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Two mortgage brokers jailed for £28m B2L fraud

Two mortgage brokers from a franchise of The Money Centre have been imprisoned after a £28m buy-to-let fraud.

Both of them worked at The Money Machine in High Wycombe, a franchise of The Money Centre.

John Stirzaker, 33, from Aylesbury was sentenced to three years’ imprisonment after being investigated by the Thames Valley Police’s Economic Crime Unit.

Paul Butcher, 31, from High Wycombe was sentenced to 18 months in prison.

A third individual involved in the scam was Butcher’s assistant Mark Stratford, 32, also from High Wycombe. He was sentenced to two years in jail.

In October 2008 suspicious activity was uncovered in mortgage applications. As a result, The Money Centre’s company director’s immediately informed the Financial Services Authority, the lenders, and the Thames Valley Police Economic Crime Unit.

In total lenders lent out £28m on mortgages with false valuations. The suspicion was that the fraudsters had applied for online valuations from national valuation agencies. When they received the completed valuations online, they would print them off and amend them by cutting out figures from previous valuations and sticking them onto the new ones, ensuring they got the maximum loan possible.

Stirzaker completed 109 fraudulent applications, making a minimum of £32,047 in commission plus bonuses.

Butcher completed 85 fraudulent mortgage applications. He obtained more than £11,091 in commission. Stratford was involved in all of
Butcher’s applications and received 10% of all the latter’s commission but is not a broker.

Confiscation proceedings have commenced under The Proceeds of Crime Act and the ECU has called on lenders to improve their internal systems.

Detective Sergeant Nick Bell, from the ECU, says: “The impact of the actions of these three individuals upon the Money Centre cannot be underestimated, their fraudulent activity to generate higher commissions and buy property for themselves contributed to a massive financial loss to the company and a huge number of people being made redundant in these difficult times.”

Lloyds Banking Group stopped accepting mortgage applications from The Money Centre in December 2009 and as a result the brokerage was forced to make 300 staff redundant.

Mark Alexander, co-founder of The Money Centre, told Mortgage Strategy that he was delighted that the three had been sent to jail.

He says: “We don’t think the sentences are long enough – they have had their assets stripped but it is never going to repair the damage that was made from making 300 people redundant on Christmas Eve last year.

“Their selfish actions meant that a lot of people lost their jobs.”

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  • Rayan 23rd December 2010 at 9:14 pm

    I dont know too much about what your both saying but what i will add is that paul butcher and mark stratford r very good friends of mine and i cannot just see this being there fault. Dont forget Mr Alexander you employed paul knowing he had little knowledge of mortgages.And from what I understand you reguarly endulged in out of work activity’s. Was this the company’s money or your own? Also I have too agrre with colin view why were checks not done.. if my friends are guilty then you should be too. It was obivously a buisness going in one direction and thats down as you never seemed to care what was really going on. Im sure you still live in your nice house with your flash car. 300 employees may have lost a great deal from all this but you seemed to gain quite a bit.

    On a personal side. both paul and mark work very hard and have been unfortunate within there work places. I feel that they have been made as scapegoats .. and yeah we all know they pleaded guilty but only for a reduce sentance.. guilty is the new innocent.

  • Rayan 23rd December 2010 at 9:14 pm

    I dont know too much about what your both saying but what i will add is that paul butcher and mark stratford r very good friends of mine and i cannot just see this being there fault. Dont forget Mr Alexander you employed paul knowing he had little knowledge of mortgages.And from what I understand you reguarly endulged in out of work activity’s. Was this the company’s money or your own? Also I have too agrre with colin view why were checks not done.. if my friends are guilty then you should be too. It was obivously a buisness going in one direction and thats down as you never seemed to care what was really going on. Im sure you still live in your nice house with your flash car. 300 employees may have lost a great deal from all this but you seemed to gain quite a bit.

    On a personal side. both paul and mark work very hard and have been unfortunate within there work places. I feel that they have been made as scapegoats .. and yeah we all know they pleaded guilty but only for a reduce sentance.. guilty is the new innocent.

  • Mark Alexander 22nd December 2010 at 7:49 pm

    TMC was a packager. That doesn’t excuse BMS for not auditing their applications and valuations though. Indeed, how on earth did so many applications get through? Colleys and BMS are sister companies have have access to each others systems for God sake! Would this practice still have been going on if TMC hadn’t spotted it and reported it? They soon stopped allowing packagers to submit applications after this hit the news didn’t they? How many other applications did BMS not check? Could it be that BMS/HBoS tried to stop TMC reporting the crimes to hide their embarrasement? Could it be that Lloyds stopped dealing with TMC because TMC insisted on pushing the Police to prosecute? Maybe Lloyds beleived that if they used their new found Monopoly to stop TMC trading the problem would go away?

