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Quick Property Sales Fraud Risk

The FSA has warned homeowners in financial difficulties who are looking to sell their home fast to beware of committing fraud.

FSA Warns of BMV Property Fraud

FSA Warns of BMV Property Fraud

The financial regulator says it has evidence that some below market value (BMV) or distressed property sales may involve fraud, where the buyer (a company or an individual), asks the selling homeowner to state that the property has been sold for its full open market value, rather than the agreed purchase price.

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UK’s Biggest Ever Female Fraudster Jailed

A female property investor, who posed as an a South African heiress to build up a portfolio of luxury properties in London, was jailed for nine years on the 9th November, after being caught with thousands of fake identity documents.

Female Fraudster gets 6 year sentence for multi million property & mortgage fraud

Female Fraudster gets 6 year sentence for multi million property & mortgage fraud

Mauritian-born serial con artist, Maria Michaela, was convicted for defrauding high street banks of almost £15 Million (GBP) in mortgages, making her the UK’s largest ever female fraudster.

Her main accomplice, Mary-Jane Rathie, a Chelsea-based surveyor, was given a six-year prison sentence after being found guilty of overvaluing properties that Michaela was purchasing in exclusive prime central London locations, including Chelsea and Belgravia, with some valuations reportedly double their true worth.

Other accomplices, Stephen Hunter-Scott, Guy Steel and Saba Humadi, who were involved in other property scams worth approximately £2 Million (GBP), also appeared with Michaela in the dock at Harrow Crown Court.

Hunter-Scott and Guy Steel were sentenced to six and four year prison terms respectively while Humadi was handed a 12-month sentence suspended for two years.

Detective Inspector Andy Fife of City of London police told the press, “We think she (Michaela, whose real name is believed to be Bruna Louise) is the UK’s biggest ever female fraudster. We have not had any female previously commit fraud on this scale before. Maria Michaela created a web of deception that duped banks into handing over vast sums of money and then perpetuated her crimes by assuming a new alias to try and secure more loans. False identities and a corrupt property surveyor were the tools she used to make millions, turning herself into one of the, if not the, most prolific female fraudster the UK has ever seen

Harrow crown court was told that Michaela had used a number of fake identities to secure four loans totalling £10.5 Million (GBP) from HBOS bank with a view to acquiring eight properties. She also managed to obtain £2.5 Million (GBP) from the Royal Bank of Scotland to acquire five more homes.

Michaela, who will be deported after her release from jail, admitted to eight counts of fraud, had defaulted on the loans and vanished with the money until she was caught and arrested in January this year. However, millions of pounds of stolen money have yet to be recovered.

Jailing her last week, Judge Graham Arran said, “You were a very experienced, highly skilled and exceptionally well-equipped fraudster.”

Chelsea-based property surveyor and accomplice, Mary-Jane Rathie, was convicted and jailed for six years at the Old Bailey last year after being bribed by Michaela.

Rathie received £910,000 (GBP) in cash, a £143,000 (GBP) Bentley Continental and a £49,000 (GBP) Range Rover Sport, to significantly overvalue a house in Cheyne Walk in Chelsea, South West London. The property was valued by Rathie at £6 Million (GBP), with a rental value of £270,000 (GBP) per year (4.5% gross rental yield), but the property was actually worth £3.5 Million (GBP) with a rental income of £180,000 (GBP), giving a 5.1% gross rental return.

Read the full BBC article here

After opening 37 bank accounts using in excess of 23 aliases, Damien Martin James succeeded in fraudulently obtaining more than £64,000 from different High Street banks and mortgage lenders.

James, originally from Somerset, acquired a £250,000 mortgage from a High Street bank and opened accounts with Royal Bank of Scotland, HSBC and Lloyds TSB using several different passports.

The Bournemouth Echo reported that James had fallen into mortgage arrears and had overdrafts ranging from £246 to £3,944. Whilst sentencing, Judge John Harrow said in court: “You are a thoroughly dishonest man. You gave false details to the Chelsea Building Society to gain £211,000, fell into arrears and the property had to be sold and there was a loss to them of £60,000.”

James pleaded guilty to 10 counts of fraud and was imprisoned for four years and two months.

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A convicted mortgage fraudster has been ordered to repay over £9 Million (GBP), in what is the largest ever confiscation of assets by a UK police force.

Jean-Paul Bestel pleaded guilty to mortgage fraud in September 2010 and was sentenced to three years imprisonment in March 2011, although he has since been released.

The fraudster, who owns a portfolio of around 70 buy to let properties, was ordered to pay £9,427,123 by Maidstone Crown Court after it was found that he benefitted from his criminal activity by the same amount.

