FSA acts on three for mortgage fraud

These actions bring the total number of mortgage brokers banned to 91 and serve as a warning to individuals who are involved in mortgage fraud, try to mislead the FSA or who fail to comply with its rules.

John Charalambous, a director of TFA, an authorised mortgage and general insurance intermediary in Sidcup, Kent, has been fined £294,500, for taking part of a customer’s mortgage advance, and for attempting to defraud life insurance companies.

Charalambous advised a customer to remortgage their property to raise additional money for a new property, increasing the amount of the loan on the mortgage application without the customer’s knowledge or approval, and arranging to receive the excess amount into his own bank account.  He then wrote the customer cheques which he was fully aware would bounce; and continues to owe the customer £44,500. 

He also set up life insurance policies in the name of customers without their knowledge to obtain commission and applied for other false life insurance policies in an attempt to obtain commission payments.

Following an investigation, the FSA concluded that Charalambous had committed serious mortgage fraud which resulted in significant customer detriment and that a ban and significant financial penalty was appropriate.

Richard Granville Greenland, of Beckenham in Kent, and an approved person of Guardian, a small mortgage broker, has been banned and fined £120,000 for knowing involvement in mortgage fraud and failing to ensure Guardian had appropriate systems and controls.

Part of the fine (£100,000), is imposed for Greenland’s involvement in mortgage fraud.   Greenland submitted applications to lenders on behalf of customers and himself which he knew contained false and misleading information. The remainder, £20,000, was imposed on Greenland for failing to ensure that he and his company complied with FSA standards, including failing to ensure that Guardian maintained customer records and recorded the suitability of advice it gave to customers. 

The FSA concluded that Greenland failed to meet minimum regulatory standards in terms of honesty and integrity, and competence and capability, and that he is not a fit and proper person.

Michael Adam Goldman, of Goldman Group, Manchester, acted as a mortgage and insurance intermediary and was an approved person and an authorised person.  The FSA has banned Goldman for submitting a fraudulent application for himself in 2007, and for submitting fraudulent mortgages for three closely related clients, and concluded he is not a fit and proper person to continue trading.

Goldman substantially inflated both his own and his clients’ income in order to obtain fraudulent mortgages.  Given the seriousness of the fraud, Goldman would have also been fined £102,158 if he had not been declared bankrupt in November 2009. 

Margaret Cole, the FSA’s director of enforcement and financial crime, said:

“We take mortgage fraud very seriously, particularly when customers suffer or are financially at risk.  All three individuals have demonstrated a serious lack of integrity and we regard it as even more serious when those in senior roles and who are trusted by the customers abuse their positions. 

“The FSA continues to identify threats to consumers through intrusive supervision and removes these where possible by banning rogue individuals.  We expect this tough action to deter others from conducting themselves in this way.”

Two of these cases arose from the thematic review work of the FSA’s Small Firms and Contact Division.  The third case arose after the FSA’s Small Firms and Contact Division pursued concerns raised by a third party.

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