Bridging loan provider foils £1.5 million fraud
Yesterday the BBC TV series ‘You’ve Been Scammed’ featured a story about a group of fraudsters who tried to obtain a fraudulent bridging loan for £1.5 million pounds from well known bridging loan provider Masthaven. The program explained how the team of fraudsters put together and executed a plan to obtain a £1.5 million bridging loan and how underwriters at the bridging company suspected and detected the fraud which led to the team being arrested.
The plan started with a false application from two men claiming to be wealthy Arab brothers. They wanted to use an expensive London flat as security, which was owned outright by the Arab brothers they were impersonating. To help in their deception they chose a vacant flat without any mortgage that was advertised for sale. They also had false passports and utility bills to help pass themselves off as the Arab brothers. The flat being on the market enabled them to obtain access through the estage agents for the necessary valuation.
All was going well with their plan until Masthaven informed the borrowers that they would need to meet them personally, which was their policy for bridging loan applications of £1 million and above. In an attempt to avoid this unexpected meeting the fraudsters reduced their application to £925,000 which led to underwriters becoming suspicious. Due to their suspicions they carefully checked the utility bills to then discover that they were in fact false. Masthaven then contacted the police who discovered that the passports were also false.
In order to try and trap the fraudsters Masthaven continued with the bridging loan application and claimed that the loan was ready to complete but they would need to meet the brothers face to face before they would release the funds. This led to a meeting in a London hotel where two gentlemen, dressed in Arab dress with tea towels on their heads, were arrested. In all 6 arrests were made, of which 3 people pleaded guilty to offences relating to attempting obtaining funds by deception and also for using a false instrument in order to commit fraud. The other 3 pleaded not guilty and went to court where 1 more was found guilty and 2 were cleared.
Some of the gang members were very knowledgeable about how different finance facilities including bridging loans work, plus the processes and checks carried out by the lenders and solicitors when arranging this type of facility. To help pull off their planned crime they had obtained false utility bills, passports and had also checked with land registry to find a property that was unencumbered and to learn the details of the owners, who they later impersonated.
Financial fraud is a big problem, and although this one was prevented, many are not and this costs the lenders an estimated amount of £1 billion every year. These costs are of course passed onto their customers, who are you and me. In addition efforts to prevent fraud mean that every application has to be checked closely and this leads to delays, extra work and frustration for not just the bridging loan providers but also the brokers and the customers who are looking for a speedy and simple completion to their application.