Claude Muller Real Estate Megalomania: What Happens When the Sharks Are Above the Law

While reading an article on Alexis Muller Pellerin, described as a rising star of the real estate world, I have also discovered his grandfather, Claude Muller, retired property developer in Cannes. I managed to find the book published by Hélène Constanty in 2015 “Razzia sur la Riviera” (Raid on the French Riviera). When you mention the real estate industry on the Côte d’Azur, you immediately think of collusion with local elected officials, bribes, corruption, yachts and stories of suitcases filled with bills. In this book, the description of this universe is worse than you could ever imagine!

There are several definitions for offenders. Offenders who flout the law in need of money, assets, etc., and offenders who flout the law for more and more profit. The wealthiest sitting on their fortune, searching by all means – lawful or not, to accumulate more and more. Petty crimes which directly result from megalomaniac desires of men in their wild silk three-piece suits. The golden organized crime of various businesses, sharing a common practice: tax evasion.

The case of Claude Muller ideally depicts the profiles of the ravenous meat-heating shark. Indeed, tax evasion and property fraud punctuated the career path of this real estate star.

Commissions paid on accounts in Switzerland and Lichtenstein

As a real estate developer and broker, Claude Muller prospered in the 1980s. He got along with local public figures and maintained influential relations in Cannes and Antibes. He was known for his imposing bearing, had the gift of the gab and maintained an exceptional network. Three useful qualities that enabled him to attract wealthy customers, especially from the Gulf. Claude Muller was a repatriated “pied-noir” from Algeria, fluent in Arabic.

While conducting businesses with his wealthy clients, he took the opportunity to initiate a tax evasion scheme. This scheme was tried and tested but efficient. Claude Muller implemented an invoicing system to the benefit of the Arabic princes he worked for – the main part of his customers, while collecting a real fortune for his services. His fraud system was the following: he worked with a Geneva attorney Baudouin Dunand, who founded customized real estate companies (SCI) in order to receive money of the financial transactions of the sold villas. These SCI were always established in countries known for applying confidentiality policies in terms of client identity, such as Lichtenstein and Switzerland. The wealthy investors transferred the funds on the SCI founded by attorney Baudouin Dunand, and once all providers and suppliers, who had worked on the construction site, were paid, Dunand transferred the remaining sums on a bank account held by Claude Muller. Then, the sums received by the real estate developer were enormous. Thanks to the SCI which served as a support structure for transferring money of each real estate transaction, Muller accumulated a real fortune. As for the Geneva attorney who assisted Claude Muller in these tax frauds, he is known to be the administrator of a number of offshore companies – essential parts of a broader tax evasion scheme.

Incarcerated in Grasse for fraud

In addition to the tax fraud, Claude Muller was also linked to other swindles such as town planning, privileges and real estate frauds, while being clever enough not to face the legal consequences. In 1982, he bought the sumptuous property called “Le Grand Jardin” on the island of Sainte-Marguerite. Spread on two hectares and composed of two 17th century mansions, it is the only private property of the island. With a very skillful trick, the property was exempt of the French fortune tax; Claude Miller claimed it had been bought for professional purpose. Indeed, indicted by the civil, criminal and administrative courts, he explained he bought the property for his business of real estate broker, with the intention to resell it. And during the 25 years he owned the property, the mansion was indeed for sale, but at price three times higher than its actual value. A clear message for potential buyers: “Move along, there is nothing to see here.”

Claude Muller was also involved in several fraud and swindles in Cannes and Antibes. The real estate developer did not always manage to flee from justice.

Indeed, on December 8, 1992, he was indicted for alleged forgery and fraud. Once again with his partner in crime Baudouin Dunand, he swindled the head of the government of Qatar of 13 million francs on the construction price of his property. Claude Muller was incarcerated at the Grasse jail, where he stayed three months before being freed with judicial review.

My research led to the undesirable Russian businessman Arcadi Gaydamak, involved in arms trafficking of the Angolagate and Clearstream cases, and subpoenaed in fraud cases linked to Claude Muller.

The passion of real estate seems to be handed over to the next generation of the Muller Family because Alexis Muller Pellerin, Claude Muller’s grandson, has also become a real estate developer. The young man aspires to big projects and especially when it comes to investment. We hope the name of this future major player of the real estate market will not be linked to sordid stories of money and tax evasion, and hope greed will not corrupt his intentions, as it used to be with his grandfather.

Real Estate Law 101

Real Estate 101: The Statute of Frauds is a really old law that originated in England in 1677. It requires that certain transactions must be in writing, signed by the party to be charged, basically the person being sued. Real estate purchases are one of the transactions covered by the statute of frauds. In real estate transactions, the SOF further requires that the writing contain a description of the property, a description of the parties, the price, and any agreed to conditions of price or payment.

There are a few exceptions to this rule. Part Performance is when someone has paid all or part of the purchase price, taken possession, and/or made substantial improvements to the land. For example, if Bob made an oral contract with Sue to buy property, paid her a down payment of 25% of the agreed purchase price, and built a house on the land, then even though the SOF would invalidate the oral contract, Sue could argue that Bob’s partial performance proves the existence of the contract.

In addition to Part Performance, Equitable estoppel and Promissory estoppel may be used to prove an oral contract for the sale of land. Equitable estoppel is based upon an act or a representation. Promissory estoppel is based upon a promise.

Once a contract has been signed, a purchaser becomes an equitable owner of title at the time of the execution of a binding contract. Under the common law, the risk of loss is on the buyer after signing the contract for sale. In other words, if the house burns down between the signing of the contract and the closing, the risk is on the buyer. The buyer will still have to close the deal.

There are some states that have a different rule. States that have enacted the Uniform Vendor and Purchase Risk Act hold that the risk of loss is placed on the seller unless legal title or possession of the property has passed. There are a minority of states have passed this statute. So, in a majority of states, the risk of loss is on the buyer.

Surprisingly, its quite common for people to make oral contracts to sell parts of their property, not realizing it must be in writing. Later, when the buyer fails to pay, the seller is at a loss at how to proceed. An attorney familiar with the nuances of real estate law can help with this.