Mousey
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Post by Mousey on Dec 14, 2020 11:00:10 GMT
Watch - Part 1 'Introduction':
Watch - Part 2 'The London Claim':
Fundingsecure director Richard Luxmore created "false and fraudulent documentation so as to conceal" payments of £8.15m, court papers claim
Following lengthy correspondence, a cache of court documents was finally released in the matter of Fundingsecure Ltd v *MC, a claim currently progressing at the Business and Property Courts in Manchester.
Fundingsecure Ltd were a so-called peer-to-peer lending company who acted as an agent between borrowers and often many hundreds of retail lenders. These lenders collectively financed loans displayed on the FundingSecure website and were purportedly secured against property and chattels. FundingSecure were fully authorised by the FCA and ultimately were placed into in administration in October 2019 “partly because the company could not support the costs of ongoing litigation”. It is understood the litigation rights for this action were sold to Asertis Ltd. *MC, the first defendant listed in the case, was one of the borrowers on the platform. In admissions made by MC in his amended defence statement dated May 2020 several other borrowers on the FundingSecure Platform “acted as nominee or agent for MC”. It is understood that one of these is a £2.95m loan purported to be secured against ‘Land in Lytham St Annes’ although it is claimed FS have "so far identified £8,155,552" paid out to MC.
In the documents FundingSecure allege that Richard Luxmore targeted investors who they thought were less likely to conduct due diligence checks. They refer to an email in which Mr Luxmore asked what the minimum amount of funding required for a certain venture of MC’s would be on the basis that "Larger loans attract larger investors who do their own due diligence with regards to property and client".
It is understood MC denies any wrongdoing and considers the sums advanced as "Commercial Loans" which are to be repaid to FundingSecure "in full together with interest in due course".
The following are quotes taken directly from the Amended Particulars of Claims dated October 7th 2019 accompanied by a statement of truth by Carl Rupert Scott Davies, at the time a director of Fundingsecure Ltd:
In or around late 2015 or early 2016, until around November 2018, RL began the process of taking monies from the Claimant’s client and/or company account and paying them to MC and/or MC’s associates.
RL, MC and/or the rest of the Defendants and/or each of them combined, agreed and conspired together to injure and/or use unlawful means against the Claimant with the intention of causing it harm.
RL and MC devised a scheme whereby RL would procure the advancement of the wrongfully paid sums to MC and/or his associates in breach of his duties particularised above and so as to cause damage and/or injure the Claimant.
RL recorded payments made to MC and/or MC’s associates on a spreadsheet privately controlled and managed by him and not disclosed at any point in time to the Claimant.
RL and MC concealed the scheme including inter alia by:
- Targeting Investors who they thought were less likely to conduct due diligence checks. In the same email chain referred to above, RL asked what the minimum amount of funding required for a certain venture of MC’s would be on the basis that ‘[l]arger loans attract larger investors who do their own due diligence with regards to property and client’.
The Claimant has so far identified £8,155,552.25 (crediting £440,000 of receipts) being paid out to MC and/or MC’s associates from the Claimant
In respect of all and/or each category of advances, MC and/or Defendants were aware that the advancing of the sums concerned was contrary to the Claimant’s proper procedures and involved the wrongful dissipation of funds and/or the creation of false and fraudulent documentation so as to conceal such wrongful dissipation from the Claimant.
Category 1 Advances RL procured certain payments from the Claimant’s client account where the purported loan referred to in the Payment Request prepared by RL and/or instruction he gave did not exist and there was no documentary record in respect of the same
Accordingly, the any and/or each such Payment Requests was falsified so as to facilitate wrongful payment
RL procured the payment of monies from the Claimant’s client account to MC and/or his associates in the absence of (1) a Loan Entry; (2) any security; and (3) any loan agreement with the recipient.
At the time of finalising these amended particulars of claim, and based on the material currently available to the Claimant, the Claimant has identified £2,548,067.77 being wrongly dissipated by means of Category 1 Advances to MC and/or his associates.
Category 2 Advances RL procured certain payments from the Claimant’s client account where the purported loan agreement to which the Payment Request prepared by RL referred did not exist but RL subsequently raised funds on the Claimant’s loan platform to cover the shortfall in the client account
After the sums were advanced, RL created or procured the creation of false Loan Entries on the Claimant’s platform in respect of which certain investors unwittingly authorised the use of sums previously input by them into the Claimant’s client account. The Loan Entries were false and fraudulent in that they were created ex post facto and the stated purpose and/or security and/or recipient were fabricated by RL.
At the time of finalising these amended particulars of claim, and based on the material currently available to the Claimant, the Claimant has identified £4,369,484.48 being wrongly dissipated by means of Category 2 Advances to MC and/or his associates.
Category 3 Advances RL further procured certain payments from the Claimant’s client account in respect of loans to MC and/or his associates which were prima facie genuine and appeared as Loan Entries on the platform at the appropriate time, but remain unpaid.
