The €1 Billion Betrayal: UK Investors Caught in Dolphin Property Collapse

For thousands of British and Irish investors, the name Charles Smethurst is now synonymous with financial ruin. Promising lucrative returns and a safer path to retirement, Smethurst’s German-based property empire—Dolphin Capital, later rebranded as German Property Group (GPG)—collapsed in 2020, leaving an estimated 25,000 investors across the globe short of over €1 billion.

Five years later, many victims still feel abandoned. Despite Smethurst’s recent conviction for fraud, only a fraction of the stolen funds have been recovered, and many are asking: “Where did the money go?” For everyday people like David and Janet Middleton from Northern Ireland, the emotional and financial toll has been devastating.

A Promised Dream Turned Nightmare

Launched in 2008 by Smethurst, Dolphin Capital was marketed as a premium investment opportunity focused on restoring historic properties across Germany—castles, villas, breweries, and period buildings transformed into luxury real estate. With slick brochures and promises of double-digit returns, the scheme quickly attracted pensioners, savers, and even financial institutions from the UK, Ireland, France, South Korea, and Singapore.

But in July 2020, Dolphin (then German Property Group) filed for insolvency. The books were empty. Projects promised never materialised. And more than €1 billion in investments vanished.

Behind the elegant facade was a Ponzi-like structure. According to German prosecutors, funds meant for property redevelopment were often used to pay earlier investors or siphoned abroad to secrecy-heavy jurisdictions like the British Virgin Islands and the Cayman Islands.

The Man Behind the Fraud: Charles Smethurst

Smethurst, the British-German property developer behind the scheme, was sentenced in June 2025 to six years and 11 months in prison after a regional court in Hildesheim, northern Germany, found him guilty of “serious fraud.” He admitted four out of 27 charges in a plea bargain that ended the trial early. The damages cited in his conviction amounted to €56 million—but this is just a fraction of the estimated total losses.

Smethurst had served prison time for a previous fraud conviction between 2000 and 2003, a fact not known to many of the investors who trusted him. Some believe his sentence is far too lenient and fear he may be released early on good behaviour—with the possibility of reclaiming hidden funds no one has been able to trace.

The Victims Speak Out

David and Janet Middleton from Northern Ireland invested £220,000—his entire pension lump sum and her inheritance. Their financial adviser, the now-deceased Alastair Hooks, assured them the Dolphin investment was low-risk and allegedly backed by the German government.

Janet recalls, “I said very clearly we couldn’t afford to lose that money, especially in retirement. But we were assured again and again that it was safe.” After the collapse, they never heard from Hooks again. Further investigation revealed he had de-registered from the Financial Conduct Authority (FCA) back in 2012, years before advising them.

Today, the couple struggles financially. David has since battled bowel cancer. They haven’t been on a holiday in years and still drive 20-year-old cars. “Smethurst might be out in a few years. Meanwhile, we’re serving a life sentence in poverty,” Janet says.

€800 Million Still Missing

According to Justus von Buchwaldt of law firm BBL, the insolvency administrator for GPG, only €87 million has been recovered from property sales, with €800 million still unaccounted for.

So far, 20 out of 75 GPG-owned properties have been sold—including Castle Dwasieden, a brewery in Bavaria, and a villa in Brandenburg. Many buildings remain derelict and unsold. Legal issues are entangled, and the process could take years.

Von Buchwaldt admitted that this may only be “the tip of the iceberg,” and that it’s unclear how many individuals were involved in the fraud, or where the bulk of the funds ended up.

The Role of Offshore Accounts

One of the most disturbing revelations from Horizon AM, a French investment firm that lost €60 million in Dolphin, is that a significant portion of funds was moved to offshore jurisdictions like the British Virgin Islands—where banking secrecy laws thwart international investigations.

“These jurisdictions do not cooperate with European authorities,” said Horizon in a statement. “This illustrates a systemic failure in cross-border financial crime enforcement.”

British Investors Left in the Cold

The Guardian spoke to other UK investors who echo similar sentiments. Many are furious, not just with Smethurst, but with the lack of meaningful recovery efforts from UK regulatory bodies.

Alison Moncrieff-Kelly, a musician from Kent and former director of the Rye Arts Festival, lost £80,000 inherited from her mother. She has recovered only half—thanks to the Financial Services Compensation Scheme (FSCS), but the other half went to a claims firm as fees.

“The sentence doesn’t touch the sides,” she said. “The real issue is how poorly regulated financial advice is in the UK. Many of these middlemen were making 20–30% commission, selling a fraud, and they’ve walked away untouched.”

Regulatory Failures and Middlemen

Time and time again, the FCA and SFO have declined to comment on Dolphin/GPG, citing ongoing investigations or lack of jurisdiction. This leaves investors frustrated, especially those who were misled by unlicensed or unscrupulous advisers.

Debbie Kay Randles, a former TSB employee from York, lost £25,000. She paid a claims management company £6,000 to recover her investment—only for them to vanish. She even hired a private investigator to track them down.

“I’m 67 and still working,” she says. “I’ll probably work until I’m 75 now. This has stolen my future.”

The FSCS: A Lifeline for Some

The FSCS has compensated over 1,900 investors and still has 150 active claims relating to Dolphin. Compensation is available when investors have suffered due to unsuitable financial advice or fraud involving FCA-regulated firms.

However, the scheme doesn’t cover all cases. And for many, the complexity of filing a successful claim without legal guidance has proved overwhelming.

What Happens Next?

With property sales still in progress and regulatory bodies under pressure to act, there is some hope for partial compensation. However, many investors will never recover the full extent of their losses. International cooperation, especially with non-EU jurisdictions, remains a major hurdle.

Lawyers at BBL have said they will work with UK agencies including the FCA, FSCS, and SFO, but no concrete results have been delivered to most investors yet.

What Can Investors Do?

Victims of Dolphin/GPG and similar schemes should:

• Gather all documentation and correspondence with advisers, investment firms, and GPG.
   
• Check the FCA register to confirm whether their financial adviser was authorised.
   
• Submit a claim to the FSCS, especially if they were advised by a UK-regulated firm.
   
• Seek legal guidance, particularly for claims involving mis-selling, unauthorised advice, or international assets.
   

If You’ve Lost Money in a Fraud Like Dolphin/GPG — Parachute Law Can Help

At Parachute Law, we understand how emotionally and financially devastating investment fraud can be. Our experienced solicitors help victims of financial mis-selling and property fraud navigate complex claims processes and recover what they’re owed.

We can assist with:

Filing claims through the FSCS
Tracing assets hidden offshore
Holding negligent financial advisers accountable
Coordinating with insolvency administrators and regulators
Group litigation or legal redress options

Reach out today for a confidential consultation.
Email thelegalteam@parachutelaw.co.uk