Director in fraud

Manchester Crown Court has sentenced a director of a sub-prime loan company to seven-and-a-half years in prison in his absence, after he fled the jurisdiction before the trial.

Waheed Luqman, who was found guilty of fraud and false accounting, was given seven-and-a-half years for conspiracy to defraud and four-and-a-half years for each of the two counts of conspiracy to falsely account. All three sentences are concurrent.

He was also disqualified from acting as a company director for 15 years and has been ordered to pay costs to the SFO of £250,000.

The 39-year-old was a director of Lexi Holdings, a property finance company based in Manchester and at some time with a London office. The company went into administration in 2006 with debts of over £100m.

According to the Serious Fraud Office, he conspired with other members of the Luqman family, principally his brother Shaid, to defraud creditors, which included the company’s main lender, Barclays Bank, between 2000 and 2006. The business, initially named Pearl Holdings (Europe) Limited, was established by Shaid Luqman in 2000 with funding from Barclays Bank. Renamed Lexi Holdings in 2004, it provided finance to individuals and companies wanting to invest in property.

Loans, commonly known as ‘bridging loans’ were facilitated through Lexi Holdings at short notice to secure a property, bridging a gap until the borrower could acquire long-term finance.

The events took place over a period when property prices and financial markets were more buoyant than they currently are and when banks were more ready to lend.

Banks, mostly Barclays, provided Lexi Holdings with large amounts of capital over the period on the basis that the business was a highly regarded and successful enterprise making loans available to property developers who might not be able to obtain loans immediately from the banks. Lexi entered into a Revolving Credit Facility Agreement with Barclays to draw down the required amounts for each transaction and though the bank carried out checks on the running of the agreement, there was a great deal of trust involved, the SFO said in a statement.

Monies obtained by Lexi under the agreement were diverted and recycled through various bank accounts held in different names and trading entities which were hidden from the auditors and from Barclays and later a syndicate of banks of which Barclays was the senior partner.

They were also hidden from Lexi’s own internal accountants as the hidden accounts were controlled by a closed circle. The company’s accounts were also doctored to create a false picture of the company’s profitability and creditworthiness.

Money was drained out of the company to family members in Pakistan and included large sums to the brothers’ father, Mohammed Luqman.

Waheed Luqman was tried in absentia following abscondment when charges were brought in August 2011. He is thought to be in Pakistan.

He was also found guilty of one common law charge of conspiracy to defraud creditors of Pearl Holdings (Europe) Ltd, later known as Lexi Holdings and two charges of conspiracy to falsely account.

His brother, Shaid Luqman, the main perpetrator of the fraud, fled the jurisdiction in June 2011 before he could be charged and is also believed to be in Pakistan.

An alleged accomplice, charged with money laundering offences, was acquitted.