German businessman acquitted of fraud and misappropriation charges after complaint is withdrawn

'Victim' had entered into a €75,000 business deal with the accused, involving gold coins and gold granules

The criminal complaint against the accused had been withdrawn after the accused settled the amount due
The criminal complaint against the accused had been withdrawn after the accused settled the amount due

A court has acquitted a German businessman, accused of misappropriation and fraud in 2015, in view of the fact that the criminal complaint against him had been withdrawn after the accused settled the amount due.

Arne Wolfgang Schmidt, who runs a travel agency in Malta, had protested his innocence when he was arraigned by Police Inspectors Matthew Vella and Christabel Chetcuti on fraud and misappropriation charges, insisting that the supposed victim was the person who should be in the dock.

During his arraignment, Schmidt’s lawyer Arthur Azzopardi had told the court that Paul Zammit, the man who had filed the criminal complaint which led to the proceedings against his client, was the fraudster. Zammit had filed a criminal complaint against Schmidt, claiming to have paid the German €75,000 as part of a business deal. 

The accused insisted that no money had ever changed hands.

Magistrate Josette Demicoli had heard the prosecuting police inspectors explain how the then Economic Crime Unit had been informed by Paul Zammit, a pensioner, that he had met the accused in May 2015 on a flight from Frankfurt to Malta. They exchanged contact details and arranged several meetings and that Schmidt had even spent around four weeks at Zammit’s residence at a point in time. 

Zammit told the police that he had given Schmidt gold granules on two occasions as well as some gold coins, together with a receipt indicating that the granules had been valued at €25,310.09. Zammit had also initially told the police that Schmidt had offered him a partnership in a business which the accused planned to open in Malta.

During the police investigation, it emerged that Zammit had entered into an agreement with Schmidt under which the accused was to return the money by the end of 2015. On a second occasion, Zammit stated that he needed cash liquidity and so he gave a further amount of gold to Schmidt in order for him to exchange it in Germany. 

Eventually Schmidt gave Zammit a receipt dated 6th July 2015 which indicated that the gold was exchanged at Pro Aurum in Germany for the value of €24,967.17. Arne Schmidt sent an email to Paul Zammit with an Ing Diba Bank receipt attached, indicating that Schmidt had transferred money from his account with the German Bank into Zammit’s Maltese bank account.

But the bank confirmed to Zammit that the transfer had never taken place and could never happen because the IBAN number of the German Bank account contained an extra digit.

After succeeding in contacting Schmidt and being told that the matter was being looked into, Schmidt broke off contact after July 21, 2015. This led Zammit to suspect that Schmidt was not going to transfer the money and so he contacted the police. After investigating the matter Schmidt was arrested and interrogated. 

Deciding the case, Magistrate Josette Demicoli, noted that Zammit had withdrawn his criminal complaint against Schmidt on 24 February 2022.

The magistrate disagreed with the defence’s statement that the charge of fraud should be considered as an alternative to the charge of misappropriation, deemed the circumstances of the case and the evidence exhibited showed that the elements required for the subsistence of this charge did not result. 

“The Court deems that the parte civile’s version of events is more credible than the one which the accused has given in his statements. The Court is convinced that Paul Zammit has given gold coins and two bags of gold to the accused and that the accused had to exchange this gold for cash and that he had to give the money to said Paul Zammit. Apart from the fact that in his testimony Paul Zammit was convincing, there are also the receipts which Arne Schmidt has sent…No reason has been brought forward to discredit in any manner this witness,” observed the court.

“However, there was no mise-en-scene. Paul Zammit handed over the gold granules and gold coins upon the agreement that Arne Schmidt would be exchanging them for gold. There is no doubt that Zammit trusted the accused completely. These circumstances as brought forward are more akin to misappropriation rather than fraud.”

The magistrate also noted that defence lawyer Arthur Azzopardi had exhibited a written agreement dated 18th February 2022 by means of which Paul Zammit and Arne Schmidt had reached an amicable agreement. Following a 2015 judgement by the First Hall Civil Court, Schmidt had paid the outstanding amount of €65,511.95 to Zammit, as well as a separate payment of €10,000 made by the accused on 28th July 2021.

In view of the fact that the businessman was also charged with misappropriation, the court, quoting jurisprudence, established that withdrawal of the fraud complaint meant that the proceedings with regards to misappropriation had to be declared extinct too.

Lawyer Arthur Azzopardi represented Schmidt as defence counsel throughout the proceedings.

Inspector Christabelle Chetcuti prosecuted.