FRANKFURT/BERLIN (dpa-AFX) - The scandal surrounding Luxembourg-based real estate group Adler Group is drawing wider circles. The Frankfurt public prosecutor's office and the Federal Criminal Police Office searched offices of subsidiary Adler Real Estate on Wednesday on suspicion of false accounting, market manipulation and breach of trust. A spokesman for Adler Group confirmed the raid. The investigation was carried out "against the background of business transactions at Adler Real Estate AG from the 2019 financial year, which extend into 2020." The group is cooperating with the authorities, he added.

The Frankfurt public prosecutor's office said it was searching 21 properties - including business premises, apartments and a law firm - in Berlin, Düsseldorf, Koln and Erftstadt, as well as in Austria, the Netherlands, Portugal, Monaco, Luxembourg and the UK, together with the BKA. Around 175 officials were involved.

The accused are German, Austrian and English nationals between the ages of 38 and 66, the authorities said. They are accused of having "misrepresented or aided and abetted the misrepresentation of the company's balance sheets" in their capacity as (former) board members of the real estate group from 2018 to 2020. In addition, they are alleged to have concluded consultancy agreements in the name of the company and to have instructed payments for these, for which, according to the current state of the investigation, there are no quid pro quos. As a result, the company has suffered a loss of assets.

In addition, it is suspected that the defendants made offers of convenience or fictitious transactions in order to drive up prices for projects and achieve a favorable "loan to value" (LTV). LTV stands for the ratio of the loan amount to the market or fair value of a property. "This sent incorrect signals to the capital market, as LTV is a key influencing factor for the group's shareholders and bondholders in making investment decisions, as well as the market price."

The searches are a setback for the troubled Adler Group, which suffered a loss of nearly 1.7 billion euros in 2022. Adler has been repeatedly exposed to accusations regarding the valuation of real estate projects. Shares had crashed after KPMG auditors refused to certify the 2021 financial statements. It was only in April that a British court gave the real estate group the green light to restructure. Adler stressed that the searches were not directed against members of the Adler Group's board of directors./als/DP/stk