A German national, Gerhard Werner Martens, appeared in a Torquay court yesterday facing charges following an international banking fraud investigation. Nine others arrested by detectives, including two women, were released on police bail pending further inquiries.
Mr Martens, 37, of Cockington Lane, Torquay, was charged at Torbay magistrates that between 25 July 1994 and 6 September 1995 he dishonestly obtained property to the value of $622,500 from Gertrude Kessenbrock.
The court was told the charge was the first in what is said to be a long inquiry by detectives investigating fraud that may prove the biggest of its kind in Britain.
Mr Martens is charged that he represented that Allgemeine Handels Und Affectenbank a.g. had reserved and nominated funds to the order of Gertrude Kessenbrock to the amount of $US450m (pounds 298m).
Mr Martens faced four further charges of acting as the director in companies contrary to the Company Directors Disqualification Act 1986. The companies were named as Allgemeine Handels Under Affectenbank; Central Bancorp For Commerce and Development; A.S.D. Wirtschafts Und Finanz Treuhandanstalt; and Hannover Estates and Consolidated Investment Company.
The court was told by Stephen Myers, a Serious Fraud Office lawyer, that Mr Martens was the subject of an investigation by Devon & Cornwall Police and the Serious Fraud Office. "The charges concern a lady, Gertrude Kessenbrock, who lives in Germany and was introduced to Martens as someone who could obtain finance for her and people on behalf of whom she worked," he said.
She entered into agreement with three companies registered in Delaware, USA, where, Mr Myers said, it was notoriously convenient to register companies in whatever name is wanted. Mr Martens was asked to secure the amount of $450m and took an advance fee of $622,500. Mrs Kessenbrock was then issued with certificates which added up to $450m. However, when Mrs Kessenbrock tried to negotiate those certificates with banks in London, she discovered the money could not be raised against them.
Mr Myers said the banks used by Mr Martens were discovered to be postal boxes. "Police visited Martens' address to take possession of a considerable quantity of documents. At least three weeks will be needed simply to make a record of the documents.
"While the police were searching the premises in Torquay, two German visitors arrived. One said he wanted to deposit 60,000 Deutschmarks. Another said he was owed a substantial sum. He was agitated because he had been seeking the money for a year."
Police are expecting further customers to arrive at the raided premises today. Mr Myers said that Mr Martens had bank accounts and property abroad and police wanted to find where they were and restrain use of any funds.
Mr Martens was remanded in custody until 14 September following the 35-minute hearing, after magistrates refused bail.
Outside court, a Devon and Cornwall fraud squad officer said a further four arrests were imminent: "All those arrested have been associates of Martens who worked for his companies at various times."
A police spokesman added: "What we are finding is that the inquiries are spreading as we investigate more. The publicity following the raid has worked nicely and more people are coming forward with information." The inquiry, the biggest fraud investigation since the collapse of BCCI, has now been extended to Canada.
"This inquiry started low-key and at a local level, but as I speak it is getting bigger ... Until we gather the full facts we can't say how widespread it is. But it may well run into billions of pounds.
"We are now down to the hard work of sorting it all out. There is a lot of digging to do. Officers seized vast quantities of documentation from some of the 14 properties raided. A storeroom at Torquay police station has been filled and overflowed into the corridor," he said.
Two key raids were at the old TSB bank building in Fleet Street and at a detached Victorian villa at 421 Babbacombe Road.
The future is still unclear for businesses operating in the former TSB building, refurbished in February at a cost of pounds 250,000 as a suite of seven serviced executive offices with boardroom. This was run as Central Executive Offices.
A spokeswoman for the company said it was hoping to find out whether it could continue to operate. She has been interviewed by police and released pending further inquiries.Reuse content