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Obtaining mortgage fraud

Date Updated: January 2012

Title: Theft

Offence: Obtaining by deception - mortgage fraud

Legislation: S15 Theft Act 1968

Commencement Date: Repealed as from 15.1.2007  by the FRAUD ACT 2006 , however under transitional provisions this section  is still applicable to  offences where the offence was partly committed before 15th January 2007- see section14(2) and schedule 2 of  the Fraud  Act for detailed provisions.

Mode of Trial: Either way

Statutory Limitations & Maximum Penalty: 10 years

Culpability & Harm

  • Large amount advanced
  • Large loss suffered by lender (Loss = value as represented - actual value)
  • Planning
  • More than one property
  • Offending carried out over a long period
  • Offender acting with others
  • Offender prime mover or nominee
  • Motivated by greed or desire to live beyond his or her means
  • No intention to repay
  • False identities or details
  • Falsified properties
  • False or forged documents
  • Official documents altered or falsified

Aggravating & Mitigating Factors

  • Offender recruited others.
  • Offender a professional or quasi-professional.

Relevant Sentencing Guidelines (If Any)

Clark [1998] 2 Cr. App. R. (S) 95 (Guideline Case)
Property obtained in breach of trust
(superseded the guideline case of Barrick (1985) 81 Cr. App. R. (S) 78 to take account of inflation)
Save in very exceptional circumstances, where a person in a position of trust, for example an accountant, a solicitor, a bank employee or a postman has used his trusted and privileged position to defraud his partners, clients employers or the general public of sizeable sums of money, that person will attract immediate custody.

Such a person, as Clark himself, will hitherto be of impeccable character.

Due to the increasing scale of white-collar dishonesty, such cases warranted longer sentences than originally contemplated in Barrick.

As in Barrick, as well as the amount stolen, the following is to be taken into consideration when sentencing:

  • Quality and degree of trust in, and rank of the offender
  • Use the money was put to
  • Effect on the victim
  • Period over which the fraud was persisted in
  • Effect on the public and public confidence
  • Effect on fellow employees and partners
  • Effect on the offender
  • Offender's own history
  • Personal mitigation
  • Long delay between discovery of offences and start of trial (2 years or more)

Consecutive sentences may be appropriate where the amount stolen was large, stolen on a number of occasions or taken from more than one victim.


Value of Fraud: Significant but less than £17,500 
Guidelines After Contested Trial: Very short custodial to 21 months

Value of Fraud: £17,500 to £100,000 
Guidelines After Contested Trial: 2 - 3 years

Value of Fraud: £100,000 to £250,000 
Guidelines After Contested Trial: 3 - 4 years

Value of Fraud: £250,000 to £1 million 
Guidelines After Contested Trial: 5 - 9 years

Value of Fraud: £1 million or more 
Guidelines After Contested Trial: 10 years or more

R v Stevens and Others (1993) 14 Cr. App. R. (S) 372, Current Sentencing Practice B6-33E59
Pleaded guilty to various counts on an indictment containing a total of 37 counts. All the offences were mortgage frauds committed over a period of eight years, 128 mortgage applications having been made in relation to 90 different properties. A total of £1.8 million had been obtained, and attempts had been made in relation to a further £2.5 million. The total loss to lending institutions was estimated to be about £250,000. The sentencer adopted as a criterion of culpability the extent of the unsecured loan obtained by particular defendants, namely the extent to which the advance exceeded the amount of the advance which would have been made if the true value of the property had been known. 6 months to 3 years.

"There are different sorts of mortgage fraud, some more sophisticated than others. In some instances, as happened here, false names and values are used. Properties, as well as borrowers, may even be invented for the purpose of defrauding the financial institutions. One must also take account of the fact that some loans are obtained for commercial purposes under the guise of being for domestic occupation and so at domestic rates. An important consideration is the part played by any given defendant in the fraud; that is to say, his role may be anything between prime mover and nominee. It is an aggravating feature if he recruits others to participate in the commission of the fraud. Of relevance, also, is the length of involvement in the fraud or frauds by any particular defendant, as well as the extent of any personal benefit that he may have derived. It is of consequence, as the judge took into account in this case, whether there was a genuine intention to repay loans advanced, and thereby ultimately avoiding loss to the financial institutions concerned. It is important to bear in mind whether any particular defendant is a professional person or a quasi-professional person, for the special reason that if such a participant he must necessarily be guilty of a breach of trust, and his role may be an important one in the deception of the lending institution."

R v Kefford (Mark James) [2002] 2 Cr. App. R. (S) 106
For economic crimes, alternative sentences to imprisonment could be appropriate punishment.
K was employed by a building society and opened false accounts into which he made windfall payments and then withdrew money as needed. The amount of £11,120 was taken. When interviewed the appellant immediately made full and frank confessions. He had no previous convictions. After the discovery of the offences the appellant sold his home so as to be able to repay the sums he had taken. On appeal his sentence was reduced from 12 months imprisonment to 4 months. The court commented that even in the present circumstances, in cases involving breach of trust where the sum involved was not small, the guidance in Clarke was still applicable even where it was a first offence, however, a sentence of imprisonment should only be imposed when necessary and only for as long as was necessary in view of the overcrowded prison system. For economic crimes, especially where the offender was of previous good character, alternative sentences to imprisonment could be appropriate punishment.

