West One fraud trial date set

West One fraud trial date set


The date for West One Loans’ fraud trial has been set to take place on the first date available after 31 December 2012.

Following the Claimant - Salkeld Investments Limited – making an application dated 28 March 2012 for a summary judgment and/or to strike out the Defence – upon hearing Counsel for the Claimant and Counsel for the Defendant on 6 July 2012 and on 5 September 2012 and upon the judgement of His Honour Judge Mackie QC, dated 31 October 2012 - it has been ordered that the trial of the Preliminary Issue shall be listed for the first available date after 31 December 2012 with a time estimate of two days.

Salkeld Investments, which is wholly owned by investor Nick Clarke, is suing West One Loans for not returning its investment of £235,000 made on a bridging loan.

Clarke has appointed law firm Mishcon de Reya to pursue his claim that West One Loans acted in breach of contract by failing to obtain security on this loan - a term which Clarke alleges was clearly stipulated in the contract.

This case, pending trial early in the New Year, serves as a warning to current and future investors in bridging loan finance, as well as advisers responsible for recommending such investments.

Clarke is the founder of Salkeld Investments Limited and is an experienced entrepreneur with investments across property, internet, biotechnology and natural resources sectors. He was introduced to an investment opportunity with West One Loans by his accountant.

In April 2011, West One Loans offered Clarke the opportunity to participate in a secured loan which it was intending to advance to an individual claiming to be Massimo Barbini.

West One advanced £570,000 to Barbini, partly funded by £235,000 from Clarke. As security in respect of the loan, West One Loans would obtain a charge over a property in Fulham, London owned by Barbini which had an open market valuation of £950,000.

The term of the loan was to be seven months and, throughout this period, West One would pay Clarke a net interest rate of 1 per cent per month on the sum that he had invested. It was agreed that West One would repay Clarke's investment of £235,000 on or around 19 November 2011.

Salkeld alleged that it and West One Loans entered into a Trust Deed relating to the loan which stated that West One Loans had previously agreed that the loan would be secured by way of a charge over the Fulham property.

Clarke alleges that the contract contained the term that West One Loans would obtain valid security in respect of the loan, specifically in the form of a charge over the property.

It is further alleged by Clarke that it was a term of the contract that West One Loans would not advance any part of the loan to the borrower before it had obtained valid security over the property and that, in the event that the borrower did not repay the loan, it would enforce the security over the property on behalf of Clarke (and any other investors involved in the loan).

West One Loans are defending the claim and argue that there was no such absolute obligation upon them to obtain security but that instead they were obliged to instruct solicitors to secure Salkeld's interest, by way of a legal charge and that they did in fact do so.

West One Loans advanced the full amount of the loan to an individual who was not Barbini and who did not own, or have any interest in, the property and without having obtained any valid security over the property. When West One Loans tried to register a charge over the property it was refused by HM Land Registry on this basis.

Interestingly the June edition of West One Loans’ Horizon magazine states:

On page 6, "Money made clear" by Mark Abrahams - "No investor has ever lost capital or interest on any loan to date. Our investors achieve circa 1 per cent per month (net of West One Loans’ management fee) and are paid interest monthly, giving them a very steady stream of income."

On page 8, "The War on Fraud” – “All lenders face a difficult challenge in balancing their need to do business and protecting themselves against mortgage fraud. The perception is that bridging lenders are more susceptible to mortgage fraud but, in my view, that is not the case. Bridging lenders have more experienced underwriters and senior directors review every file that completes. That is not the case with larger lenders. Bridging lenders and their advisors are using the latest electronic identification software and will not proceed unless their borrowers' identity has been verified by a solicitor.

“Lenders should proceed with caution on every deal they complete. However, a lender that takes a sensible measured approach and employs a highly skilled team of professional advisers and underwriters can still successfully do business in this burgeoning and exciting lending market."

Recently filed accounts by West One Loans show that a total of £1,080,000 was paid as dividends to the shareholders.

Nick Clarke said: "As far as I was concerned, I was sold this investment on the basis that the loan would be secured. Had I thought that West One was not guaranteeing that this would be the case, I would never have invested.

“I am very disappointed with West One's conduct as described above and felt I had no alternative but to pursue this matter through the courts."




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    Tiger Moth

    What goes around, comes around, so they say

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    Is this the beginning of the end, for a company who has grown so quickly, and is so clearly built on straw?

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