Glasgow man admits self-cert mortgage fraud
Share
A Glasgow man has admitted running up more than £250,000 in mortgage frauds using self-cert mortgage applications.
Edwards Lyons has admitted defrauding £119,000 from Preferred Mortgages between May 2003 and August 2005 to buy a house in East Kilbride.
He has also pleaded guilty to defrauding £140,000 from HBOS between June 2004 and January 2005.
He claimed he was self-employed and making £48,000, when he was working at a community initiative earning just £20,000.
Lyons is described as a “gangster” and the head of a “notorious” criminal family by the Scottish press.
He also pled guilty to an offence in terms of Section 327 of the Proceeds of Crime Act 2002, by illegally transferring £30,000 of the proceeds from the sale of one of these mortgaged properties to his daughter.
Sentence has been deferred on Lyons until 27 April 2010.
The Crown also advised the Court that it would be seeking to recover the proceeds of Lyons’ crimes by a confiscation order.
A confiscation hearing under the Proceeds of Crime Act 2002 has been set down for 25 May 2010.
Speaking after the hearing, Scott Pattison, Crown office director of operations, says: “Edward Lyons failed to disclose accurate information to mortgage companies in a deliberate ploy to defraud them of money.
“This involved a gross abuse of trust. The Crown Office specialist National Casework Division is committed to working with other agencies to ensure that financial crime is investigated robustly and where there is sufficient evidence, that perpetrators of these crimes are prosecuted.
“We aim to ensure that crime does not pay. The Crown Office and Procurator Fiscal Service is committed to recovering the proceeds of crime using the full powers available under the Proceeds of Crime legislation.”
If you enjoyed this article, sign up here to receive daily email updates from Mortgage Strategy and Follow @mortgagestrat
View results 10 per page | 20 per page | 50 per page
Readers' comments (26)
Kevin friend | 31 Mar 2010 10:37 am
If, and when thsi story hits the National press, it will cause a great deal of worry for 100,000's of mortgage applicants who may have done something similar. There may be blame attributed to brokers, this is going to be the tip of a very BIG fraud issue and potential mis-selling associated with transactions in self cert lending.
Unsuitable or offensive? Report this comment
Paul Tolliday | 31 Mar 2010 10:51 am
There must be more to this story - self cert mortgages were widely available at the time and obviously this would have meant the lender required no proof of income apart from accountant's confirmation that the business existed or an Inland Revenue communication if self assessing. Not only was this type of mortgage widely available but they were also widely used particularly by the self employed who had no accounts, or accounts that showed very little net profit. Their net profit on accounts would usually not show the true income usually due to tax avoidance which remains widespread today. I would maintain that the fault should be lain at the lender's door - it was the lender who did not require proof of income - an open invitation for abuse which was regularly taken up. Does this mean those clients of mine that self certed are all going to be investigated?
Unsuitable or offensive? Report this comment
Anonymous | 31 Mar 2010 10:56 am
Shock, stunned, horror.....an applicant exaggerated his income! The courts are going to be busy!
Unsuitable or offensive? Report this comment
Anonymous | 31 Mar 2010 10:57 am
As Kevin said this is the tip of a very, very big iceberg. Im sure there are more than a few people guilty of this.
Unsuitable or offensive? Report this comment
Adele Turton | 31 Mar 2010 11:00 am
I partially agree with Kevin, however an equal amount of blame has to lay at the doors of the lenders and more importantly the BDM's represetning the lenders. I can not count the number of times I have had a BDM sat in my office, giving guidance on how to get around underwriting criteria, self cert or not. All so they could meet lending and sales targets. Thankfully I did not take this kind advice. You can not wholly blame brokers for everything that goes wrong, each party in each case will have their own part to play. Lender's were well aware of the exaggeration taking place, but they chose to turn a blind eye in the good times and now look to point the finger at everyone else in the bad times. Our society is turning into a litigious one and it will only get worse from here. What happened to people taking things on the chin? Wonder how many no win no fee firms we will see springing up as a result of this little lot?
Unsuitable or offensive? Report this comment
Martin Tapper | 31 Mar 2010 11:04 am
Kevin Friend is quite right. This is potentially enormous. The sad thing is that most people who are potentially at risk are the soft target.
Yesterday it was revealed that (departments of)two major banks had colluded to fix prices on products. The banks considered this to be a localised, departmental issue. Really?
Over recent times, how many brokers have found that the property valuation has taken the deal into a higher LTV band and the only way forward is for the client to pay a higher interest rate? Was this an independent valuation?
To identify and prosecute all of the self-cert culprits will be an impossible costly task. The exercise will create a more fraud aware culture, which is a good thing. But wouldn't it be gratifying to have a little more attention paid to those higher up the tree who helped create the situation and who are benefiting from it even now?
Unsuitable or offensive? Report this comment
Anonymous | 31 Mar 2010 11:05 am
I think this was a deliberate fraud attempt, rather than a case of declaring a higher income to buy a property, many self employed will have done similar and will be managing their payments perfectly well, with no attempt to defraud the mortgasge company, this surely doesn;t relate to that? if it does they'd better have an amnesty and ask brokers to come forward as it will probably be over half the population!
Unsuitable or offensive? Report this comment
Anonymous | 31 Mar 2010 11:14 am
Paul Tolliday was correct, there is more to this story. Edward Lyons, according to reports in other trade publications, is a member of a crime family in Glasgow. I would assume this is part of a wide investigation.
As for self-certified mortgages, all I can say is thank God those days are gone. Another wonderful idea created by an industry that used to be self-regulating, which in itself, was created by another self-regulating industry (ie politicians!).
Unsuitable or offensive? Report this comment
Steve | 31 Mar 2010 11:14 am
The "SELF CERT" market place" - The lenders created a way to generate new business from clients who couldn't prove their incomes. Guess what? They got what they deserved and yet they try and blame everyone else. The word "GREED" comes to mind.
Unsuitable or offensive? Report this comment
Maurice Edgington | 31 Mar 2010 11:20 am
I agree mostly with all comments previously but have to add that lenders offered self-cert mortgages when money was freely available on the basis that their brokers, packagers and even their own staff had a duty of care to ensure that incomes were not deliberately increased in order to obtain larger loans.
Our own enquiry system has always required applicants to complete a full fact find before we look at their enquiry.This is completed on-line and no other way. Many times we have quoted lower mortgage amounts based on what income was shown in the form only to hear nothing further from the applicant or be told that another broker had suggested self-cert as a way to boost income without realising that we had already been told the income in the enquiry form!. The real problem has been collusion between applicant and seller with the lender relying on honesty from both but without an automated system that picks out a random audit of actual income. A system that I tried to sell to a number of sub-prime lenders with no success because lenders said "we rely on introducers and packagers to make sure the income is feasible" So there you have it.
Unsuitable or offensive? Report this comment