Euan Armstrong, 73, who lives in Marbella, was initially lured in by the false hope he could reduce inheritance tax for his two daughters – who would eventually be liable to pay Spain’s top rate of 34 per cent – and enjoy a salary for life.
But Armstrong, originally from Scotland, now faces losing his home.
“The whole case is a mess of illegal contracts, bad investment and a loss of client’s money in spite of Danske Banks huge profits,” said Armstrong.
“We must stop these banks stealing our money.”
Armstrong claims he was convinced by three separate Danske Bank employees in the Mijas branch that taking out a one million euro mortgage loan against his home would reduce his daughters’ inheritance tax liability by half.
Within the plan Danske Bank was supposed to use 850,000 euros to invest in bonds, Swiss Francs and Euros with the ‘profits’ being used to pay off the mortgage, while a 150,000 euro lump sum would be given to Armstrong as equity release.
But Armstrong added: “After the first year I realised that they had lost me 18,000 euros. For the next five years Danske Bank continued to lose money and in 2009 I was told by an account manager for Danske Bank in Luxembourg that I should sell my property and pay the bank back the 650,000 euros they had lost.
“I refused, so in November 2010 Danske Bank issued a foreclosure on my house and also a repossession order through the local court due to take place last month.”
Fortunately for Armstrong, his lawyer Antonio Flores from the Marbella based firm Lawbird – who is also filing eight separate complaints against various Nordic banks on behalf of expats who bought into similar plans – stepped in and obtained a court ruling suspending the repossession.
According to Flores it is actually illegal to indebt yourself in order to reduce your inheritance tax liability, but there are likely hundreds of people who have fallen victim to this scheme.
“This type of product, peddled by unauthorised agents under the auspices of supposedly reputable banks to mostly British pensioners, is becoming more and more common and should be avoided at all costs,” he explained.
And Armstrong added: “The Judge in Coin Court has accepted that the charges of criminal intent are correct, in spite of their lawyers saying it was not correct as someone else had tried a similar case and lost and had to pay 500.000 euros to Danske Bank, who had lost their money in the same way.”
Armstrong has now been forced to rent out his home and move in with his daughter and resume his former job as a yacht captain in order to raise legal fees.
A spokesman for Danske Bank said: “According to the law we cannot comment on individual customer cases nor questions related to individual customer cases. We have no comment.”
The investigation continues.