Ian McGarry, a senior chartered surveyor, and Birmingham property developer Saghir Afzal have pleaded guilty to their part in a £50m 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.
Ian McGarry was head of City valuations at Dunlop Haywards, a subsidiary of Erinacious Group. After his actions, Dunlop Haywards 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 current case is expected to last 12 weeks. At the end of it, McGarry and Afzal will be sentenced.
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Comments
OOPS - sorry, forgot the PS!
"As for where I post, and when, I'd think that's for me to consider rather than you, but thanks for your concern."
I couldn't agree more. However, you have used this platform to make statements for all to read. I have used this platform to ask questions to you based upon those statements. Yet you have not responded.
I had the good manners to carefully digest what you were saying. You have apparently chosen to ignore what I (and others) have simply asked you to clarify.
That is firstly not good manners. If someone takes time to have a pop at me on here, (and I think I beat you hands down on past, present - and probably future - numbers on that score...), then I take time to answer them.
Secondly (and mores to the point, ironically, considering...), the lack of courtesy is not professional - in my opinion.
I regret that we always seem to be at opposing ends. It is strange, considering that what we both seem to want is a better thought-of industry. How, then, we can be so diametrically opposed remains a mystery to me.
I welcome the day when we agree! ;0)
Neil (if I may be so bold...): Thank you for acknowledging me. I was worried about you, as you had been quiet for a while, and the subject of licensing normally provides a vehicle for us to have an 'exchange of views'.
Okay. Am I in favour of licensing? No.
Why? Because I do not believe/expect/hope/dream/add-your-own that it will achieve what others seem to think it will.
You draw our attention to banned FA's - 101 since December 2006, according to the story. How many more SHOULD have been banned in that period, but have so far escaped the net (and may or may not be eventually unearthed)? At WHAT point did the licensing process stop these criminals - or any other - from commiting their illegal acts? It simply closes the door after that particular horse has bolted - and might make one or two think twice before committing the exact same act!
IF licensing brought about a better standard of Estate Agency; IF licensing took out the unwanted element; IF licensing ensured that the customer got what they want, when they want it, from an Agent; IF licensing allowed those who deserve payment commensurate to their skills and results; IF licensing resulted in the removal of the 'Numbers Game' culture that Agents (and I respectfully suggest that you will fall into this category - please correct me if I am wrong but I haven't met one yet...) live their very lives by, THEN I would shout from the rooftops for its' immediate introduction. I will be your willing Ambassador from the consumer side.
Until then, I will question its' merit.
Lord knows, if ANYONE should want it, it should be me - the potential CUSTOMER!
I look forward to our continuing dialogue, Neil. ;)
PeeBee. I see that 101 mortgage brokers have been banned. Perhaps you could just run past me how many agents have been banned http://ow.ly/3LOco
As for where I post, and when, I'd think that's for me to consider rather than you, but thanks for your concern.
We continually see agents on here bleating on about how there is too much red tape and regulation, yet in their next breath they moan that rival agents 'get up to no good'. Either the industry wants to clean up its act, or it can continue to have its joke reputation, low barrier to entry, acceptance of low standards etc.
Are those agents who are anti-licensing really suggesting that the industry status quo is acceptable? It does rather look that way right now.
Off subject but just to say thanks PeeBee. A forum is for discussion and people will have differances of opinion. I refrain from trying to insult, there are people better at it than me, including attempt at wit. I do care about our industry with a passion and I don't expect people to agree entirely with my views. They have theirs and I'm entitled to have mine.
wooden top (courtesy returned... ;0) ): As a long-time reader and regular poster, like me, you know that stories like this are always where the licensing brigade jump on the broken bandwagon - hence my call to Mr Neil Kurz for his thoughts, as this is his particular pet subject. Interesting that he has posted on another story today but has so far given this one a wide berth...
