I thought they could do with it.

“They suggested perhaps luxury apartments, to which I laughed, because this area just does not have the market for upmarket flats.”

Dolphin states that 20% of its investors are affected by the delays. It also states that it now pays a lower rate of commission.

GPG responded to You & Yours’ investigation saying that the investors’ money is safe. Investors’ capital is not at risk, because it is secured against property on the German Land Register, it says.

It says only 20% of its customers are affected by delays on projects, which have been caused by various issues with planning and construction work.

Addresses are not always provided to investors, it adds, because that information is not always relevant. However it says it does plan to provide customers with addresses in the future.

It adds that there is no legal obligation to inform loan customers if funds are reallocated to new properties.

Dolphin says it is currently involved in real estate investments of 60 properties. There are currently delays in 10, they say for the other 50 everyone will get their money back on time.

GPG also says introducers are now paid a lower rate of commission.

In February 2019 – in other words, months after the investors in the BBC article allege they were due to be paid back and weren’t – a number of former Dolphin Trust staff formed Grounds Investments plc.

Dolphin CEO Charles Smethurst, CFO Thomas Prax, and director Christopher Moss, have all either served as directors or have held shareholdings (direct or indirect) in Grounds.

Like Dolphin, Grounds Investments plc invests in German property.

Grounds Investments plc is itself not regulated by the FCA, but offers an ISA product via Nicola Horlick’s Money & Co, which is.

We review Grounds Investments’ “cash investments” paying up to 7% per year

Grounds Investments logo

Grounds Investments is offering unregulated loan notes and IFISAs paying 3% per year for a 2-year investment or 7% per year for a 5-year investment.

The company aims to raise money for investment in German property.

Who are Grounds Investments?

Grounds Investments plc is the UK arm of Grounds Real Estate Development AG. The website names Grounds’ management team as Thomas Prax, Hans Witmann and Eric Mozanowski.

Not named on the Grounds Investments plc website is Christopher Moss, who is the sole owner and one of two directors of that company.

Christopher Moss is one of several links between Grounds and another German property development firm, Dolphin Trust. Moss was the director of a Dolphin Trust subsidiary, Dolphin SPV 1 Limited, until 15 March 2019, shortly after the incorporation of Grounds Investments plc.

Although its shares are publicly listed on the Düsseldorf stock exchange (a relatively minor stock exchange compared to Germany’s main exchange in Frankfurt), Grounds Real Estate Development AG is majority owned (70.2%) by Red Rock Wealth Management Limited. At time of writing the transfer to Red Rock Wealth Management is still to actually be made.

Red Rock Wealth Management Limited was incorporated in the UK in September 2016 by Charles Smethurst, former CEO of Dolphin Trust. (Smethurst’s LinkedIn profile states that he remains Dolphin Trust CEO, but Dolphin Trust’s company filings indicate he stepped down as CEO in September 2018, replaced by Helmut Freitag who took office in April 2018.) Smethurst was replaced as director of Red Rock by Bernd Reinhard Lommel in November 2018, but remains its sole owner according to Companies House.

Dolphin Trust was renamed German Property Group GmbH in March 2019.

Grounds Investment plc was incorporated on Valentine’s Day 2019 and is yet to file accounts.

At time of writing, shows that Grounds Real Estate Development AG is being traded at a total market capitalisation of 28 million Euros. For comparison, the smallest share in the FTSE AIM 100 (the 100th largest of the UK’s “small companies”) has a market cap of £159 million at time of writing. Grounds Real Estate Development AG is therefore a micro-cap (very very small) company.

Given the close links between Grounds and Dolphin, investors should establish as part of their due diligence whether the investments are completely separate or whether funds will be used to invest in Dolphin.

How safe is the investment?

Grounds Investments inaccurately describes its non-ISA loan notes as “Cash Investments” on its website. At time of writing it advertises heavily on Facebook.

It is important that investors understand that these are loan notes and if Grounds Investments is unable to make sufficient returns from its investments in German property, or for any other reason runs out of money to service its bonds, investors risk losing up to 100% of their money.

Grounds Investments has a page on its website entitled “Security” which states that it “aims to protect investors in a number of ways”, with investors holding a first charge over the assets of the company.

However, secured lending is not risk-free as there is a risk that if the underlying borrower defaults, the security cannot be sold for enough to cover the loan.

Investors in asset-backed loans have been known to lose 100% of their money when it turned out that there were not enough assets left to pay investors after paying the insolvency administrator (who always stands first in the queue).

We are not in any sense implying that the same will happen to investors in Grounds Investments, only illustrating the risk that is inherent in any loan note even when it is a secured loan.

If investors plan to rely on this security, it is essential that they hire professional due diligence specialists (working for themselves, not Grounds Investments) to confirm that in the event of a default, the assets of Grounds Investments would be valuable and liquid enough to compensate all investors. Investors should not simply rely on what Grounds Investments tells them about their assets, as Grounds Investments are the ones asking for their money.

Should I invest in Grounds Investments?

This blog does not give financial advice. The following are statements of publicly available facts or widely accepted investment principles, not a personalised recommendation. Investors should consult a regulated independent financial adviser if they are in any doubt.

As with any individual loan note to a micro-cap company listed on a minor stock exchange, this investment is only suitable for sophisticated and/or high net worth investors who have a substantial existing portfolio and are prepared to risk 100% loss of their money.

As an individual, illiquid security with a risk of total and permanent loss, Grounds Investments’s loan notes are much higher risk than a mainstream diversified stockmarket fund – despite the relatively low rate of return offered (7% or 3%).

Before investing investors should ask themselves:

  • How would I feel if the investment defaulted and I lost 100% of my money?
  • Do I have a sufficiently large portfolio that the loss of 100% of my investment would not damage me financially?
  • Have I conducted due diligence to ensure the asset-backed security can be relied on?

The investment may be suitable for high net worth and sophisticated investors who will already be well aware of all of the above risks, are looking to invest a small part of their assets in corporate lending, have done sufficient due diligence, and feel that the return on offer is sufficient for the risks involved in lending to a small company.

If you are looking for a “cash investment”, you should not invest in corporate loans with a risk of 100% loss.