The Office of the Special Prosecutor filed charges against businessman Aron Karlsson on Monday because of fraud in relation with the sale of a building on Skúlagata in Reykjavík to the Chinese Embassy in Iceland.

Archive photo by Páll Stefánsson.

The defendant’s name was first mentioned in RÚV’s coverage on Wednesday.

The case made headlines in January 2010 when Aron and his father, Karl Steingrímsson, sold the building to the Chinese Embassy for ISK 870 million (USD 6.9 million, EUR 5.2 million).

At the same time banks that had collateral in the building were presented an ISK 575 million (USD 4.5 million, EUR 3.4 million) offer from an Indian company.

The property was over mortgaged at Íslandsbanki, Arion Bank and the bankruptcy estate of Glitnir, and a settlement was made on the basis of the offer from the Indian company.

However, the house was then moved to a different company owned by the father and son and sold to the Chinese Embassy for a higher price.

They were suspected of having pocketed the difference of approximately ISK 300 million (USD 2.4 million, EUR 1.8 million).

The case has since been under investigation by the National Commissioner of the Icelandic Police’s department for enrichment crimes but was relocated to the Special Prosecutor’s Office, along with other cases, in September 2011.

According to RÚV, the office filed charges against Aron and his real estate company AK fasteignir ehf. for fraud on Monday.

Almost ISK 100 million of the alleged profits were confiscated in the process of the investigation, raids were conducted in three locations and two men, in addition to the father and son, were questioned.

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ESA