News1: Spouses who bought apartments in Austria are suing the developer Motti Gruzman
E. and his wife sued for NIS 6 million on the grounds that they did not receive the three vacation apartments they purchased and attribute to Gruzman a Ponzi scheme
The dentist and his wife are demanding 6 million shekels from the real estate venture Motti Gruzman, alleging that they were deceived in the purchase of three holiday apartments in a town in Austria. The claim was submitted (11/30/22) to the District Court in Tel Aviv. The prosecutors say that in February 2017 they signed an agreement with the Austrian company TCI Hotels, which is owned and managed by Gruzman, to purchase three holiday apartments intended for rent in an apartment hotel near the ski town of Zell am See in the province of Salzburg. According to them, this company is conducting a mix of assets with the Excelion Development company, which owns a project that is also owned and managed by Gruzman and presents itself as an entrepreneur for the improvement and sale of real estate in Europe. According to the plaintiffs, the apartments were supposed to be delivered to them by the end of 2017, but have not been delivered to date. Gruzman's representations as to the reasons that supposedly prevented him from promoting the project gradually evolved over the years, and among other things were later revealed to be false and some of them even tainted with real fraud. According to them, funds that were associated with the project were diverted to other projects of Gruzman's Austrian companies and this is a Ponzi fraud*. According to them, Gruzman continues to market the project through another company to other investors. The lawsuit was filed through attorney Roi Rabinowitz and a statement of defense has not yet been filed.
*A Ponzi fraud is a type of financial scheme where the organizer convinces people to invest money with promises of high and quick returns. In reality, the profits received by the initial investors come from the funds of new investors, not from actual returns generated by the investment. In other words, the money from those who join later is used to pay those who have already invested.
At first, as long as new investors keep joining, it may seem like the investment is successful because people do receive payments. However, once there aren’t enough new investors to pay the earlier ones, the scheme collapses, and the last people to invest do not get their money back.
The scheme is named after Charles Ponzi, who ran such a scam in the early 20th century in the United States and was eventually caught.
