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The tale of an Old Bailey fraud witness

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  • 21/07/2011
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The tale of an Old Bailey fraud witness
A mortgage industry boss describes the chain of events after his ex-firm discovered one of its employees was a fraudster.

Robin Johnson, ex-MD of Ashdown Lyons speaks exclusively to Mortgage Solutions editor, Victoria Hartley

 

“My first inkling there could be a problem followed our regular monthly meeting, when I heard Mary-Jane saying how lucky she was her husband had won a Bentley at Heathrow Airport. I called our risk manager that evening,” said Johnson.

Previously Mary-Jane Rathie had been one of his top surveyors in Ashdown Lyons. She was both “incredibly professional and very diligent,” he said and had worked at Ashdown Lyons for five years, which coincidentally went into administration during the downturn in February 2009.

Two weeks ago, Mary-Jane Rathie was convicted of five counts of fraud between May 2007 and June 2009 and of concealing criminal property. The judge warned her to expect “imprisonment of some length” when she is sentenced on Wednesday, next week, at The Old Bailey. It is not clear whether she will seek permission from the court to appeal.

Rathie has been convicted for overvaluing five properties in Central London, including a flat in Belgravia and a riverside property in Chelsea, in exchange for roughly £1m in cars and cash.

Prosecutor David Durose told the Court Rathie had “dishonestly-inflated” valuations for a woman known as Joanne Pier, who secured mortgages from the Bank of Scotland and has since disappeared.

Back in April 2008, after Johnson raised the alarm, the firm’s risk manager collated Rathie’s files and after an internal investigation at Ashdown Lyons concluded commercial valuation methodologies had been inappropriately used for a series of upmarket, residential executive lets.

“Her valuation work had been carefully audited in the software main frame, however, re-typed valuation reports overwritten for lenders had not been flagged up.”

After an internal and external audit, Rathie was interviewed and dismissed for gross misconduct. She appealed again, which was also dismissed, then Rathie launched a claim in the employment tribunal against the firm.

Meanwhile, Johnson was obliged to provide any potential evidence of fraud to the company’s Professional Indemnity insurer.

“We weren’t in a position to substantiate a claim against the company at this point because we weren’t sure of the level of exposure for that lender,” he said. “We had a strong relationship with the HBOS Group and I had a lot of support from the executives involved when we came to them to disclose the fraud.”

Johnson was one of four Ashdown Lyons witnesses to volunteer to appear for the Crown Prosecution Service and he testified over three days from 7 June. There was no eye contact between Rathie and Johnson during that time, he said.

“The Old Bailey is a very small environment – it puts everyone on edge. It’s almost purposely confrontational,” he said.
“Everyone is physically very close and the judge is placed high above the court room.”

Johnson said the process was both stressful and uncomfortable at times.

The figure bandied about for UK property fraud is £3bn, but it’s almost impossible to know the full extent of the crimes committed in the UK. According to CIFAS, in 2010, the figure for credit application fraud fell -23%, where its mortgage application fraud figure increased.

“No-one truly knows the level of mortgage fraud because lenders would prefer not to admit the figures. Providers would rather make a claim against a solicitor or surveying firm and list the legal costs as negligence than provision capital for a mortgage fraud claim.

Johnson added: “We are here to be the eyes and ears of the lender – and that can sometimes be forgotten.”

“But importantly, you mustn’t start to become suspicious of your own surveyors, viewing them as potential criminals. Checking your auditing and risk function is far more effective due-diligence,” he said.

Since the publication of this feature, the defendant Mary-Jane Rathie of Waltham Cross, Hertfordshire, has been sentenced to six years for her part in the Mortgage valuation scam.

Robin Johnson is the current managing director of Kinleigh Folkard and Hayward Chartered Surveyors

 

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