Buy To Let Scams And The Property Boom Fraudsters

The Serious Fraud Office recently confirmed that, with the collapse of the mortgage lending and property markets, buy-to-let scams have emerged to take advantage of the crisis.

UK detectives are looking at cases which involve millions of pounds in alleged property fraud, and are investigating many cases involving thousands of property investors worldwide. Closer to home, there have been a number of high profile off plan, buy-to-let frauds involving hundreds of properties in the cities of London, Liverpool, Cardiff, Nottingham, Derby, Manchester, Leeds and Hull. 

Recently, five directors of the north east based company PPP ltd (Practical Property Portfolios) and its sister company Napeer Holdings Ltd pled guilty in court to fraudulent trading charges.

Newcastle Crown Court heard that the companies lost £65 million of investor’s money and were wound up as a result of these losses. PPP sold 4000 residential properties for £80 million. Investors had paid fees of £25,000 for their investment properties, with a “rental guarantee”.

Also,  police were investigating an alleged £2 million multinational property fraud involving a York based company, Chancellor Property Developments Ltd., after they arrested and bailed four people on suspicion of conspiracy of money laundering and fraud.

Yet another company in the Midlands, Ocean View Properties, was suspected by Liberal Democrat MP, Norman Baker, of involvement in another property scam. The company’s accounts were shown to hold debts of more than £100 million, and property investors based in the UK are believed to have lost millions of pounds through their dealings with them. Investors were buying £70,000 off plan apartments in Spain and the Dominican Republic through Ocean View Properties.

In the Republic of Ireland the assets of Breifne O’Brien, totaling some £32 million, were seized, including exclusive properties in Dubai, Dublin, Paris and the Caribbean. Mr. O’Brien had been accused of operating a pyramid scheme aimed at property investors. Mr. O’Brien had to answer accusations leveled against him in the Irish Commercial Court.

Over 15 years Mr. O’Brien had allegedly channeled money from property investors to fund his luxury lifestyle and business interests. In 2008 the Association of Chief Police Officers reported that some £700 million pounds had been defrauded from mortgage lenders in order to launder money from prostitution and the drugs trade. Most of these frauds were designed to overvalue newly built apartments, purchased with false documentation. 

Thanks to such scams, it is now harder than ever to gain mortgages for buy-to-let properties and new build apartments

As property guru Martin Brennan said in interview recently, "...most of these outfits go one of two ways;

1. They disappear after a year or so of taking peoples money.
2. They appear on BBC Watchdog ...and then come under item 1. above.

Anybody in the property game knows very well that the best property buys are completed discreetly and quietly."