Kent Police have used “The Proceeds of Crime Act”, to order Bestel to pay back the full sum, within six months, or serve a further ten years in jail.

Detective Inspector Mark Fairhurst commented on the case stating: “This demonstrates the committed approach of the Kent and Essex Serious Crime Directorate in ensuring criminals do not benefit from the proceeds of their criminality. Offenders will be pursued even when released from prison to ensure their assets are taken from them.”

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The Financial Services Authority (FSA) have warned landlords and homeowners about ‘property hijacking’, the practice whereby fraudsters attempt to raise mortgages on empty properties that they do not own.

The FSA says it has observed a notable increase in cases of UK property hijacking.

The warning has gone out to all UK mortgage brokers, but agents and landlords should also be aware of the potential for fraud.

In its smaller firms regulation round-up for April 2012, the FSA warned UK mortgage brokers that: “There have been attempts by fraudsters to raise mortgages on unencumbered properties which they do not own – property hijacking. This demonstrates the importance of undertaking appropriate due diligence when engaging in new relationships, to ensure that you know who you are dealing with and can identify any trends or anomalies in the business being offered.”

The Financial Services Authority (FSA), are urging people seeking mortgage advice to ensure they obtain the correct type of mortgage product for their residential property purchase.

The FSA have said that Buy to Let Mortgage applications are rising, but a growing number of applications are fraudulent.

Would be homeowners and borrowers who, for whatever reason are unable to meet the strict lending criteria now demanded for a UK residential mortgage, are attempting to fraudulently use Buy To Let (BTL) mortgages as a means to purchase property, despite having no intention of being a landlord or ever renting the property out to tenants.

Buy to let mortgages are not regulated in the same way as residential mortgages and the borrowing criteria are more relaxed.

This means that buyers who fail to meet the income and credit check requirements of a residential mortgage can still get approval for a similar sized buy to let mortgage.

The FSA believe that intermediaries and financial advisors are involved in the fraudulent applications.

When asked about the rising levels of deception an FSA spokesman commented: “We are seeing anecdotal evidence of unregulated buy-to-let mortgages being used fraudulently as a replacement for regulated residential mortgage contracts, as borrowers and intermediaries seek to circumvent more stringent income and affordability checks.”

Fraudulent tenancies on the increase in the UK

Are Tenant Applicants Really Who They Claim To Be?

UK Landlords and letting agents are being warned about an increase in bogus tenant applications.

Fraudulent applicants have been filling out tenancy application forms provided by honest landlords and agents, giving inaccurate or misleading information, in a bid to secure the rental of the property.

It is not unknown for the fraudsters to move from property to property, with no intention of keeping up with the rent, even within the same small town.

Fraudulent tenants often give false information on where they have been living previously to throw referencing companies and letting agents off the trail.

They are also very difficult to evict as the more professional bad tenants appear to know their way round the legal system. Eviction of these “professional bad tenants” is better left to an eviction specialist such as Legal 4 Landlords.

Tenant fraud has been problem for letting agents and landlords alike for a number of years and is apparently on the increase in some parts of the UK.

It is essential that landlords and their agents have a checklist for new tenants that include obtaining ID documents and proof of current residency at the earliest stages of a tenancy application.

Landlords and their agents need to be alert for anything unusual that could increase the risk for the landlord.

Comprehensive tenant referencing services are a vital tool for landlords and letting agents to spot anomalies, oddities and the potential for fraud in all tenancy applications.

Tips for landlords and letting agents to help reduce Tenant Fraud.

  • Request photo ID
  • Obtain a credit check – individuals with good credit histories are generally good tenants.
  • Use a professional company, such as Legal 4 Landlords for thorough tenant referencing
  • Get references from employers – Obtain written references and where possible speak to the employer personally
  • Get references from all previous landlords – although references from landlords may need to be taken with a pinch of salt as some landlords just want to get rid of problem tenants and will give good references.
  • Obtain copies of payslips and bank statements
  • Compare addresses shown on the application with those shown on ID documents
  • Look at what kind of car the prospective tenant drives
  • Trust your gut instinct
  • Do not take anything at face value

Landlords are urged to double check everything and if they have any reasonable suspicion that things are not quite what they seem, then they should refuse the tenancy, no matter how desperate they are to get someone in their property. Letting to a dishonest tenant will cost the landlord even more financial heartache in the long term.

Landlords should also beware of another common practice employed by dishonest tenants – subletting!

Sub-letting is an illegal practice that the UK Government are trying to stamp out, however it has become a common practice among fraudsters in the private rented sector, (PRS).

