Irish and UK financial brokers may have to pay back up to €100m in commissions from selling Dolphin loan notes, a detailed report lodged by an insolvency expert to a German court has said.
he insolvency application proceedings, for which the report was prepared, names Cork-based Dolphin International Group (Dolphin IG) as the administrator of payments for a wider organisation that it described as a “pyramid scheme”.
The preliminary liquidator’s report for the Bremen Insolvency Court concerns the assets of Bremen-based Dolphin Capital 80th Projekt GmbH, one of a myriad of Dolphin-related companies.
The insolvency application is being undertaken by Dr Gerrit Hölzle, of specialist German insolvency law firm GÖRG.
It has commissioned Ernst & Young to undertake forensic processing of Dolphin’s entire payment transactions, and an initial cash flow analysis had uncovered cash transactions amounting to at least €3.1bn between 2012 and 2020 via the wider Dolphin group’s “frequently changing accounts in Germany and abroad”, it said.
“Whether born out of an increasing need for financing or designed from the beginning, the business model developed into a pyramid scheme soon after the company was founded,” it said.
It found that from “2015 at the latest that only 55pc of the amounts paid by investors were actually forwarded to Germany to finance projects”.
The report said said that the now insolvent property scheme’s accounting department in Germany received accounting instructions in the form of Excel spreadsheets from Dolphin IG in Cork.
“To the best of our current knowledge, there was no business operation set up in a commercial manner with the aim of presenting a true and fair view of the net assets, financial position and results of operations with regard to the accounts,” said the report.
GÖRG estimated that Dolphin had raised around €360m in investor funds in the UK and around €112m in Ireland.
“I currently assume an outflowed and possibly liability-relevant commission volume of up to €100m for the investor funds raised in Great Britain and Ireland alone,” it said.
“The further investigations and examinations by the insolvency administrator that will be necessary in the future will show whether, for what period of time and in what amount the agents will have to repay the commissions they received.”