It promised to make them a fortune in prime German real estate. Yet, on Monday, only a few dozen investors in Brendan Investments Pan European Property (BIPEP) Plc logged in to a virtual annual general meeting of a property firm languishing in liquidation.

Fronted by investment advisor and former television presenter Eddie Hobbs, some 800 people had piled into Brendan after a rambunctious roadshow in 2007. In total, it raised €12.7 million from backers to invest in property in Europe, supposedly helping them escape Ireland’s low yields as the Celtic Tiger reached its final period. 

The Currency has received from investors in BIPEP a copy of a presentation given at the AGM by liquidator Aidan Garcia of accountancy firm Sabios, plus an audio recording of the event. Combined, they reveal what has happened since the company went into liquidation, while also offering an indication of what will happen next.

Garcia began the meeting by reiterating to investors that they had lost everything. “There is not going to be any return of funds to any creditor,” he said. “There are just not sufficient assets. I just can’t magic funds out of fresh air.”

The liquidator, appointed in 2017, said his work had been delayed by Covid-19 but he was now nearing the end of the liquidation. He gave investors an overview of why, in his view they had lost their money.

According to Garcia, money from investors was initially put into commercial properties in the German cities of Dusseldorf and Frankfurt. But after a key tenant went bust, a decision was taken by BIPEP to sell out of Germany crystallising a loss of €5 million. Garcia said he had some minor questions about this period but nothing of significance. 

Garcia said a decision was then taken by the company to invest in risky residential properties in Detroit with the plan being that they would be refurbished and let. It is this period, he said, that he is investigating the most, before adding he was “unhappy” with what occurred.

In his presentation slides, read out to investors, Garcia said: “There was $7m invested in Detroit between 2012 (€5.5m resale of Dusseldorf & development project) -2014 (€1.5m resale of Frankfurt).”

He said more than 400 properties were purchased and a company called Metro Property Group (MPG) was hired to refurbish the properties. “The cost was approx. $8,500 to buy and $25-30,000 to refurbish. MPG were taking funds for refurbishment but weren’t doing the work,” Garcia said. “MPG are alleged to have defrauded many investors and it was stated to me by the Directors that the company was ‘dead’”.

His slides conclude: “MPG was initially selling 30-40 properties a month for about 6 months. The directors stated that six months were taken to get the best 150-200 properties out in order to sell them at $3-5,000 per property and $20,000 for the refurbished property. The remainder (circa 200) were left with MPG.”

This left him with just one run down property to sell at 16833 St Mary’s Street in Detroit. 

Garcia said this last run-down property was valued at just $7,000 and he had decided not to sell it as doing so would incur charges that would exceed any value that might be returned to investors. 

The liquidation

Garcia then turned to his work as liquidator of the business. “The Company’s books and records are as I have highlighted, poor,” he said. “Given this was a PLC and an entity acting, in effect as the custodian for investor funds, in my professional opinion, the record keeping falls way below what could have been expected.” 

He added: “This is particularly the case when one considers that the promoters of the company contained amongst them; a Chartered Accountant and an ex-Revenue official and an authorised financial advisor.

“The piecing together of the books and records has been a time consuming and arduous task – to the extent that this has been possible. I certainly believe there is an accountability issue in relation to the directors of the Company. The failure to keep proper books and records is one of these issues.”

In his opinion, Garcia said that if BIPEP had been regulated by the Central Bank it would not have been managed in the way it was “given the threat of sanctions”.

He added in his presentation: “I am unhappy with the audit work of the Company, and have threatened legal action against PWC (the Company’s auditors).

“The lack of what I, as Liquidator, say is commercial acumen, in relation to the investment in Detroit is self-evident from the paperwork I have been provided with. I have seen nothing in terms of cash flow forecasts or budgeting that would allow me to form the view that the Company’s solvency (or otherwise) was being monitored adequately.

“I also believe that there has been a lack of internal controls in relation to the expenditure of Company assets. I am aware that the directors have engaged external advisors to represent them, given their awareness of my unhappiness in relation to certain matters.

“I do not believe that sufficient investor due diligence took place in relation to the Investments made in Detroit. I do not believe that ongoing monitoring of financial viability took place and certainly not to the degree one could expect from individuals who were running a PLC.”