When tenants have accepted the landlord’s terms and conditions regarding the tenancy, signed the AST and apparently appear to have moved in. Only to rent the property out again to another unsuspecting dupe at a profit. Often in cases where this happens the bogus tenant will abscond with everyones money, leaving the sub-letting tenant homeless and the poor, unsuspecting landlord high and dry.

When a landlord carries out regular periodic property maintenance, they should check that the occupier is still the same person named on the assured shorthold tenancy agreement, (AST).

Why Does Housing Benefit Cost Taxpayers £22 Billion (GBP) A Year?

The latest figures from the Department for Work and Pensions, (DWP), show there are close to 5,000 families still claiming more than the £400 Housing Benefit cap.

According to a report in the Daily Mail

  • At least 100 families are living in luxury homes and raking in enough housing benefits to fund a £1 Million mortgage each
  • Of the 100 families, 60 have their rent paid by the state to the value of £5,000 a month, according to the Department for Work and Pensions
  • More than 30 of those families are given a staggering £1,500 a week (£6,000 a month) to live on and at least 60 families receive more than three times the national average wage, getting £5,000 a month
  • Unemployed living in luxury homes in upmarket parts of London such as Kensington, Chelsea and Westminster
  • Poor families should not be allowed to live ‘swanky’ lifestyles in postcodes beyond their means, says campaigners
  • Calls for the Government’s £400 per week cap to be properly enforced

Although almost four out of every five people on housing benefit pick up less than £100 each week.

At a time when millions of people are struggling to get on the housing ladder, the handouts would easily cover the monthly payments on a £1Million (GBP) mortgage.

Government ministers last year announced a sweeping range of welfare reforms that included housing benefit, which costs the taxpayer £22 Billion (GBP) every year, should be capped at £400 per week.

The figures have been criticised by campaigners and raised concerns that the Government’s plan to cap housing benefit is not being enforced.

Public opinion has been riled by the cases of immigrants and asylum seekers who have been allowed to live in lavish flats at the expense of taxpayers.

The Government handouts have allowed families to live in upmarket parts of London such as Kensington, Chelsea and Westminster alongside wealthy neighbours such as Roman Abramovich and George Michael.

WHERE HOUSING BENEFIT CASH GOES EVERY YEAR 

  • NORTH  EAST………………………….. £923.8m
  • NORTH WEST……………………….. £2,371.5m
  • YORKSHIRE…………………………….. £1,497m
  • EAST MIDLANDS………………….. £1,112.6m
  • WEST MIDLANDS…………………. £1,736.6m
  • EAST…………………………………….. £1,632.6m
  • LONDON………………………………. £5,539.0m
  • SOUTH EAST………………………… £2,536.9m
  • SOUTH WEST……………………….. £1,525.9m
  • WALES…………………………………….  £892.9m
  • SCOTLAND ………………………….. £1,660.6m

TOTAL  £21,429.5m

 

The figures will raise calls for the Government’s benefit reforms to be bulldozed through the Commons – despite pleading from Liberal Democrats.

The data, made public under the Freedom of Information Act, show the areas of the UK that pay out the most in housing benefit are

  1. Birmingham – £469 Million per year
  2. Glasgow       £337 Million per year
  3. Brent            £306 Million per year
  4. Westminster £281 Million per year
  5. Hackney       £267 Million per year
  6. Newham       £264 Million per year
  7. Enfield          £258 Million per year
  8. Haringey       £254 Million per year
  9. Liverpool      £254 Million per year
  10. 10.  Manchester £248 Million per year

The DWP says the new rules which have been put in place mean that those families currently getting more than £400-per-week will be gradually taken out of the system and moved into cheaper accommodation.

A DWP spokesman added: ‘These figures underline exactly why our Housing Benefit reforms are so necessary’.

Emma Boon of the TaxPayers’ Alliance said: “This is further evidence that it is right to cap benefits. It is unfair to ask taxpayers to pay for swanky central London homes for others when they can’t afford to live in those postcodes themselves. Many middle or low income families have to decide if they can afford to house their family in town, or if they have to move out to somewhere more affordable. It is not unreasonable to ask those on benefits to make the same choice.”

 Read the Full Daily Mail article here

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The Land Registry has waived its fees for landlords who want an extra security function in a bid to counteract increasing property fraud.

From 1st February 2012, UK landlords will no longer have to pay for restrictions to be entered on their residential rental properties deeds at the Land Registry.

The restriction is designed to help prevent property fraud by requiring that a competent solicitor or property conveyancer must certify that they are satisfied that the person selling or mortgaging the property is the rightful and true owner of the property.

