Solicitors 'in one of UK's largest ever mortgage frauds'

Simon Lawrence, Fatema Patwa, Hardeep Sodhi, Laurence Ferrigan, Kamran Malik and Mark Knight took part in a scam that allegedly amounted to taking out an 866 per cent mortgage on six properties, Southwark Crown Court was told yesterday.

Andrew Baillie QC, prosecuting, told the court the solicitors had acted for various companies, which applied for the loans after apparently selling the properties to each other to inflate the price.

He added they also used valuation reports that included false leases to up the value. The reports were provided by chartered surveyor Ian McGarry, who has already admitted two counts of conspiracy to defraud and four counts of obtaining money transfers by deception.

All six solicitors deny obtaining money transfers by deception.

Mr Baillie said: "Between February 2005 and March 2006, a period of about 13 months, banks and building societies were persuaded to lend a total of 49,287,000 on the supposed security of these six properties.

"This is not an 80 per cent or a 90 per cent mortgage but, taking all of these loans together, it was the equivalent of an 866 per cent mortgage.

"When they realised the properties were worth only a fraction of what they thought, 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."

He added: "It must be one of the largest mortgage frauds ever perpetrated in the UK.

"The question that this trial has to address is whether each of these defendants is guilty of acting fraudulently."

The court heard that Concentric Works, an industrial complex in Birmingham, was bought for 1.3m by a company in 2004.

It was apparently sold on several times, eventually being bought by a firm for 14.5m, including a 10.5m mortgage from Cheshire Building Society.

According to a valuation by McGarry, the property was worth 16m with tenants, or 10.5m without tenants.

But valuers instructed by the Serious Fraud Office found the property was worth just 1.3m, the court heard.

The jury was told that other properties involved in the scam included Tattersett Business Park in Fakenham, Norfolk, which was initially bought for 2.75m and eventually sold for 16m with a mortgage for 9m from Societe Generale.

Mr Baillie said a property in Alma Street, Smethwick, in the West Midlands, was also involved. After being valued by McGarry at 2.3m, it was repossessed and sold for "a nasty loss" at just 100,000.

The trial continues.