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The sentencing of Charles Smethurst in a Hildesheim courtroom last month may have brought a symbolic end to one of Germany’s most audacious property investment scandals. But for thousands of defrauded investors, the real story remains unfinished. REFIRE has followed the collapse of German Property Group (GPG) and its predecessor Dolphin Trust from the beginning, tracking the quiet unravelling of a network that promised regeneration, delivered ruin, and left behind derelict castles, ruined pensions, and missing millions.
Smethurst, now 65, was handed a sentence of six years and eleven months for fraud in four cases, following a plea bargain that saw him admit to defrauding French fund Horizon AM of €56 million. It is a small fraction of the damage attributed to the broader scheme, which drew in between €1.3bn and €1.5bn from as many as 25,000 investors—most of them in the UK, Ireland and Asia. The court acknowledged that Smethurst never intended to develop a flagship Berlin site for which investors had transferred millions. He simply used the funds to plug gaps elsewhere. Smethurst had previously served a prison sentence for fraud between 2000 and 2003 and received a further conviction in 2018, facts not uncovered by many investors during their due diligence.
The project at Pariser Strasse in Berlin was just one among many used to attract fresh money with promises of returns up to 15%. High-gloss brochures painted a picture of cultural restoration and tax-advantaged returns. In reality, the business had become a pyramid by 2018. According to prosecutors, Smethurst should have declared insolvency then. Instead, fundraising continued. By the time insolvency was finally filed in July 2020, most of the group’s 150–200 project entities had ceased filing financial statements. At least 700 sets of annual accounts were missing.
The Hildesheim court did not impose restitution, citing a lack of proof that Smethurst personally diverted the funds. That decision has further inflamed investor anger. According to Justus von Buchwaldt of BBL, the insolvency administrator handling the estate, some €800m in investor funds remains unaccounted for. Only 20 of the group’s 75 properties—many of them neglected historic buildings—have so far been sold, for a combined €87m.
"It is a disgrace that the court only looked at this tiny part of a huge fraud," said Mark Hambling, an investor and spokesperson for one of the UK-based victim groups. For many, the scope of the trial fell far short of addressing the full impact. Several investors have also voiced outrage at Smethurst’s post-sentencing plans: he is now studying law and working in a legal office that handles insolvency cases.
Among the hardest hit were elderly private investors, many of whom were drawn in by financial advisers now revealed to have been unregulated. Janet and David Middleton of Northern Ireland lost their combined life savings—£220,000—after being assured the investment was low-risk and endorsed by the German government. Their adviser, since deceased, had de-registered from the UK’s Financial Conduct Authority years earlier. Janet said: "Smethurst may serve a few years, but we are serving a sentence of our own."
The case also casts a long shadow over the role of UK and Irish financial intermediaries. In Ireland, liquidators from KPMG and Kirby Healy are pursuing proceedings against RE Administration and associated firms over missing investor funds channelled through Dolphin-linked entities. New information from UK firm Whites is now being examined by liquidators as part of discovery processes in the Irish High Court.
Meanwhile, questions persist about how the scheme escaped early scrutiny. BaFin, German tax authorities, and local commercial registries failed to intervene, even as GPG stopped publishing financial reports. Cross-border enforcement was all but absent. The British Virgin Islands and Cayman Islands served as conduits for large tranches of funds that remain beyond reach.
For the investors who entrusted their savings to what they believed was a robust German heritage play, the outcome remains bitter. The buildings—such as Dwasieden Castle on Rügen and a former brewery in Bad Aibling—offered a veneer of credibility. In many cases, land registry entries were inflated to suggest stronger security than existed. What little value remains is locked up in legal wrangling. Fewer than a third of the properties have changed hands, and none of the proceeds has yet been distributed to creditors.
REFIRE will continue to follow the remaining court actions and insolvency developments. The fraud may be partly acknowledged in law, but the restitution process—slow, opaque, and incomplete—continues to test the limits of investor trust in cross-border real estate finance.
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