Mortgage Solutions exclusively reported the story in June this year after investor and entrepreneur Nick Clarke slapped short-term lender West One with a lawsuit in a bid to get both his cash and costs back from the lender.
The fraudster secured a bridging loan for a higher amount of £570,000 from West One after falsely posing as Italian national Massimo Barbini, the registered owner of 88 Gowan Avenue in Fulham.
He has never been apprehended and the case run by the economic fraud unit has been closed.
However, in a statement, the CEO of short term lender West One, Mark Abrahams (pictured) hit back, saying: “This was a sophisticated identity fraud of which the investors in this loan – including the directors of West One Loans in a personal capacity – were victims.
He said in this case, as with all others, the borrowers’ identity was verified by the company and a solicitor before West One advanced the full amount of the loan to an individual whose passport and identity had been subject to a full ID fraud check.”
Following a preliminary court hearing, the Judge agreed with Clarke the early literature may have given Clarke the impression he was entitled to a charge over the property.
Abrahams admitted the participation agreement literature all investors were meant to sign has since been rewritten “to be certain there are no future misunderstandings.”
“But all our investors know, if we are lending millions of pounds out a year, we couldn’t guarantee those loans and that is why the returns are so generous.”
Abrahams explained, traditionally, a restriction on the property is registered at the Land Registry and after application, that restriction becomes a charge, which arrives within a few days or weeks, but never before the money is lent.
He said the fact the client agreement had been left unsigned was “remiss” of West One, but added, as the first loan the client had ever underwritten with the lender, Clarke should never have agreed to fund the loan without knowledge of how the loan was secured or the risks involved if the deal went wrong.
West One said the other 11 investors were anxious to get their capital back but satisfied their funds would be returned by West One Loans, which was seeking to recover the cash through “a number of channels.”
Abrahams said: “We can confirm that no investor has ever lost capital or interest on investments with West One Loans in over four years of lending. West One Loans has made in excess of 530 loans and lent more than £170m. We have over 180 private investors who have formed a strong on-going relationship with West One Loans over the years.”
Investor Nick Clarke was approached but was unavailable to comment.
A full trial will take place early in the New Year, if no prior settlement is reached.
The case centres on entrepreneur and investor Nick Clarke’s claim that West One Loans acted in breach of contract by failing to obtain security on a Fulham property before inadvertently lending Clarke’s money to a fraudster in April 2011.
The fraud was finally uncovered by HM Land Registry, which spotted a signature did not match its previous records.