  • Mark Alexander 22nd December 2010 at 7:34 pm

    TMC was a packager. That doesn’t excuse BMS for not auditing their applications and valuations though. Indeed, how on earth did so many applications get through? Colleys and BMS are sister companies have have access to each others systems for God sake! Would this practice still have been going on if TMC hadn’t spotted it and reported it? They soon stopped allowing packagers to submit applications after this hit the news didn’t they? How many other applications did BMS not check? Could it be that BMS/HBoS tried to stop TMC reporting the crimes to hide their embarrasement? Could it be that Lloyds stopped dealing with TMC because TMC insisted on pushing the Police to prosecute? Maybe Lloyds beleived that if they used their new found Monopoly to stop TMC trading the problem would go away?

  • Sheffman 21st December 2010 at 3:33 pm

    TMC was a direct packager and used to instruct their own valuations independant of the lender.
    When the reports had been signed off by the surveyor they could be printed off within TMC offices before being submitted to the lenders together with all the other documentation that the lender requires in support of the case.

    All Money Centre offices had quality control departments who would check each and every case before sending the case to the lender.
    The amended vals must have been very convincing otherwise they would not have got through QC.
    It is my understanding that one of the lenders did a spot check on a sample of cases and contacted the valuers who reported different figures to what was shown on the val reports presented to them by The Money Centre.
    TMC was one of the best Buy To Let brokerages in te market and its a real shame that a few stupid individuals took it upon themselves to commit this fraud.
    As Mark Alexander has said the actions of a few have cost the jobs of many.

    The other result of their actions is no one in the brokerage industry is allowed to package anymore and I doubt it will ever come back!

  • Michael Fisher 21st December 2010 at 3:33 pm

    TMC was a direct packager and used to instruct their own valuations independant of the lender.
    When the reports had been signed off by the surveyor they could be printed off within TMC offices before being submitted to the lenders together with all the other documentation that the lender requires in support of the case.

    All Money Centre offices had quality control departments who would check each and every case before sending the case to the lender.
    The amended vals must have been very convincing otherwise they would not have got through QC.
    It is my understanding that one of the lenders did a spot check on a sample of cases and contacted the valuers who reported different figures to what was shown on the val reports presented to them by The Money Centre.
    TMC was one of the best Buy To Let brokerages in te market and its a real shame that a few stupid individuals took it upon themselves to commit this fraud.
    As Mark Alexander has said the actions of a few have cost the jobs of many.

    The other result of their actions is no one in the brokerage industry is allowed to package anymore and I doubt it will ever come back!

  • colin 21st December 2010 at 3:07 pm

    false valuations……..how on earth did this get through the system…BM instruct Colleys, Colleys report it back via quest electronically directly to BM……no room for funny business.

    Unless TMC was a packager ??

    The lender probably wasn t too fussed it was non reg B2L, their most profitable lending channel……..

  • Jon 21st December 2010 at 1:05 pm

    There seems to be a number of system failings –

    On the lenders part an automatic letter to the valuer quoting the valuation figure submitted with a responsibility for the valuer to contact the lender if not the same as their valuation would have identified the problem on the first application.

    Also the franchisor should have had a system in place to check applications being processed. Mortgages totalling £28 million and circa 200 mortgage application – systems should have been in place to pick this up sooner – and to stop it happening again.

    None of the organisations affected come out of this well.

  • Mark Alexander 21st December 2010 at 11:36 am

    First, the criminals were NOT franchisees of The Money Centre. They were employees of a franchisee.

    Second, The Money Centre reported the crimes, not the mortgage lenders.

    Third, there is no mention of the lenders lack of ‘due diligence’. They had the ability to check the valuations. Birmingham Mishires and Colley’s surveyors are sister companies. They have access to each others systems. The judge even mentioned this. Had they done their ‘due diligence’ properly the crime would have been detected on the first case!

    How is it the criminals can get such a short sentence and the lenders don’t get any bad press in respect of their negligence but the real victims of the crime (The Money Centre and its employees) lose the the most profitable element of their business and have their names dragged through the mud?

    The Money Centre paid every creditor and have managed to survive. Should the Directors have simply taken all the money out of the company, closed it down, not reported the crime and left others to deal with the mess?

    They didn’t, and for one reason only, they beleive in justice!

    They hoped the convictions would put the records straight, instead the press seem happy to continue to give the real victims a kicking.

  • Mark Alexander 21st December 2010 at 11:35 am

    First, the criminals were NOT franchisees of The Money Centre. They were employees of a franchisee.

    Second, The Money Centre reported the crimes, not the mortgage lenders.

    Third, there is no mention of the lenders lack of ‘due diligence’. They had the ability to check the valuations. Birmingham Mishires and Colley’s surveyors are sister companies. They have access to each others systems. The judge even mentioned this. Had they done their ‘due diligence’ properly the crime would have been detected on the first case!

    How is it the criminals can get such a short sentence and the lenders don’t get any bad press in respect of their negligence but the real victims of the crime (The Money Centre and its employees) lose the the most profitable element of their business and have their names dragged through the mud?

    The Money Centre paid every creditor and have managed to survive. Should the Directors have simply taken all the money out of the company, closed it down, not reported the crime and left others to deal with the mess?

    They didn’t, and for one reason only, they beleive in justice!

    They hoped the convictions would put the records straight, instead the press seem happy to continue to give the real victims a kicking.