Home owner occupiers will have to continue paying a small fee for the charge, but the new exemption extends to buy-to-let investors and others not living in the property they wish to protect, including elderly people in long-term care or people who have moved out of their home after a relationship breakdown.

Landlords are at a proven higher risk of property fraud than homeowner-occupiers, and there have been cases where tenants have passed themselves off as the owner of the property and attempted to sell it or raise money on it via a mortgage.

See additional “Spotlight” articles about Property Fraud

By law the Land Registry must compensate the rightful owners of a registered property if there is sufficient evidence of a property fraud.

In 2010, 30 of the 71 claims paid out by the Land Registry for fraud and forgery were by non-family members.

Of these, 23 involved properties with an absent owner and amounted to £2 Million (GBP) out of the total £7.3 Million (GBP) compensation paid.

Landlords are urged to take up the land registry safeguard and also to take extra action to prevent ID and property fraud:

  • Use the Post Office’s mail redirection service if you have lived in the property yourself and are now renting it out. Use the service for at least a year.
  • Be extremely careful about details you give out on social networking sites like Facebook. Do not give out personal information such as date of birth.
  • Ensure that all your properties are registered with the Land Registry.
  • Ensure that all your contact details are updated and correct, so that the Land Registry can get hold of you if it wants to query anything.
  • Utilise the Land Registry facility to have three addresses on the register. Email addresses, as well as physical addresses, can be included.
  • Finally, use the free facility described above to enter a restriction on your property, requiring your solicitor to certify that the person attempting to sell or mortgage the property is the owner.

Chief Land Registrar, Malcolm Dawson, said: “It is important to let home owners know what simple steps they can take to protect their property, one of which is now the ability for those at greatest risk to have a free restriction entered which might prevent their property from being targeted by fraudsters and stolen unawares. We have introduced a range of additional safeguards in the last four years and we also work closely with other organisations to do all we can to tackle fraud and identify and take corrective action when it has happened. But home owners must also be vigilant and play their own part in protecting their properties against fraud.”

Original source: LandlordToday.co.uk

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Mark Lawton, 45, from Town Moor in Doncaster, who acquired a £2million property portfolio, including luxury properties in Tenerife and across South Yorkshire, through fraud has been jailed for two years at Sheffield Crown Court yesterday.

Investigations revealed that Mark Lawton, 45, from Town Moor in Doncaster had committed a series of frauds from which he amassed a significant property portfolio. He owned 17 properties in Tenerife and across Doncaster, which were rented out, but for which he didn’t declare any profits. He also lied about his financial circumstances to obtain a loan by deception, as well as providing false income details in order to claim the education maintenance allowance for his son.

Although Lawton also owned the extensive property portfolio he had claimed that his family’s small tanning salon business only made him an income of around £10,000 per year. HM Revenue & Customs (HMRC) estimate that Lawton had defrauded the taxpayer out of £65,000 in unpaid taxes alone.

Lawton was caught when HMRC seized 10,000 illegal cigarettes which he had been selling and £50,000 in cash stored at his home and business premises. He was found guilty of fraud and failing to pay tax on his business profits.

Lawton pleaded guilty to charges of cheating the public revenue, evasion of excise duty and possession of criminal property (£50,000 cash). He was sentenced yesterday to 24 months imprisonment for cheating the public revenue, three months imprisonment for the evasion of excise duty – sentences to run concurrently. £50,420 cash was forfeited to the Crown for the charge of possession of criminal property. Lawton was also ordered to pay £10,000 in costs.

Lawton’s wife Christina was convicted of fraudulently claiming the education maintenance allowance for their children. The couple’s accountant Joanne Outram, 42, from Rossington was also convicted of helping the couple to prepare false documentation, to facilitate their claim for the education maintenance allowance payments.

Peter Hollier, Deputy Regional Director of Criminal Investigation for HMRC said:

“Lawton made a significant effort to hide his business dealings from the authorities. He enjoyed the benefits of our public services and lived a lifestyle that many families work hard to achieve, but his activity was stealing vital public revenue. It is only fair to those hard working families that he has been brought to justice.”

Sentencing Mark Lawton yesterday His Honour Judge Kelson QC commented: “You and your wife were living well beyond your declared means. What you declared to the Revenue was far short of the correct figure – therefore you were enjoying a better lifestyle than that of honest people.”

The Judge also passed comment sentencing the couple’s accountant Joanne Outram stating: “You are a qualified accountant, a professional person and you did this for personal gain by keeping the custom of your client. The involvement by professional people by making claims on the state erodes the public confidence.”

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