Hreit CEO released from custody after paying 7 million zloty bail; losses reach one billion
Michał S., head of Hreit Capital Group, left pre-trial custody after paying 7 million zloty in property security. The prosecutor's office has pressed charges against eight additional people; total losses are estimated at 1 billion zloty.
Michał S. released from custody as prosecutor expands investigation into Hreit Group
Michał S., president of Hreit Capital Group, left pre-trial custody last week, according to Dziennik Gazeta Prawna. This occurred after a property security deposit of 7 million zloty was paid to the account of the District Prosecutor's Office in Łódź. Simultaneously, eight additional people were charged in the same investigation, and losses estimated by the prosecutor's office have already reached 1 billion zloty.
Prosecutor Paweł Jasiak, spokesman for the District Prosecutor's Office in Łódź, told the PAP news agency on Wednesday that the investigating prosecutor approved replacing pre-trial detention with property security. The basis for this decision was a recent ruling by the Court of Appeal in Łódź, which upheld the detention but simultaneously gave the suspect the possibility of using an alternative preventive measure.
— The 7 million zloty security amount indicated by the court was paid to the District Prosecutor's Office in Łódź account several days ago. Its acceptance was preceded by a financial investigation intended to establish the source of the funds paid. We established that these funds do not originate directly or indirectly from a criminal offence, and accordingly we accepted the security and the suspect left pre-trial custody on Tuesday — Jasiak said.
However, Michał S. is subject to strict restrictions whilst at liberty. He is required to report to a police station five times per week and is prohibited from contacting any persons associated with the capital group which he headed.
Eight new charges, over a dozen suspects in total
In recent days, the prosecutor has pressed charges against eight additional people connected with the group's activities. Among them were: a person responsible for recruiting and training financial intermediaries selling stakes in special-purpose companies, two intermediaries, three construction site managers, and a woman on whose instructions entries were made in construction site journals suggesting that investments were proceeding without disruptions — despite the fact that they had already been suspended.
A 34-year-old woman also heard charges of fraud related to fictitious flat assignment agreements, after she allegedly signed contracts with earlier dates — before their actual sale to victims.
— Such actions determined the application of an unfavourable interpretation of the so-called developer act and deprived flat buyers of protection for the money they had paid through the Developer Fund — Jasiak explained.
Besides Michał S., the corporate director of the company, the head of the legal team, and a residential sales adviser were previously charged in the investigation. In total, over a dozen people are suspects.
Threatened sentences: up to 25 years imprisonment
Prosecutor Jasiak outlined the range of penalties threatened to the suspects. Falsification of documents is punishable by up to 5 years' imprisonment, participation in an organised criminal group — up to 8 years. The main charges — fraud against property of substantial value, committed with premeditation as part of an organised group — are punishable by up to 25 years' imprisonment. Heading such a group alone is punishable by up to 10 years.
The new suspects have been placed under police supervision, property security, and travel bans.
According to the prosecutor's office, the developers misled buyers regarding the possibility of fulfilling contracts within the agreed timeframe. Customers who invested money did not receive the promised flats.
Nationwide investigation conducted from Łódź
Proceedings concerning Hreit Capital Group cover the entire country. By decision of the National Prosecutor's Office, the District Prosecutor's Office in Łódź has been designated as competent to conduct all matters related to HRE Investment group and the persons managing it.
Prosecutor Jasiak noted that both the estimated loss amounts and the number of victims may change, as the prosecutor's office is planning further steps in this investigation.
Source: Dziennik Gazeta Prawna