The concursal administrator details payments to fictitious workers and cash withdrawals for trips, jewelry, and restaurants.
Promociones Lujo Casa SL, whose managers are accused of orchestrating a large-scale scam with 235 victims, planned the construction of 18 real estate developments with an estimated cost of 34 million euros despite having a social capital limited to a car worth 6,000 euros that was not even in their name.
This was explained by the concursal administrator of the company in the first session of the trial that started on Thursday morning in the Second Section of the Provincial Court of Palma.
The real estate scam of Lujo Casa left at least 235 victims who handed over 3.3 million euros to the defendants believing they were making reservation contracts to buy homes that did not actually exist between 2015 and 2017.
For the alleged ringleader of the scheme and founder of the company, Carlos García Roldán, known as ‘Charly’, the Prosecutor’s Office is seeking a prison sentence of 16 years and a fine of 446,000 euros. His partner and owner of Mallorca Investment, Michele Pilato, faces a 10-year prison sentence.
The witness has reported on the reports she issued regarding the supervision of the company, owned by the alleged ringleader of the scheme, Carlos García Roldán, known as ‘Charly’. Among other things, for example, she detected an income of 400,000 euros that did not go through any banking entity.
She also explained that she was unable to find any official accounting records for the years 2015 and 2017. For 2016, the accountant only sent her an Excel document.
In no case did she find construction material expenses in the accounting records, only the acquisition of seven plots of land and the hiring of the services of an architect, to whom some invoices were left unpaid.
A CAR WORTH 6,000 EUROS
Based on the information gathered by the Civil Guard during its investigation, the concursal administrator continued, it is estimated that the scheme planned the construction of at least 38 real estate developments.
Of these, 18 had a total estimated cost of around 34 million euros, something for which Promociones Lujo Casa did not have sufficient funds. The company, she detailed, was established with a car valued at 6,000 euros — which did not even come under the name of the company — as its only social capital.
They also had no relationships with any banking entity, leaving the company in a situation of "undercapitalization". "It was impossible to undertake the investment, there was neither own contribution, which could have been provided by the partners, nor external contribution from banking entities," she emphasized.
In any case, they could not use the contributions they received from buyers as financing, something prohibited unless a technician certifies the progress of part of the works. "If the work is not carried out, the funds cannot be used, they must be in a separate and independent account," she pointed out.
That did not happen, she continued, since only a license to demolish a house built on one of the purchased plots was found for some of the potential real estate developments. Some basic projects had been presented, which in no case authorized the execution of the works.
All of this, she summarized, is what led Promociones Lujo Casa to insolvency and to enter into bankruptcy proceedings. When she analyzed the working capital available to the company, she stressed, it was "ridiculous, practically zero".
A company with a liquidity ratio between one and two, she explained, "is tight," while one with between 1.5 and two can be saved. García Roldán’s company, after she made the necessary adjustments and corrected the accounting errors, had a ratio of 0.12.
"The main cause, therefore, is that there is no money to undertake the investments. And that was known from minute one," she concluded.
FICTITIOUS WORKERS, PAYMENTS IN KIND, AND LUXURIES
During the hour-long interrogation by the prosecutor, the concursal administrator reported payments to "fictitious workers" who had never performed any work in the real estate developer.
This was the case for ‘Charly’s’ ex-partner and her cousin, who together received almost 40,000 euros "without any justification." At the beginning of the trial, both reached a settlement and accepted nine-month prison terms as responsible for money laundering.
She also identified cash withdrawals from the company’s accounts with "concepts that are not justified by the real estate development activity" and that amounted to just under a million euros in casinos, trips, jewelry, restaurants, or jazz clubs.
Another irregularity identified by the concursal administrator was the "payment in kind" received by the builder who presented himself to the public as responsible for carrying out the developments and who faces eight years in prison.
Specifically, the company paid him 11,200 euros for the rent of an apartment and for the utilities of electricity, gas, and mobile phone. Something, the witness emphasized, that was not necessary according to the company’s operations.
She also detailed the discovery of direct transfers from the accounts of Promociones Lujo Casa to García Roldán himself for several million euros and, in the days leading up to his escape to Colombia, a loan of approximately 300,000 euros.
THE SCHEME
As stated by the anti-corruption prosecutor in his indictment, García Roldán and the other defendants used the company Promociones Lujo Casa Baleares to pretend to be carrying out real estate developments, publicly offering the sale of homes.
At times they used photographs of other developments and architects obtained from the internet. Of the at least 32 developments advertised in different parts of the island, only seven plots of land had been acquired and none were built.
In this way, they defrauded 3.3 million euros from at least 235 people, many of them young couples who thought they were making reservation contracts to buy a home.
As the deadline for the delivery of the homes approached, the buyers made complaints and asked for explanations, but only received excuses. They were also persuaded not to report the facts, warning them that it would hinder the progress of the developments or their ability to recover the money.
With the money defrauded from the victims, the defendants paid salaries to fictitious workers and spent huge amounts of money on restaurants, companionship services, and casinos, as well as jewelry and vehicles. In a casino that García Roldán visited 227 times while raising funds with the developments, he spent 712,000 euros.
Upon learning he was under investigation, García Roldán fled to Colombia, where he changed his appearance and tried to hide. He was later arrested in a joint operation by the Civil Guard and the Colombian Police in 2019.
He spent some time in a prison in the South American country before being sent to Spain, where he spent four years in provisional detention. In December 2022, he was released on bail, a situation in which he remained until the start of the trial.