RL further procured certain payments from the Claimant’s client account in respect of loans to MC and/or his associates which were prima facie genuine and appeared as Loan Entries on the platform at the appropriate time, but remain unpaid.
At the time of finalising this these amended particulars of claim, and based on the material currently available to the Claimant, the Claimant has identified £1,678,000 outstanding in respect of the Category 3 Advances made to MC and/or his Associates.
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adrian77
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Post by adrian77 on Dec 14, 2020 11:11:09 GMT
thanks Mousey - well this is interesting and even worse than I had feared (if true) will go over this when I get more time but on first inspection this looks a bit naughty to me !
Interesting to see how some "private" emails have surfaced...
Having this muppet go down for fraud will make my Xmas!
And just what is the situation with the FS 5% fee on these loans?
What the hell were the FSA doing ?
Must dash and hide in the back room as carol singers are coming down the street!
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Mousey
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Post by Mousey on Dec 14, 2020 11:32:42 GMT
even worse than I had feared (if true) This part of the story represents about 30% of the allegations...!
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pfffill
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Post by pfffill on Dec 14, 2020 11:45:13 GMT
Let's hope Luxmore does go down, and soon. Nothing like a spot of stir pour encourager les autres to cough up.
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ozboy
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Mine's a Large One! (Snigger, snigger .......)
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Post by ozboy on Dec 14, 2020 14:41:41 GMT
thanks Mousey - well this is interesting and even worse than I had feared (if true) will go over this when I get more time but on first inspection this looks a bit naughty to me ! Interesting to see how some "private" emails have surfaced... Having this muppet go down for fraud will make my Xmas! And just what is the situation with the FS 5% fee on these loans? What the hell were the FSA doing ?Must dash and hide in the back room as carol singers are coming down the street! "What the hell were the FSA doing ?" .................. out to lunch, like they always are.
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criston
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Post by criston on Dec 14, 2020 14:58:41 GMT
thanks Mousey - well this is interesting and even worse than I had feared (if true) will go over this when I get more time but on first inspection this looks a bit naughty to me ! Interesting to see how some "private" emails have surfaced... Having this muppet go down for fraud will make my Xmas! And just what is the situation with the FS 5% fee on these loans? What the hell were the FSA doing ?Must dash and hide in the back room as carol singers are coming down the street! "What the hell were the FSA doing ?" .................. out to lunch, like they always are. Out at lunch with & paid for, by FS directors, no doubt.
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shimself
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Post by shimself on Dec 14, 2020 15:12:05 GMT
/photo/2
Paul Lewis Moneybox copy of today's Times
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adrian77
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Post by adrian77 on Dec 14, 2020 15:39:01 GMT
sent to Paul : Paul - enjoy your R4 show -very good and useful Glad you have got your teeth into this one - have you seen my top 40 of mega failures and 100% expected losses posts p2pindependentforum.com/thread/15544/league-predicted-mega-failures-summaryp2pindependentforum.com/thread/17184/fs-100-lossesIf several of we forum members realised something was badly wrong here months ago then why the hell didn't the FSA - too busy working out how to get their snout into the BoE trough? Feel free to PM me if you have any questions Well this is the mother of all horlicks isn't it - funnily enough I don't seem to be getting the negative comments about having a vendetta etc against these muppets - happy for people to disagree provided it is polite and constructive
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kielbasa
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Post by kielbasa on Dec 14, 2020 22:43:45 GMT
The Times article says that the litigation rights to this case were sold to Asertis Limited.
The sole director of Asertis Limited is Ian Madej.
Asertis Limited was a "shelf company" and Ian Madej became a director on 3 December 2019.
Ian Madej was previously on the management team of Arrow Global, a quoted company that deals in debt, but left and was an eco-farmer in Cheshire.
The redacted minutes of the FundingSecure Creditors' Committee meeting on 17 December 2019 said:
"It was agreed that Philip Holden [of DrydensFairfax, CG & Co's solicitor] would approach commercial litigation funders/acquirers in order to seek third party funding if required."
DrydensFairfax was acquired by Arrow Global in the early part of 2019.
Given that it was only agreed on 17 December 2019 that litigation funders would be approached, why would eco-farmer Ian Madej have decided on 3 December 2019 to buy a shelf company and apparently go into the litigation funding business?
I am sure that the sale of the litigation rights, arranged by CG & Co's solicitor, to a former member of the management team of DrydensFairfax's parent company was all above board and at arms length. Any suggestion that this was a "done deal" and that proper processes to obtain the best deal for investors and creditors did not take place would surely be ludicrous.
