Friday, December 8, 2023

Two found guilty of making £3m worth of fraudulent mortgage applications

Larry Barreto, based in the East Midlands, has been found guilty of 11 charges of fraud by false representation following a prosecution brought by the Financial Conduct Authority (FCA).

At an earlier hearing, Mr Barreto pleaded guilty to two offences of arranging and advising on regulated mortgages without FCA authorisation. At the beginning of the trial, Mr Barreto’s co-defendant, Tassib Hussain, a chartered accountant, pleaded guilty to fraud by false representation.

The total value of the mortgages falsely applied for was around £3 million.

Between 1 January 2015 and March 2018, Mr Barreto gave advice to clients looking to take out residential mortgages without the necessary FCA authorisation. In 11 cases, he also dishonestly inflated the mortgage applicant’s income in their application to the lender.

Mr Barreto charged the client a fee which he would then pay in cash to Mr Hussain, who created false self-employment and employment documentation to support mortgage applications for clients with insufficient income.

Mr Hussain also produced multiple documents purporting to have been issued by HMRC and containing false income figures, which in each case were sent on to the lender by Mr Barreto.

With Mr Barreto’s knowledge, Mr Hussain also claimed to employ two of the applicants to create a false impression of their income, producing false contracts of employment and payslips in support, which Mr Barreto also forwarded to lenders.

As a result of the fraud, lenders granted mortgages to several applicants on a false basis, placing lenders at greater risk of loss.

Steve Smart, Joint Executive Director of Enforcement and Market Oversight, said: “Mr Barreto and Mr Hussain knowingly lied and misled their clients and mortgage providers in order to benefit financially from mortgage applications. This put borrowers at risk of taking on unsustainable levels of debt, and left lenders open to losses.

“Today’s verdict demonstrates our commitment to tackling fraud and sends a warning to anyone involved in similar criminal activities that we will pursue them, so they face the full force of the law.”

Mr Barreto had previously been struck off as a financial adviser by the Personal Investment Authority (in 1996) and prohibited from carrying on regulated activity by the Financial Services Authority (in 2004).

Both individuals will be sentenced on 23 February 2024.

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