16833 St Marys Street: The last house in the Detroit portfolio.

Garcia told investors he had not to date been given “adequate explanation” for a number of events that took place within the company or its wholly owned subsidiaries.

“One such event pertains to the funds paid out to Detroit Property LLC. From the work I have been able to undertake and/or representations made to me it appears that these amounts $1,196,578 pertain to property refurbishments,” he said. “I am however unable to reconcile this with the premise that Metro Property were the entity engaged to refurbish and rent property on behalf of the Company.

“A further entity, Atlas Construction Services LLC, also received $3,949,145. I have requested, inter alia, a detailed analysis of the payments made to include: property addresses, dates of payments and the summary of work done. None of these queries have been responded to properly,” he said.

Tunisia and GDPR

Vincent Regan is a founding director of BIPEP and Garcia said he had questions about payments made to a Tunisian company called KEL Consulting which is beneficially owned by Regan.  

“Payments in the amount of $186,500 were paid to this entity, it taking some time before Mr Regan was revealed as the beneficial entity behind same,” Garcia said. “Mr Regan’s position is that KEL was engaged to find euro buyers for properties but that he cannot provide details of same due to GDPR.

“I do not accept this position as GDPR relates to the EU protection of Data and KEL is a Tunisian Company (Non EU) and was engaged by an American company – thus not bound by GDPR,” Garcia told the AGM.

“Further discrepancies exist in relation to Boxster LLC. This entity appears to be owed money but is not present on the Company’s statement of affairs – to date this has not been adequately explained.

“I am not in agreement with the level of fees paid to BIPM (Brendan Investment Property Management) when considered within the context of the services purported to have provided to the Brendan Group. Given the Metro Group was engaged to source, renovate and rent property and then KEL was paid for sourcing purchasers, I am unable to ascertain what services were provided to Brendan by BIPM and the arms length value of same,” the liquidator said. 

“I also note this company has been placed into insolvent liquidation and one is left querying the recovery route of same. I am however also concerned at the rationale behind the payments to BIPM, given BIPM was an unsecured creditor and appears to have been discharged in preference to shareholders loan notes.”

Garcia said he was working with an unnamed Irish based entity with operations in the US in an attempt to realise assets in the US for creditors.

“Recently a decision was taken relating to foreclosed property which states that any proceeds over the foreclosure amount have to be returned,” he said. “I am considering providing details of Brendan’s property in the US to this entity. I cannot however guarantee that this will produce any funds. It may well however also identify the current owners of the Detroit properties which would then circumnavigate Mr Regan’s GDPR concerns. This information is also likely to validate or otherwise much of the representations made to me by the directors in relation to the events in the Company.”

Garcia said he had tried with a US law firm to take control of a company called Artesian Equities. He said he had questions about the role of this company in relation to BIPEP.

“However, this has proved difficult to date,” he said.

Recommendations to the ODCE

In the final slide of his presentation, liquidator Garcia told investors in Brendan: “The investigation has been closed out and I will, by the end of May make my recommendations to the ODCE against the Company’s directors to the Company’s creditors. I believe it unlikely that the ODCE will relieve me of my statutory duty to bring Proceedings against the company’s directors.

“I will also close out a remaining issue in relation to whether the promoters of the Company actually paid for their shares and made the corresponding loan note investments (as all other investors did),” he added. “There is correspondence on file from legal advisors engaged by the Company highlighting that at a point in time this did not appear to be the case. I have been unable to ascertain whether this position was subsequently dealt with. Whilst I have not made any determination in relation to this matter should it transpire that these monies have not been paid across then I will consider issuing demands for such monies to be paid.”

In a statement to The Currency, Hobbs outlined his own position relating to share purchases: “As stated many times, I invested €600,000 and lost it fully in the 2017 liquidation as one of the largest shareholders.”

Garcia then asked for questions from investors. One of the questions he was asked about related to which company directors he was looking at in relation to any potential recommendations to the ODCE.

“At this moment in time there are two,” he replied. “Vincent Regan and Hugh O’Neill are the two directors. And indeed, I am only able to file a report to the ODCE in respect of directors who were directors within 12 months of the company going into liquidation.” 

“So, while I am aware that there were former directors, they were not directors within 12 months of the company going into liquidation. I do expect them to appear quite substantially in respect of any affidavit that might be filed by me in the High Court.”