Anyways, back to the point. As you will be well aware, stories like this one; the homebuyers agent shenanegans; the make-the-agent-buy-your-house fiasco etc etc bring out the best of the worst! People like Mr Smiles here; Jackie from the most-commented storyline of 2011 so far - all come on full of wind and p***, start a ruck that they have no chance whatsoever of walking away from without a bloody nose, and then shout that they are being picked on! (You know - the kind who, following your excellent and extremely frank post yesterday, think they have figured out who 'wooden top' is in the real world, and then jump up and down "I know who he ii-iis!" like demented primary school kids!) And all of a sudden it falls back on those who dare to stand up to them and retaliate. I'm all for sensible debate on EAT and other forums that I frequent. I'd like to think that sometimes - just sometimes - I contribute in a positive way! I'm all for banter as well. I positively love good craic, which is what this site normally produces from its' posters.
I just wish that when people who post on here would accept the fact that if they can't take it, then they shouldn't give it in the first place.
I work bloody hard - but I play harder! And I was NEVER the recipient of a bloody nose in the playground!!
To you, AceofSpades, Ray Evans, wardy, Jonnie (where ARE you??) - and all the MANY others too numerous to list who I believe speak for the good of the industry - well done and keep at it! ;0)
PeeBee (please note spelling) your correct that Licensing doesn't stop fraud. Dishonet behaviour is a mind set. These aren't the first and sadly to say the last professional qualified (I refrain from calling them professionals, but I suppose professional criminals would be OK) people that we will hear about and not an estate agent in sight, phew! Mind you they still have to be tried in court.
Ray is also correct. We have so much legislation the forests are getting smaller and smaller each year. We don't need more red tape.
What we do need is proactive and sensible Policing. Everything always seems to be, after the horse has bolted.
It aint half hot Mum!!!
Aren't all crimes which cause house prices to rise pardoned in the UK?
We can discuss this case but not, Brandon "Bully Boy" Weston's?
This is nowhere near the biggest mortgage fraud, the banks themselves have done hundreds of billions worth plus don't even get me started on derivatives and the whole notion of fractional reserve banking. Portraying banks as innocents in any fraud case is as ludicrous as prosecuting someone for counterfeiting when the Bank of England prints billions every day
Anyone who votes for more controls (licensing etc) over their industry with yet more admin and the accompanying fees that will be charged is like turkeys voting for Xmas.
There are enough government controls and obligations already in existence, all that is required is for strict punishment for deliberately breaking them, which is not carried out at present.
Chris Smiles: I COULD have "mistyped" you name as 'Slimes' in an attempt to raise a titter or two from myself - but I didn't as this site is directed at an adult audience I will refrain from juvenile humour...
Inferiority complex? Don't think so - but perhaps if you were to enlighten me as to your thought processes behind the statement I would be able to give you a definitive answer. Is uppose if I DO have one, then I should know about it, so you would be doing me a big favour in that respect. I thank you in advance.
I don't drive a Porsche (assuming THAT is the make of car you referred to - I have made an assumption based upon the phonetics of the word you typed not the spelling...) I am afraid, so if that was your reasoning, then you are obviously mistaken and I can rest assured that I do not, in fact, have an inferiority complex.
I would still appreciate you putting my mind at ease - or not, as the case may be...
Other than that - what was your point?
PeeWee,
You seem to have an inferiority complex. I suggest you GET OVER IT!
Professional Qualifications cant stop criminals, no more than car alarms can stop car theives, but there is an element of deterence.
Some form of licensing should improve standards for patrons and change the image of Estate Agency which is a good thing.
Suspect you drive a Porche.......
Funny old world. Someone defrauds a bank and all hell breaks loose.
Banks defraud us by lending the same money over and over again - by creating financial instruments so complex the directors don't understand what is going on - so that bankers can say 'we've parcelled up a billion quids worth of loans - where's my £2 million bonus?' - get to the point where the banks are bankrupt and need bailing out by the taxpayer - AND NOT ONE DAMN CRIMINAL CASE IS BROUGHT AGAINST THEM.
Funny old world.
SO - a fraud involving Solicitors (LICENSED profession) and Chartered Surveyors (LICENSED profession) and a "pwoperty developer" (holds a DRIVING LICENSE... ;) ).
Seems like the only alleged 'crook' missing was an Estate Agent (UNLICENSED profession).
Mr Neil Kurz - what do you have to add to THIS?? Your cries for LICENSING have been muted for a while...
Did these professionals' regulatory bodies discover the illegal acts? NO - it was a suspicious LENDER! (You know - the ones who REALLY should be looking for money laundering!)
Goodness Gracious Me!