Two Years For Real Estate Fraud

20.11.2012
Words by Paul Fontaine
A well-known Icelandic businessman was sentenced to two years in prison yesterday for real estate fraud.

Aron Karlsson and his father, Karl Steingrímsson, have been major players in Iceland's real estate market for a number of years. The case in question concerns property they owned on Skúlagata 51.

The property was originally owned by Vindasúlna ehf, Vísir reports, a company Aron and Karl owned. On December 2, 2009, an offer was made to buy the property. Nine days later, ownership of the company was moved to another company, called 2007 ehf. Three days later, the same party who made the initial bid on the property made another offer, to buy it for 575 million ISK. On December 16, the banks which had mortgages on the property, Glitnir and Íslandsbanki, began to process the sale. However, a day later, the property owners then ended up selling the property to the Chinese embassy for 870 million ISK.

The banks believed the activity was suspicious, and reported the matter to the police. Investigations were launched, culminating in the search of three locations on January 9, 2010, among them the offices of Aron and Karl. Evidence showed that the two had engaged in fraud and market manipulation in order to give the false impression of increasing demand for the property.

In addition to the two-year prison sentence, Karl will have to pay both Glitnir and Íslandsbanki a total of 160 million ISK.

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