Investor group Little River Victims (LRV) has started proceedings against an Algarve-based golf resort developer after losing $3m of investments in US properties that were sold to them through their advisers.
The group of 35 UK and Ireland-based investors is suing Portuguese Oceânico for breach of contract, after it refused to make payouts or hand back the investments following their expiry.
It is understood that all sales to the LRV group were made through their financial advisers, with at least three advisers known to have been involved so far.
The group had invested in a US-based fractional ownership project at the Little River Golf Resort in 2008, only to be told by the company's chief operating officer a year after maturity in 2011 that the specified properties were not built.
In total, 24 contracts were issued by Oceânico for about £3.6m, 19 of which are represented by LRV.
LRV ended its three-month negotiations with the company after Oceânico refused to accept any redress deal proposed by the group or offer any form of settlement.
A LRV spokesperson said the group believed it had been the victim of deception and or fraud.
A statement said : "It is our firmly held belief, based on [Oceânico's] unwillingness to negotiate a lawful and amicable settlement together with their behaviour over the past two years since our contracts matured, that they, in essence, harvested our funds on the false pretext of a non-existent property development scheme and that, from the outset, they never intended to return said monies let alone the contractually agreed uplift.
"Hence, it is our submission that we are, in essence, victims of a terrible deception/fraud.
"Some of the group are elderly and infirm and they desperately need their monies returned and their contracts honoured."
It added: "To that end, our lawyers are now going to pursue the matter in the Portuguese courts to try to secure justice and end the suffering of the Little River Victims.
"We have instructed them to instigate civil proceedings against the Oceânico Group for breach of contract."
Since the negotiations have stalled, the group has embarked on a public campaign to get their investments refunded, growing its membership along the way.
It has also alerted the Portuguese police and Portuguese financial regulator CMVM, which was "interested in the matter" it said.
Meanwhile, the group spokesperson said, one Algarve lawyer had secured civil court determinations against Oceânico for other investors in Little River properties.
However, the company ignored the court orders asking it to refund the investors, forcing the lawyer to seek enforcement proceedings instead.
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