At the City of London Magistrates’ Court last week, Achilleas Kallakis and Alexander Williams were charged with conspiracy to defraud, forgery and fraud by false representation, money laundering charges and one count of obtaining a money transfer by deception.
In March 2009, the Serious Fraud Office (SFO) started investigating the alleged fraud in cooperation with the City of London Police.
The investigation found the pair had forged documents to show that tenants were paying higher rents than they actually were and had lease contracts for longer terms than stated, which inflated properties prices.
It also found the guarantees of certain lease payments on the properties by a counterparty were fraudulent. These guarantees meant the banks extended loans for the purchase of properties as they believed they came with longer, more lucrative leases.
Once alerted to the alleged fraud, AIB took control of and sold the relevant properties, resulting in a £56m loss.
Both men are on bail pending a hearing at Southwark Crown Court in May.
Simon Webster, managing director of broker Facts & Figures, said: “There is nothing wrong with the availability of funds from lenders, but borrowers need to be creditworthy and provide adequate security.”
