Six Solicitors On Trial After Uk's 'largest Ever Mortgage Scam'

[buytoilet]

Former Dunlop Haywards head of valuations Ian McGarry, a chartered surveyor, and Birmingham property developer Saghir Afzal have pleaded guilty to their part in a £50m commercial mortgage fraud.

The court heard it was likely “one of the largest mortgage frauds ever perpetrated in the UK”.

McGarry and Afzal admitted charges of conspiracy to obtain a money transfer by deception and dishonestly obtaining a money transfer.

The pleas were entered in previous hearings but can only be published now after reporting restrictions have been lifted, with the trial under way of six other people.

McGarry has been released on bail but Afzal was remanded in custody.

Six solicitors have also been charged in relation to the alleged fraud and pleaded not guilty when they appeared at Southwark Crown Court.

They are: Hardeep Sodhi, 34, Laurence Fennigan, 49, Fatema Patwa, 48, Simon Lawrence, 39, Mark Knight, 46, and Kamran Malik, 31, who acted for various companies.

The court heard that two brothers, Saghir and Nisar Afzal, borrowed £49.3m against property that was worth less than £6m, in what was “most likely one of the largest mortgage frauds ever perpetrated in the UK”.

The prosecution told the court that Afzal and his brother Nisar had orchestrated a series of property transactions with the “sole aim of inflating the value of the properties and deceiving the banks as to the value”.

They had recruited a “dishonest valuer”, named in court as Ian McGarry, to provide “grossly inflated” valuation reports that included false leases.

The fraud concerned six properties bought between November 2004 and January 2006 for a total of £5.68m. Between February 2005 and March 2006, banks and building societies were persuaded to lend a total of £49.28m on their supposed security.

Andrew Baillie, prosecuting, said the solicitors had sold the properties to each other, ramping up the prices before applying for the mortgages.

Mr Baillie said: “This is not an 80% mortgage or a 90% mortgage but, taking all of these loans together, it was the equivalent of an 866% mortgage.”

He said that by the time the lenders realised that the properties were worth a fraction of what they had been told, it was too late: “The money had been distributed, a very substantial part of it sent abroad and the banks were left to whistle for their money.”

The Serious Fraud Office began investigating the case in March 2006 after a complaint from the Cheshire Building Society.

Dunlop Haywards, a subsidiary of Erinacious Group, went into liquidation in May 2008.

In 2009, the high court ruled that Dunlop Haywards owed £21m in relation to a Cheshire Building Society mortgage fraud.

Cheshire had also claimed against legal firm Cobbetts, which paid the building society £5.6m in an out of court settlement.

The case is expected to last 12 weeks. At the end of it, McGarry and Afzal will be sentenced.

http://www.introducertoday.co.uk/News/Story/?title=Six%20solicitors%20on%20trial%20after%20UK%27s%20%27largest%20ever%20mortgage%20scam%27&storyid=3891&type=news_features

[leicestersq]

Former Dunlop Haywards head of valuations Ian McGarry, a chartered surveyor, and Birmingham property developer Saghir Afzal have pleaded guilty to their part in a £50m commercial mortgage fraud.

The court heard it was likely “one of the largest mortgage frauds ever perpetrated in the UK”.

McGarry and Afzal admitted charges of conspiracy to obtain a money transfer by deception and dishonestly obtaining a money transfer.

The pleas were entered in previous hearings but can only be published now after reporting restrictions have been lifted, with the trial under way of six other people.

McGarry has been released on bail but Afzal was remanded in custody.

Six solicitors have also been charged in relation to the alleged fraud and pleaded not guilty when they appeared at Southwark Crown Court.

They are: Hardeep Sodhi, 34, Laurence Fennigan, 49, Fatema Patwa, 48, Simon Lawrence, 39, Mark Knight, 46, and Kamran Malik, 31, who acted for various companies.

The court heard that two brothers, Saghir and Nisar Afzal, borrowed £49.3m against property that was worth less than £6m, in what was “most likely one of the largest mortgage frauds ever perpetrated in the UK”.

The prosecution told the court that Afzal and his brother Nisar had orchestrated a series of property transactions with the “sole aim of inflating the value of the properties and deceiving the banks as to the value”.

They had recruited a “dishonest valuer”, named in court as Ian McGarry, to provide “grossly inflated” valuation reports that included false leases.

The fraud concerned six properties bought between November 2004 and January 2006 for a total of £5.68m. Between February 2005 and March 2006, banks and building societies were persuaded to lend a total of £49.28m on their supposed security.

Andrew Baillie, prosecuting, said the solicitors had sold the properties to each other, ramping up the prices before applying for the mortgages.

Mr Baillie said: “This is not an 80% mortgage or a 90% mortgage but, taking all of these loans together, it was the equivalent of an 866% mortgage.”

