FCA successfully prosecutes two individuals for making £3 million worth of fraudulent applications
An individual who gave advice to clients looking to take out residential mortgages without the necessary authorisation from the Financial Conduct Authority (FCA) has been found guilty of 11 charges of fraud by false representation.
At an earlier hearing, Larry Barreto, who traded as Barreto and Partners – an unauthorised financial services firm based in Nottingham, pleaded guilty to two offences of arranging and advising on regulated mortgages amounting to a total of around £3 million without FCA authorisation.
In 2021, the FCA commenced criminal proceedings against Barreto and Tassib Hussain, a chartered accountant who was also found guilty after admitting to committing fraud by false representation. Both individuals will be sentenced in February 2024.
Barreto had previously been struck off as a financial adviser by the Personal Investment Authority in 1996 and prohibited from carrying on regulated activity by the Financial Services Authority in 2004.
In 11 instances between January 2015 and March 2018, Barreto also dishonestly inflated the mortgage applicant’s income in their application to the lender. He charged the client a fee which he would then pay in cash to Hussain, who created false self-employment and employment documentation to support mortgage applications for clients with insufficient income.
Hussain produced multiple documents purporting to have been issued by HMRC and containing false income figures, which in each case were sent on to the lender by Barreto. With Barreto’s knowledge, Hussain also claimed to employ two of the applicants to create a false impression of their income, producing false contracts of employment and payslips in support, which Barreto also forwarded to lenders.
As a result of the fraud, lenders granted mortgages to several applicants on a false basis, placing lenders at greater risk of loss.
“Barreto and Hussain knowingly lied and misled their clients and mortgage providers in order to benefit financially from mortgage applications,” stated Steve Smart, joint executive director of enforcement and market oversight at the Financial Conduct Authority. “This put borrowers at risk of taking on unsustainable levels of debt, and left lenders open to losses.
“Today’s verdict demonstrates our commitment to tackling fraud and sends a warning to anyone involved in similar criminal activities that we will pursue them, so they face the full force of the law.”
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