Police are raiding offices of Adler Group SA and homes of several individuals suspected of engaging in false accounting, breach of trust and market manipulation, in a seven-country search that could plunge the troubled landlord deeper into crisis.
The action by Frankfurt prosecutors and federal criminal police Wednesday targets seven individuals including former board members of Adler Real Estate, according to the prosecutors' office. The raids involve 175 officers at 21 buildings, including a law firm, in Berlin and the German state of North Rhine-Westphalia, as well as in Austria, the Netherlands, Portugal, Monaco, Luxembourg and the U.K.
Adler Group, which owns Adler Real Estate, confirmed the raids at its offices in Luxembourg and Berlin, adding it is cooperating with authorities.
The individuals targeted are German, Austrian and U.K. nationals between 38 and 66 years of age, who are suspected of having manipulated the accounts of Adler Real Estate from 2018 to 2020, prosecutors said. They allegedly hired and paid consultants in the name of the company who never performed any real services. They're also suspected of orchestrating sham transactions in order to drive up prices for real estate projects and improve the loan-to-value ratio of the company, prosecutors said.
Adler has been in crisis since short-seller Fraser Perring published a damning report on the company in October 2021 accusing it of fraud, and Bloomberg reported that a whistleblower had raised concerns about the role of real estate tycoon Cevdet Caner. The raids come about a year after prosecutors in Frankfurt opened an investigation into Adler that centered on the 2019 sale of a property in Dusseldorf-Gerresheim to a firm controlled by Caner's brother-in-law.
Adler's shares have plunged 98% over the past two years as it struggled to refute the allegations and its auditor resigned. The company is now trying to sell off assets in an orderly fashion after creditors agreed to a restructuring of its debt pile of more than €6 billion ($6.6 billion).
Perring argued that Caner and some of his associates had used Adler to enrich themselves to the detriment of bondholders and shareholders. This was done, he said, by selling assets to undisclosed related parties and taking undisclosed fees out of the company.
Caner didn't respond to phone calls seeking comment.
Regulator BaFin investigated the Gerresheim deal and found that the price tag overvalued the portfolio by as much as €233 million. The transaction, which was eventually reversed, was also cited by Perring as illustrative of how a small number of investors had used agreements with Adler to enrich themselves.
— With assistance from Nicholas Comfort and Luca Casiraghi