He said that by the time the lenders realised that the properties were worth a fraction of what they had been told, it was too late: “The money had been distributed, a very substantial part of it sent abroad and the banks were left to whistle for their money.”

The Serious Fraud Office began investigating the case in March 2006 after a complaint from the Cheshire Building Society.

Dunlop Haywards, a subsidiary of Erinacious Group, went into liquidation in May 2008.

In 2009, the high court ruled that Dunlop Haywards owed £21m in relation to a Cheshire Building Society mortgage fraud.

Cheshire had also claimed against legal firm Cobbetts, which paid the building society £5.6m in an out of court settlement.

The case is expected to last 12 weeks. At the end of it, McGarry and Afzal will be sentenced.

http://www.introducertoday.co.uk/News/Story/?title=Six%20solicitors%20on%20trial%20after%20UK%27s%20%27largest%20ever%20mortgage%20scam%27&storyid=3891&type=news_features

A fair sentence for this would be 50 years each, 30 minimum.

And all of their assets to be seized.

I wonder what paltry sentence the judge will give, maybe a suspended and a £50 fine?

[R K]

The fraud concerned six properties bought between November 2004 and January 2006 for a total of £5.68m. Between February 2005 and March 2006, banks and building societies were persuaded to lend a total of £49.28m on their supposed security.

were persuaded

[Realistbear]

A fair sentence for this would be 50 years each, 30 minimum.

And all of their assets to be seized.

I wonder what paltry sentence the judge will give, maybe a suspended and a £50 fine?

To be fair, the banksters have defrauded us all of billions bordering on trillions and they have got away with it not only welsh free but with the blessing of HM Government.

These poor crooks stole a fraction and get to do bird. Where is the justice in that? I say life for the banksters and maybe 20 years for the small fry we see in this farticle.

[leicestersq]

To be fair, the banksters have defrauded us all of billions bordering on trillions and they have got away with it not only welsh free but with the blessing of HM Government.

These poor crooks stole a fraction and get to do bird. Where is the justice in that? I say life for the banksters and maybe 20 years for the small fry we see in this farticle.

You can be sure that I would less merciful with fraudulent banksters RB.

[longtomsilver]

A fair sentence for this would be 50 years each, 30 minimum.

And all of their assets to be seized.

I wonder what paltry sentence the judge will give, maybe a suspended and a £50 fine?

The punishment has to fit the crime. They are no less fraudulent than the banksters and have played a tiny part in the wholesale ponzi scheme of the last 13years. Just like the child caught smoking a cigarette and told to smoke the whole packet in a confined space they should be given millions of pounds of fiat money and forced to spend the lot on Bentleys and grand houses. That'll teach 'em.

[Realistbear]

Maybe some Sharia punishments would be in order? Fraudsters in those country are "neutered." Its a bit primitive but the executioner uses two large bricks that are slammed together on the relative body bits. Apparently painless------if you keep your thumbs out of the way.

[athom]

Maybe some Sharia punishments would be in order? Fraudsters in those country are "neutered." Its a bit primitive but the executioner uses two large bricks that are slammed together on the relative body bits. Apparently painless------if you keep your thumbs out of the way.

interesting idea even if completely false

What some Dubai expats has found though is that you have to pay it back or go to jail, in this case probably both.

In the UK i suspect they won't even manage to retrieve all their now overseas assets and they'll get a few years bird with free sky subscription.

[The Masked Tulip]

Solicitor to stand trial for scam allegations

http://www.thisissouthwales.co.uk/news/Solicitor-stand-trial-scam-allegations/article-3077956-detail/article.html

[RobK]

Mr Baillie said: “This is not an 80% mortgage or a 90% mortgage but, taking all of these loans together, it was the equivalent of an 866% mortgage.”

Some nice number mangling by Mr Baillie. I could be wrong, but this sounds like he is comparing what would be a reasonable LTV (80%) with the combined LTV of a series of mortgages, some of which were presumably repaid as the houses were sold back and forth (and the price uplifts skimmed off).

So, according to this logic, if I own a house with 80% LTV mortage, and sell it to somebody else with an 80% mortgage, this is equivalent to a 160% mortgage.

[South Lorne]

Some nice number mangling by Mr Baillie. I could be wrong, but this sounds like he is comparing what would be a reasonable LTV (80%) with the combined LTV of a series of mortgages, some of which were presumably repaid as the houses were sold back and forth (and the price uplifts skimmed off).

So, according to this logic, if I own a house with 80% LTV mortage, and sell it to somebody else with an 80% mortgage, this is equivalent to a 160% mortgage.

...believe he is comparing to the the true estimated value....

[RobK]

...believe he is comparing to the the true estimated value....

Yeah maybe.

Which do I believe more - that banks would be stupid enough to lend 866% LTV, or that a lawyer is twisting the numbers. Hmmm...

