11 billion euro lawsuit before the Frankfurt am Main Regional Court against Deutsche Bank AG and Hauck & Aufhäuser Privatbankiers AG for fraud – criminal charges brought against Deutsche Bank AG and Hauck & Aufhäuser Privatbankiers AG to the Stuttgart state prosecutor.
Frankfurt am Main/Kirchentellinsfurt, January 22, 2019
TILP Litigation Rechtsanwaltsgesellschaft mbH (TILP Litigation) has filed a lawsuit before the Frankfurt am Main Regional Court on behalf of Stuttgart-based businessman Hafez Sabet against Deutsche Bank AG and Hauck & Aufhäuser Privatbankiers AG as joint and several debtors for more than 11 billion euros. The complaint with docket number 2-05 O 440/18 has been effectively served on the defendants. The plaintiff accuses the two banks of having manipulated a property transaction in 2013 and having colluded to his detriment by means of intentional immoral acts. This would have allegedly enabled Deutsche Bank AG to commit fraud in a prior lawsuit that had been brought against Deutsche Bank AG by Hafez Sabet in Stuttgart and therefore led to damages that are now brought by Mr. Sabet before the Frankfurt Regional Court.
Background: The initial court proceedings in Stuttgart
In 2009 Mr. Sabet filed a claim for damages in Stuttgart against Deutsche Bank AG (Deutsche Bank) in connection with the insolvency proceedings opened in 2004 concerning the assets of the company M. Sabet & Sons (Sabet company), which was at that time the world's largest dealer of oriental carpets and operated an engine development institute. The main issue in the lawsuit was the question of whether Deutsche Bank was overcollateralized with Sabet company assets and thus unlawfully brought about insolvency. The lawsuit with a claim amount of around 5.9 billion euros plus statutory default interest was lost in 2015. About 5.6 billion euros of the Stuttgart claim were, according to an expert's report documenting damages, caused by the shutdown of the "Sabet-Motor" engine institute. “This engine, whose success has been proven both in the testing of the institute and in expert reports, was already well-developed at the time of the Sabet company insolvency, which has affected all Sabet family assets, thus preventing the completion of the engine development," explains lawyer Andreas W. Tilp, managing director of the TILP Litigation the billion euro damages. Tilp has previously represented Mr. Sabet in the initial proceedings in Stuttgart.
For the first time, in 2018, Mr. Sabet received documents which provide evidence of the allegations of fraud, and as a result, represented by the renowned Cologne criminal law firm Gercke Wollschläger, brought criminal charges in May of 2018, inter alia against those responsible from Deutsche Bank AG as well as the Hauck & Aufhäuser Privatbankiers AG (Hauck & Aufhäuser), which are being processed by the state prosecutor's office Stuttgart under docket number 145 Js 50442/18. "In our legal opinion, Deutsche Bank only won the then ongoing Stuttgart lawsuit because it committed fraud there, made possible by Hauck & Aufhäuser," says Tilp. "We are confident that we will be able to prove that this fraud was committed before the court, based on the documents that we received in 2018," continues Tilp.
The alleged fraud before the court in Stuttgart
Mr. Sabet substantiates his allegation of fraud before the court with the fact that Deutsche Bank as defendant in the initial Stuttgart lawsuit claimed, against its better knowledge, a low collateral value on two Sabet properties located in Stuttgart Pragsattel (Maybachstraße and Rheinstahlstraße). The value of these plots, however, played a key role in the legal proceedings with regard to the controversial question of overcollateralization. "According to our analysis, there was a clear overcollateralization and Deutsche Bank would have had to release collaterals to Sabet company by the year 2002 at the latest, therefore avoiding its bankruptcy", explains lawyer Tilp. "Instead of releasing collaterals, however, Deutsche Bank terminated the loans for its decades-long client M. Sabet & Sons and filed for bankruptcy."
The Sabet properties on the Pragsattel were to be acquired by TD Trump Deutschland AG in 2001, with the intention of building the "Trump Tower". According to the complaint the final sale failed because Deutsche Bank refused to release the land charge registered in its favor. "In our legal opinion, this refusal was unlawful and led to the bankruptcy of the Sabet company, which is why we have sued on behalf of Mr. Sabet before the Stuttgart Regional and the Higher Regional Court for damages for breach of contract and intentional immoral injury," says Tilp.
For the Higher Regional Court Stuttgart, the important issue in terms of the overcollateralization was the valuation of the Sabet properties on Pragsattel, which were sold as part of the bankruptcy estate during the Stuttgart proceedings. "In 2013 Deutsche Bank hence had a fundamental interest in the fact that these Sabet properties would be sold out of the bankruptcy estate for a value far lower than its actual value," says Tilp.
In August of 2013 the sale of the Pragsattel properties to the project companies Maybach 1-4 GmbH & Co. KG (Maybach 1-4) took place at a price of 6.7 million euros. In its judgement (docket number 9 U 157/13) against Mr. Sabet in May of 2014, the Stuttgart Higher Regional Court stated that this sale price proved a low collateral value of the Pragsattel properties in the bankruptcy as a whole and denied an overcollateralisation of Deutsche Bank.
In just five weeks after the final acquisition of ownership, the properties were resold by Maybach 1-4 for a minimum purchase price of 16 million euros.
"It is our legal conviction that the Pragsattel plots were sold far below their value and therefore dumped in order to fight off the Stuttgart lawsuit of our client Hafez Sabet and damaging the insolvency assets. This dissipation happened, according to our recent findings, with knowledge and intent of the insolvency administrator Steffen Beck, today managing director of Pluta Rechtsanwalts GmbH, as well as of Hauck & Aufhäuser and Deutsche Bank", states Tilp. "According to the documents which we have recently received, Hauck & Aufhäuser had connected with the purchaser Maybach 1-4 by means of a trustee structure for their mutual benefit and also secured the real estate purchase," continues Tilp.