EXCLUSIVE: Broker guilty in bridging lender's £1.5m fraud case

EXCLUSIVE: Broker guilty in bridging lender's £1.5m fraud case



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In an interview secured exclusively by B&C, Jason McGee-Abe chatted to Andrew Bloom, Managing Director at Masthaven Bridging Finance, to find out the details of a fraud case which culminated in a broker being found guilty last week in the attempted £1.5 million con of the bridging finance firm.

During the operation, six people were arrested and initially charged. Three pleaded guilty and the remaining accused pleaded not guilty. The latter trio were in the Old Bailey last week where the jury only found mortgage broker, Jonathan Flynn, of Gobridging Ltd, guilty in the fraud case.

The defendants found not guilty last week included Sarah Compton, who works at a firm of solicitors and was accused of stamping the applicant’s fake passport, and a man who was accused and found not guilty of pretending to be one of the fake wealthy sheikhs in a meeting.

The Fake Sheikhs

The case involved a gang of fraudsters who tried to con Masthaven out of £1.5 million using two ‘fake sheikhs’. Masthaven was told that wealthy Arab brothers, Said and Malthoum Mebjar, would back the loans with an exclusive flat in London’s West End.

The ‘sheikhs’ did not exist and the property had been ‘hijacked’ using land registry documents.

But the fraud was spotted by Masthaven’s underwriters when they liaised with utility companies for proof of address in the deal’s documentation and became suspicious of the case. Masthaven subsequently informed the authorities, the City of London Police, who started their investigations.

Andrew Bloom told B&C, “I was delighted that Masthaven’s robust underwriting procedure spotted this attempted fraud. It is a credit to the expertise and training of the underwriting team that these fraudulent applications are detected.”

The Police

The City of London Police’s investigation started when they took fingerprints of all the staff at Masthaven who had touched the fraudulent documentation. They excluded their prints in their analysis of the papers which led them to their first arrests in April 2010.

The Chester Chronicle reported in May 2010 that Shane Martin, 50 at the time, had been charged with committing fraud by making false representation to Masthaven. He was accused of conspiring with Ahmed Ali, Shakil Ahmed and Ahmed Onmar and was arrested on the 18th May 2010 at his home by Cheshire Police, who were assisting the City of London Police in their investigations.

On the 20th December 2010, Ahmed Ali, 46 at the time, admitted in court to using a false identity in the group’s bid to secure the £1.5 million loan.

B&C found out that the gang had also tried to defraud another finance company, JR Commercial Mortgages Plc, in their ‘fake sheikhs’ con, out of a figure believed to be in the region of £1.5 to £3 million. But Masthaven’s swift action in stopping the deal from going forward in 2010 and their cooperation with the authorities ensured that both companies were safeguarded and that the police were on the case.

The Property In Question

The initial details in the press about the property which the ‘fake sheikhs’ tried to secure the loan on only revealed that it was a £5 million property in Bayswater, but B&C have now tracked down the house in question and can disclose the actual details for it.

The unencumbered property in Orme Square, Mayfair, W2, was on the market for £6.4 million and was being sold through Harrods Estates at the time.

The sales details highlight that over 5,830 sq ft and five floors the freehold property comprised of nine rooms including four en-suite bedrooms and also a conservatory, a terrace, garden and a separate flat on top of a double garage.

The Valuation and I.D.

Andrew Bloom informed us that one of the fraudsters had arranged a viewing with Harrods Estates on the property and had told them in advance that ‘his surveyor’ was joining him to look around the property. They had arranged with Masthaven for the valuation to take place during this viewing whereby the lender’s instructed surveyor assessed the property and valued it for the application.

Further investigations by the City of London Police working with Masthaven discovered that the passport number used for identity verification was of a deceased nine-year-old boy’s and that his photo had been replaced.

The Sting

The police held a sting operation where a police officer, who was undercover as a PA, accompanied Andrew Bloom to a meeting with the fraudsters at a Marriott Hotel in London's West End. Two men arrived dressed as sheikhs and were subsequently arrested.

In early January 2012, B&C learnt that Andrew Bloom gave evidence for three consecutive days in the London courts, where he brought a number of his underwriters to the hearings so that they could see first-hand what was going on in this case. This action will surely boost Masthaven’s underwriters’ due diligence even further when looking through potential applications in the future.

Speaking on how this case has showcased bridging lenders fighting fraud, Andrew Bloom added, “Each successful conviction helps deter others from attempting to commit this crime. Mortgage fraud is not a victimless crime and pushes up the cost of borrowing for everyone.”

Mortgage fraud is still a huge issue and the National Fraud Authority estimate that mortgage fraud costs the industry around £1 billion a year. One of the most common types of fraud that bridging lenders are usually subjected to is when a borrower deliberately misstates their income on an application.

Andrew Bloom concluded by saying, “All brokers must ensure that they never deliberately or inadvertently collude with people who are attempting to commit mortgage fraud. Even, if the broker has done nothing more than turn a blind eye, the courts take a very dim view of professional advisers who act in this way and are increasingly likely to hand out a lengthy custodial sentence.”

It is rumoured that Flynn may receive a jail sentence of three to four years for this type of fraud but we shall await to discover his and the other guilty fraudsters’ fates when they are sentenced in due course.

Jason McGee-Abe

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