In his presentation, Garcia said other former directors of BIPEP were Pat Owens, Dermot Flanagan and Eddie Hobbs but none of these were named by him in relation to his near completed ODCE report. All directors of Brendan have denied all wrongdoing.  

*****

Brendan has been an utter disaster for its 800 investors who have lost all their money. Investors were told their money was going to Detroit in November 2012. Garcia told the AGM that some investors would have liked their money returned after Germany, but this didn’t happen.

He said: “There wasn’t anything in the prospectus preventing (BIPEP) investing outside the EU. That doesn’t give the directors carte blanche. I am still very unhappy that the company took the decision to invest in Detroit.” 

Former directors Vincent Regan and Hugh O’Neill have not commented publicly on what occurred. Both men have denied any wrongdoing, as have all former directors.

Eddie Hobbs was an initial promotor of Brendan and a non-executive director of the company until March 2015. He is a financial advisor and the author of a new book The First Heresy. He appeared on RTÉ recently to discuss the economy saying: “It’s quite clear from the Sinn Féin manifesto that we are going to eventually destroy the engine of the economic growth that we’ve got.” Hobbs told The Sunday Independent recently that he was traumatised by what occurred to Brendan “to the level of PTSD.”

The Currency submitted a number of questions to Hobbs to which he replied in detail.

Statement from Eddie Hobbs

“First and foremost I want to make it crystal clear that I’m not a Director of BIPEP and thus I am not a party to the liquidators likely proceedings. I’m frustrated by a process whereby I’m expected to comment on matters in which I’m an outside observer but that may stray into disputes of fact and opinion between parties and that is likely to come before the courts.  It is inappropriate for me to comment, except upon what is already on the public record.

 “My position is unchanged from here; https://eddiehobbs.com/bipep-in-liquidation/ dated December 11th 2017 where you will find the answers to all of your questions.

“I resigned 7 years ago in quarter one 2015 from two Non-Executive roles for the reasons I gave at the time, this included from BIPEP and a wind technology company, Airsynergy and which I explained at the BIPEP AGM of 2015.  

“I’m not possessed of time travel to see three years into the future but, I am possessed of the 2014 Audited Accounts which show the position of the business concurrent with my standing down, reporting net assets of c.€5.5 million or 44 per cent of opening equity 2007 and which included a cash pot of €1.6 million.

“As stated many times, I invested €600,000 and lost it fully in the 2017 liquidation as one of the largest shareholders.

“BIPEP Directors fees flowed into the operational costs of BIPM ltd from which I resigned as a Non-Executive Director eight years ago, in Q3 2014. I was not a Director of any BIPEP subsidiary in Europe or the USA or anywhere else. My income, finances and Revenue returns are subject to annual independent audit and show no receipt of salaries, fees and expenses in response to the specific question you raised about these.

“The disbursement of 1 per cent annual fees by BIPEP to the asset manager BIPM was in keeping with the Prospectus and subject to satisfactory annual comment by the Auditors throughout my tenure.

“As I recall it, against the backdrop of the severe bank finance shortage, the unfolding Eurozone crisis and the sovereign bailouts, a review of the strategic direction of the company was held and led by the Executive Directors at the AGMs of 2011 and 2012, this included their due diligence undertaken as the BIPEP property professionals outlined in the Prospectus pages 9 and 17.

“I agreed to get involved as a promoter originally provided (a) the vehicle became the first investment vehicle to be subject to the EU Prospectus Directive which took the Prospectus over 1.5yrs to get through IFSRA [today the Financial Regulator] line by line, (b) that it would not be an opaque product wrapper but a Plc that would be subject to full upfront disclosures on risks and (c) annually it would be subject to the rigours of audit.

“The outcome of my conditions is the Prospectus, Risks pages 6-11, Senior Management Risks 9 & 19, other countries 17 etc. The initiative was to open up German commercial property to those to whom it was closed. I didn’t have a time machine then either and even though I’d warned about excesses, bank collapses and gold in LOOT my 2006 book, I did not foresee the contagion that would transmit through the wiring of the global systems after the Lehmann supernova in Q4 2008 and that threatened the survival of the global financial system itself.

“I await the outcome of due process to come where the relevant facts, grounded in sworn evidence, can be resolved and until then further comment would be inappropriate.”

Further reading:

A disaster in Detroit, a trip to Tunisia: why Brendan Investment’s final voyage has still some way to travel