Iceland’s FL Group Might Have Part in US Fraud Skip to content

Iceland’s FL Group Might Have Part in US Fraud

Icelandic investment company FL Group’s investment in four real estate development projects in the US in May 2007 is believed to be part of a fraud case initiated by the American company Bayrock LLC.

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Photo by Páll Stefánsson.

In FL Group’s announcement to the stock exchange on May 22, 2007, chairman of Bayrock LLC Tevfik Arif is quoted as saying that the executives of Bayrock LLC are excited to work with FL Group, Morgunbladid reports.

Arif was arrested in Turkey two weeks ago accused of having participated in the organization of international prostitution and human trafficking. Arif has maintained his innocence during the interrogation related to this case.

A former employee of Bayrock LLC claims, in a charge against the company’s executives, that at least half of FL Group’s USD 50 million (ISK 6 billion, EUR 36 million) investment in the company was used for the personal interests of its executives.

Moreover, it is stated that assets worth USD 140 million (ISK 16 billion, EUR 99 million) disappeared from the balance sheet of the companies in which FL Group invested and was deposited into the mother company’s accounts.

Smaller shareholders in Bayrock LLC and claimants are said to have been cheated by this conduct.

FL Group’s USD 50 million payment was allegedly registered as salaries and FL Group was not registered as owner of the projects towards which the investment was directed—the plaintiff’s lawyers believe that fact indicates that FL Group’s involvement was dubious.

Two of the projects in which FL Group invested involved building two luxury hotels in New York and Fort Lauderdale. Tycoon Donald Trump is said to have agreed to lend his name to these hotels and take care of their operation. However, the responsibility for these hotels is completely in the hands of Bayrock LLC.

When the Icelandic media reported on FL Group’s investment in 2007, FL Group’s employees were quoted saying that Bayrock LLC had initiated the collaboration.

Click here to read more about FL Group.

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