U.K. Fraud Office Arrests Six in Alleged Commercial Loan Fraud

U.K. prosecutors arrested six people and searched 19 properties in an investigation into suspected advance-fee fraud and rent fraud in the commercial property market.

The Serious Fraud Office is investigating a company operating as Gresham Ltd. and Gresham Finance (London) Ltd. that offered commercial loans of as much as 250 million pounds ($416 million), the London-based agency said today in a statement. The companies charged applicants up to 50,000 pounds for voluntary background investigations and a payment of as much as 5 percent of the face value of the loan, the SFO said. Suspected losses are at least 12 million pounds, SFO spokesman Sam Jaffa said.

After Gresham had taken the payments, it allegedly didn’t deliver the loans, according to Jaffa. The suspects are also alleged to have committed rent fraud by asking for incentive fees or a year of free rent from landlords in exchange for renting their property. The suspects then subletted the property, kept the payment and never delivered rent, the SFO spokesman said.

A phone number for Gresham was disconnected and the company couldn’t be reached for comment. The company is in liquidation, the SFO said.

Gresham Finance (London) Ltd. has no relation to Gresham Finance Ltd., which isn’t under investigation, the SFO said.

Prosecutors executed search warrants at 19 commercial and residential properties in London, Surrey, Cheshire and Derbyshire, England, yesterday, Jaffe said. Three of the six apprehended are due to appear at the City of London Magistrates Court today, the SFO said.

Source:  Bloomberg