Three men who were jailed after pleading guilty to a huge mortgage fraud should have received longer prison sentences, the boss of a firm which was all but ruined as a result has said.
All three men worked for The Money Machine, a franchise of The Money Centre which was founded in 1990 by Mark Alexander. The trio fiddled some 200 buy-to-let mortgage applications, including some to fund their own property portfolios.
The damage to The Money Centre business was such that it lost contracts, all its franchise operations were closed down and 300 people lost their jobs. At the head office in Norwich 100 people had to be made redundant; today, just 11 people including the three partners work there.
“In 2008, our businesss was valued at £40m. We had to write off every single penny of it,” said Mr Alexander. “We had no debts and £7m in the bank, all of which we had to use to settle mortgages and redundancy payments.
“The damage to our reputation meant that Lloyds took away their contract and others wouldn’t deal with us. It was the most horrible, horrible time of my life.
“The real rub is that the fraud could have been spotted by the lenders themselves. HBOS not only owned Birmingham Midshires but also the valuer, Colleys Surveyors, who were involved. Their own internal controls should have picked this up.”
In total, lenders issued loans of £28m before the alarm was raised in October 2008 when The Money Centre’s compliance department could not track down some paperwork. After The Money Centre reported its suspicions to police, an investigation followed by Thames Valley Police’s Economic Crime Unit.
John Stirzaker, 33, from Aylesbury, Bucks, was sentenced to three years’ imprisonment. Mark Stratford, 32, from Deeds Grove, High Wycombe, got two years, and Paul Butcher, 31, also from Deeds Grove, was given 18 months.
Stirzaker and Butcher were both consultants at The Money Machine in High Wycombe, and Stratford was Butcher’s personal assistant.
In October 2008, concerns were raised by two of The Money Centre’s lenders, Birmingham Midshires, owned by HBOS, and Bradford and Bingley, owned by Santander.
They suspected that The Money Machine had submitted false mortgage applications. Butcher and Stratford admitted altering the valuations and were immediately suspended.
The third person involved was Stirzaker, who had left the company in July 2008. After receiving legal advice, the directors of The Money Machine did not approach him and reported the crime to Thames Valley Police in November 2008.
On February 18, 2009, officers arrested Stirzaker. He confessed to doctoring the valuation documents. He stated that he had earned high commission, but when the market collapsed in mid 2007, he like others in the office began to alter the valuations.
It was not a sophisticated method. Documents were changed by cutting the correct value out from the valuation, finding the amount needed from a previous valuation form, glueing it into the correct place and then photocopying the form before sending to the lender with the false information on it.
Stirzaker completed a total of 109 fraudulent mortgage applications, making a minimum of £32,047 commission for personal gain plus bonuses, and also gaining the title deeds to several properties which were in his wife’s name.
Butcher completed 85 fraudulent mortgage applications. He gained in excess of £11,091 commission for personal gain plus bonuses, plus title deeds to several properties.
Stratford was involved in all of Butcher’s applications. He received 10% of all of Butcher’s commission.
In total the banks lent out £27,951,723 on mortgages submitted with false valuations.
Det Con Stephanie Burleigh, from the ECU, said: “Since Thames Valley Police have been investigating this crime, The Money Centre have closed all their franchise offices, lost over 300 staff and have taken a huge drop in business. This is due in part to the current economic climate, but also due to loss of good reputation in the buy-to-let market.
“This was a lengthy and complex investigation and I am pleased that the seriousness of this fraud has been recognised. The fraud resulted in many people being made redundant, and in turn I hope lending organisations look to improve their internal systems.”
Despite the hammer blow to its business, Mr Alexander has re-engineered The Money Centre which remains solvent and in operation. It now offers a range of services for landlords, including insurance, mortgages and legal advice through seven joint ventures.
Mr Alexander said: “I did think of taking the easy way out and putting it into liquidation, but I wouldn’t have been able to sleep at night.”