Relevant Sentencing Case Law

R v Mason [1991]12 Cr. App. R. (S) 737
Pleaded guilty to five counts of procuring the execution of a valuable security by deception, three of obtaining property by deception and one of obtaining services by deception. The defendant took out a £56K mortgage, a £64K mortgage and a £80K mortgage and secured loans on a property using a false name and details. Liability £36K. Carefully thought through scheme over a extended period which required considerable skill. 3 years.

R v Callen [1992] 13 Cr. App. R. (S) 60
Convicted of conspiracy. The appellant was a mortgage broker. Over a period of four years he conspired with surveyors and accountants to obtain £2 million from mortgages by the provision of false descriptions of the property concerned and false accounts. The defendant earned £50K commission. 4 years.

R v Luxon and Others [1992] 13 Cr. App. R. (S) 138
Convicted or pleaded guilty to various offences of procuring the execution of a valuable security by deception, obtaining property by deception, and obtaining services by deception. They were concerned in a series of fraudulent mortgage transactions involving a large number of properties. A total of about £600,000 was obtained, and the lenders sustained losses of about £225,000. 18 months to 3 and a half years.

R v Weinberg [1993] 14 Cr. App. R. (S) 381
Pleaded guilty to procuring the execution of a valuable security by deception. The defendant, a financial services consultant, concealed his debts and applied for a mortgage advance of £292K to enable him to purchase a flat for resale. 12 months.

R v Rice [1993] 14 Cr. App. R. (S) 231
Pleaded guilty to 11 counts of procuring the execution of a valuable security. The defendant, in conjunction with others, obtained seven building society mortgages by giving false particulars of occupation, name and salary. A total of £600K was obtained. The defendant admitted his part in the offences when challenged and offered to give evidence against his accomplices. 2 years.

R v Harling and Hayden [1992] 13 Cr. App. R. (S) 672
Pleaded guilty to three offences of obtaining property by deception and one of conspiracy to procure the execution of a valuable security. He was involved in obtaining mortgages in respect of four properties by various false representations, principally relating to sales to fictitious individuals. The total amount involved in the frauds was about £171K all the money was repaid before the offences were discovered 2 years.

R v Harjit Singh Samra [1991] 13 Cr. App. R. (S) 168
Pleaded guilty to two offences of procuring the execution of a valuable security by deception. The defendant obtained mortgages on two houses (£165K) brought to let by making false representations about his income and his circumstances and intentions. 9 months.

R v Evans [1992] 13 Cr. App. R. (S) 413
Convicted of two counts of obtaining by deception. The defendant was an estate agent and obtained a mortgage advance of £52K by making false representations in relation to his employment and earnings, and a second advance of £87K relating to a different property by similar false representations. "All too frequently the defendants include people with professional qualifications or with business experience in property dealing." 12 months with 3 months suspended.

R v Rolls [1993] 14 Cr. App. R. (S) 304
Pleaded guilty to three counts of procuring the execution of a valuable security by deception. On three occasions the defendant who was in financial difficulties obtained mortgages by pretended to sell his house. Sales were based on genuine valuation. No intention to cause any loss. 9 months.

R v Ozair Ahmed [1994] 15 Cr. App. R. (S) 286
Pleaded guilty to three counts of procuring the execution of a valuable security by deception. The defendant secured three mortgages on domestic premises by false representations about his income. One property was occupied by the defendant; the other two were let out. The total amount of the mortgages was £100K. Previous good character, mortgage payments up to date. 9 months

Ward [2005] EWCA CRIM 1972
Prominent Role, Mortgage Broker
6 years imprisonment after conviction was upheld on appeal for the appellant who along with others had perpetrated mortgage frauds, having been convicted of obtaining money transfers by deception. It was held that Ward, a mortgage broker, had played a prominent role, and had been a recruiter, Stevens (1993) 14 Cr. App. R. (S) 372 considered.

Jenner [2002] EWCA CRIM 3060
Building Society Manager
J, a former building society facilities manager, appealed against a total sentence of four years' imprisonment following guilty pleas for false accounting and obtaining a money transfer by deception. J contended that the sentence was excessive in view of the decision in R v Kefford (Mark James) [2002] EWCA CRIM 519, that in economic crimes of this nature, imprisonment should only be imposed when necessary and for no longer than necessary. Allowing the appeal, that in light of the decision in Kefford, J's full cooperation which had enabled the building society to recover nearly all its losses of £394,000 and J's excellent prison report, a sentence of three years and six months' imprisonment should be substituted, Kefford followed.

Carter [2002] EWCA CRIM 2147
False information given by mortgage broker
Two years were reduced on appeal to 12 months following guilty pleas to obtaining a money transfer by deception. The appellant was an independent mortgage adviser and he used that position to make an application for a mortgage advance in the sum of £141,000, giving false information as to the address that he lived, a false landlord's reference and a forged gas bill. As a result he was granted a mortgage advance in the sum sought.

Ancillary Orders:

  • Restitution
  • Compensation
  • POCA

Consider Also:

  • Disqualification from acting as a director of a company

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