Warning from lender over 'bent' solicitor cases

Warning from lender over 'bent' solicitor cases



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A new threat has arisen on "property purchase" cases, where collusion between a fraudulent borrower and a dodgy solicitor (or someone purporting to be a solicitor) could mean that the lender's money disappears into the solicitor's account, never to be seen again. The security property would then turn out to be owned by someone else entirely, completely unaware that their property was being used in a fraudulent transaction. David Levitus, Director at Bridging Loans Ltd, reveals his own experience of fraudulent applications and highlights potential issues that can arise from unscrupulous or ‘bent’ solicitors...

In the past, we at Bridging Loans Ltd would be especially vigilant on re-finance cases where the borrower was using a solicitor who had never previously acted for him. There could be potential identity fraud issues or perhaps the property being re-financed never even belonged to the borrower.

One such case was identified by our underwriting team when the so-called solicitor’s letter-headed paper simply didn’t look very professional, and after a bit of “googling” we managed to contact the real solicitors whose firm’s name was being used by the fraudster. On mentioning the name to the Managing Partner, we were met by “Oh no, not him again!”  Needless to say, the firm has changed its name and the police are pursuing the culprits. 

Which brings up another important point: ‘tipping off’. On discovering a potential fraud, the Money Laundering Regulations mean that the lender must not report its suspicions to anyone but its own solicitor and the relevant authorities, for fear of alerting a fraudulent borrower, broker or solicitor. In the vast majority of cases, the broker will be completely innocent, unaware of any wrong-doing, and ultimately not understand why the lender is unable to complete the loan. This inevitably affects the business relationship between lender and broker. 

We would advise our fellow lenders to have a quick look at the various solicitors or, more accurately, fraudsters masquerading as solicitors, listed on the Solicitors Regulation Authority “News and Alerts” web page  https://www.sra.org.uk/alerts. The dodgy solicitor we came across is certainly listed there... so, lenders perhaps you should check the list before instructing your own solicitors to release any funds to what you thought was another solicitor’s legitimate client account.

 

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