[South Lorne]

Yeah maybe.

Which do I believe more - that banks would be stupid enough to lend 866% LTV, or that a lawyer is twisting the numbers. Hmmm...

...I believe the Banks (and Building Societies[novices])were stupid enough to lend 866%...they were hungry for the commission associated with the deal...and believed the false paperwork and fraudulent valuations by a crooked surveyor.....no fools like 'greedy pigs'...at least one of the BSs had to be 'rescued' or absorbed by Nationwide...no tapayers money at this one.......

Edited January 26, 2011 by South Lorne

[Rachman]

...I believe the Banks (and Building Societies[novices])were stupid enough to lend 866%...they were hungry for the commission associated with the deal...and believed the false paperwork and fraudulent valuations by a crooked surveyor.....no fools like 'greedy pigs'...at least one of the BSs had to be 'rescued' or absorbed by Nationwide...no tapayers money at this one.......

how else were the lenders supposed to vet the applications, except by using regulated solicitors and independent valuers who were a subsidiary of a listed plc ? Yes, it's a risk, but what else were they supposed to do ?

[HPC001]

There is an argument for implementing some Sharia Law for finances in general.

http://en.wikipedia.org/wiki/Islamic_economic_jurisprudence#Property

http://en.wikipedia.org/wiki/Islamic_economic_jurisprudence#Monetary_.26_Fiscal_Policy

Incidentally the muslim banks would have survived the 2008 financial crisis whilst many western banks wouldnt have.

That policy sounds remarkably Georgist. Taxes on land\resources and money supply based on trade\population indices.

Just a shame their social policies would be less than agreeable...

[South Lorne]

how else were the lenders supposed to vet the applications, except by using regulated solicitors and independent valuers who were a subsidiary of a listed plc ? Yes, it's a risk, but what else were they supposed to do ?

...they could at least have inspected the physical site ...understand this is not the 'done' thing....people tend to trust too much in a world which is not that way....in other words too much naivity and lack of real world experience around....and of course the smell of big commissions in the air....the real attitude adjuster .....

[Rachman]

...they could at least have inspected the physical site ...understand this is not the 'done' thing....people tend to trust too much in a world which is not that way....in other words too much naivity and lack of real world experience around....and of course the smell of big commissions in the air....the real attitude adjuster .....

that's what the surveying firm is for...... that's why they paid a listed blue chip established surveying firm ..... how can it be better for a punter from the bank to travel to the other end of the country and decide what a property is worth or not, you don't, you pay the established expert in the field to do it for you..... this was clear fraud....... the lenders did what they are supposed to do, had independent advisers brought in to do jobs.... rather than risk ballsing it up themselves....

[R K]

...they could at least have inspected the physical site ...understand this is not the 'done' thing....people tend to trust too much in a world which is not that way....in other words too much naivity and lack of real world experience around....and of course the smell of big commissions in the air....the real attitude adjuster .....

Ahh.....those were the days, in my working memory, where the bankster actually knew his customers and visited them to discuss lending, vet security, value assets etc etc. It's not a very big island we live on. Getting in his car and driving a few miles on a nice sunny morning isn't the most challenging thing in the world.

This bleating from banksters is dissembling of epic proportions. They'll go on blaming every one except themselves.

They're the fraudsters, outsourcing it to someone else as a firewall doesn't change that, although it's clearly precisely why they do it.

No different to the securitisation fraud in principle, just in scale. Keep the real assets and punters at arms length, ask as few questions as possible, maintain plausible deniability, let the FSA fine the sappers and pocket your 7 figure bonus.

FSA could sort this out in a heartbeat if Turner could find his cojones.

edit: typo

Edited January 26, 2011 by Red Karma

[South Lorne]

that's what the surveying firm is for...... that's why they paid a listed blue chip established surveying firm ..... how can it be better for a punter from the bank to travel to the other end of the country and decide what a property is worth or not, you don't, you pay the established expert in the field to do it for you..... this was clear fraud....... the lenders did what they are supposed to do, had independent advisers brought in to do jobs.... rather than risk ballsing it up themselves....

...you have just proved the old fashioned way is best ....look before you lend....if I am buying a house I don't buy blind on the word of the surveyor for whom I pay ...and who sometimes only does a drive by....in the case of a commercial loan I am looking for the business viability ...cash flows and real evidence....some of these lenders were new to commercial lending ....

[Rachman]

...you have just proved the old fashioned way is best ....look before you lend....if I am buying a house I don't buy blind on the word of the surveyor for whom I pay ...and who sometimes only does a drive by....in the case of a commercial loan I am looking for the business viability ...cash flows and real evidence....some of these lenders were new to commercial lending ....

exactly, so the prudent approach is, if you don't know the market, you pay an established expert to do it for you...