NARA, the Association of Property and Fixed Charge Receivers, has issued a warning to lenders about the risks of fraud, following a successful prosecution by the Police in London of three company directors who borrowed under false pretences.
The case has highlighted the need for lenders to review their systems regularly in order to thwart fraudulent borrowers who try to borrow giving false information.
In a recent case a City of London Police investigation successfully prosecuted three company directors and secured criminal convictions and jail sentences for fraud. Each was also disqualified from being a director for eight years. The three investors defrauded three lenders of £20 million by refinancing existing commercial properties. They falsely told the lenders that they had secured long term commercial leases which meant that steady and long dated income streams were ‘guaranteed’. In fact the leases were fraudulent.
NARA members Benjamin Tobin and Simon Tilsiter, of Strettons, were appointed as fixed charge receivers by a major national lender. Benjamin Tobin commented: “In two cases the properties were said to be subject to leases to genuine companies, but when we made contact with those companies they denied all knowledge of the properties and the leases. Once we had satisfied ourselves that we couldn’t prove that the leases were genuine we dealt with the vacant properties.”
NARA is the professional association for Property and Fixed Charge Receivers, which provides education and training to maintain the highest standards in the profession. The warning to lenders has been issued to encourage them to be on their guard and to continue their increasing process of due diligence to ensure that fraud is avoided and detected wherever possible.
