A Hong Kong judge on Monday ruled against Deutsche Bank AG [corporate website] on a motion to dismiss a developer's rental fraud lawsuit. Judge A.T. Reyes for the Court of First Instance of the High Court [official website] held [Bloomberg report] that the claims brought by the developer Tin Lik should be resolved at trial. Lik claims that during his sale of the Gateway Plaza in Beijing to Deutsche Bank's RREEF China Commercial Trust in 2007, he was forced to pay a shortfall of HK $279 million (US $36 million) in rental fraud. Lik is demanding the German bank pay him a total of HK $289.4 million, which includes the shortfall he had to cover five years ago. Lik also alleged that the trust used higher figures than actual rents collected from the property during the negotiations. The German bank denied the allegations and claimed that Lik's accusations are spurious. The trial is expected to begin on June 3 of next year.
A similar fraud claim was brought against the Deutsche Bank in May 2011. US Attorney Preet Bharara filed a lawsuit [JURIST report] against the bank accusing it to have engaged in mortgage fraud. The US was seeking more than $1 billion in damages including punitive damages and fines in the US District Court for the Southern District of New York [official website]. The complaint alleged that the bank had lied to the Federal Housing Administration (FHA) [official website] during the period from 1999 to 2009 to obtain and maintain the Direct Endorsement Lender (DEL) status of its subsidiary, MortgageIT. The DEL program enables private lenders to give out mortgages that are qualified for FHA insurance. The MortgageIT however had allegedly ignored the eligibility requirements during the ten-year period.