Prosecutors in Munich raided the offices of pension fund giant Bayerische Versorgungskammer as new details emerge in the investigation into BVK's massive losses on high-profile U.S. projects.
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The Munich offices of BVK were raided just two days after investigators searched the offices of Deutsche Finance Group, escalating a corruption probe related to “loss making” investments in seven U.S. real estate projects.
German investigators said in a statement to Bloomberg that the investigation is focused on a current and former BVK employee who handled property investments and a member of Deutsche Finance Group's management. Investigators also searched three private residences in and around Munich as part of the investigation, according to Bloomberg.
Deutsche Finance Group previously said this week that its offices had been searched as a “third party” to an investigation, but details of what prosecutors were targeting weren’t public.
German investigators suspect that the BVK employee exerted “improper influence” on BVK’s real estate investments and the decision to provide additional capital to keep the projects operating, according to Bloomberg.
Deutsche Finance Group management allegedly enticed the manager with invitations to high-end restaurants in Munich, London, Los Angeles and New York, plus a hotel stay in New York, prosecutors told Bloomberg.
Deutsche Finance America, the German investment giant's U.S. affiliate, sued BVK in Delaware Superior Court in September for breach of contract, defamation, deceptive trade practice and other claims related to the alleged mismanagement of the real estate portfolio.
The properties at the center of the probe are located in New York; Miami Beach, Florida; Beverly Hills, California; Chicago; and San Francisco, prosecutors told Bloomberg.
BVK invested $1.9B in projects through a joint partnership with Deutsche Finance America and Michael Shvo’s eponymous development firm. The portfolio included the Transamerica Pyramid, which sold for a loss in April, and the planned $2B redevelopment of the Raleigh Hotel in Miami Beach, which collapsed amid poor sales, with Shvo selling the historic site in October 2025.
The pension fund, which oversees some $137B in retirement assets for Germans, has previously said it could ultimately write down nearly $1B of its investment in the seven real estate ventures.
Shvo hasn’t been mentioned by German prosecutors as part of their investigations and hasn’t been accused of any wrongdoing, Bloomberg reported.
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