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james100
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Post by james100 on Dec 15, 2020 8:53:10 GMT
The Times article says that the litigation rights to this case were sold to Asertis Limited. The sole director of Asertis Limited is Ian Madej. Asertis Limited was a "shelf company" and Ian Madej became a director on 3 December 2019. Ian Madej was previously on the management team of Arrow Global, a quoted company that deals in debt, but left and was an eco-farmer in Cheshire. The redacted minutes of the FundingSecure Creditors' Committee meeting on 17 December 2019 said: "It was agreed that Philip Holden [of DrydensFairfax, CG & Co's solicitor] would approach commercial litigation funders/acquirers in order to seek third party funding if required."DrydensFairfax was acquired by Arrow Global in the early part of 2019. Given that it was only agreed on 17 December 2019 that litigation funders would be approached, why would eco-farmer Ian Madej have decided on 3 December 2019 to buy a shelf company and apparently go into the litigation funding business? I am sure that the sale of the litigation rights, arranged by CG & Co's solicitor, to a former member of the management team of DrydensFairfax's parent company was all above board and at arms length. Any suggestion that this was a "done deal" and that proper processes to obtain the best deal for investors and creditors did not take place would surely be ludicrous. Does anyone know which company the art loans' litigation rights were sold to?
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aj
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Post by aj on Dec 15, 2020 10:13:47 GMT
All in all a complicated mess here. I can only hope the litigation goes well. The questions that stand out to me right now are; 1. Why was the Times given the details of the litigation before the investors who are the victims of the fraud? I'm in Lytham and have not heard a peep yet. 2. Is there any plan for Asertis/CG&Co to give an update to the investors who are involved in these loans as to their exposure to each category of the advances? An 'identified £8M' is 10% of the total outstanding loanbook so I'm expecting to see a lot of updates. kielbasaThe possibility that the litigation funding has been acquired for below market value is better than my previous assumption that the litigation was worthless and wasn't going to be pursued. At the time, CG&Co claimed: "It was agreed that we would explore the possibility of finding a third party to acquire the litigation, and several offers were received." Hopefully they can easily evidence that they made sufficient effort and took the best deal available.
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kielbasa
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Post by kielbasa on Dec 15, 2020 10:57:50 GMT
kielbasa The possibility that the litigation funding has been acquired for below market value is better than my previous assumption that the litigation was worthless and wasn't going to be pursued. At the time, CG&Co claimed: "It was agreed that we would explore the possibility of finding a third party to acquire the litigation, and several offers were received." Hopefully they can easily evidence that they made sufficient effort and took the best deal available. For the avoidance of doubt, I am not alleging that the litigation was acquired for below market value.
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Mousey
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Post by Mousey on Dec 15, 2020 13:31:45 GMT
Does anyone know which company the art loans' litigation rights were sold to? It was sold by "assignment dated 27 March 2020 by the Joint Administrators of FundingSecure Ltd" to what appears to be four individuals.
Their position isn't clear on the public documents I have access to, which is partly why they're not being named here, suffice to say 2 of the names are common with the application to (inter alia) challenge the administrators 5% fee.
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Brainer
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Post by Brainer on Dec 15, 2020 15:52:57 GMT
So, to summarise:
Category 1 - <redacted> from the Client account (£2.548M)
Category 2 - fake loans where there's no discernible security (£4.369M)
Category 3 - genuine loans which haven't paid back (£1.678M)
That about right?
Someone with the full loan book download and a list of MC loans (and possibly the Reading loan) might be able to piece together which loans are category 2 and 3 with a bit of arithmetic.
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adrian77
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Post by adrian77 on Dec 15, 2020 22:01:05 GMT
Category 1 - <redacted> from the Client account (£2.548M)
Category 2 - fake loans where there's no discernible security (£4.369M)
Category 3 - genuine loans which haven't paid back (£1.678M)
looks about right to me but I wonder just what has been going on here
I am not interested in speculating what has happened as this is in the hands of the court but interested in what may have happened so we know what to look with any further P2P investments
3 quick comments
1) if these allegations are true than the defendant has been incredibly greedy and stupid - most accountants I have met may possibly be greedy but they sure aren't stupid. Maybe he thought we investors were stupid and no borrowers would default causing FS to crash and be investigated?
2) I wonder how fake loans may have been set-up as the owners of the properties may possibly have noticed them on the website! I deleted what I typed next as like to be 100% fair but still interested how this was done - I have a few theories but they all have holes in them unless I am missing something obvious. One thing that crossed mind is that this may refer to the land where FS do not have a first charge but are the beneficiary of the charge -which in non-legal terms means c*ck all in practice
3) I wonder if the alleged investor in cahoots is playing a clever game (too bloody clever!) as he is tied in with a solicitor and reporting this at the same time he was investing and of course there is no evidence he has done anything untoward.
I was worried my 100% loss list would be over 20 but now I worry it will be over 50 or even higher!
can I indulge myself and cynically say I expect a lot of updates to be posted immediately before Xmas - fine by me as any excuse to get away from the Mother-in-Law
Bext Xmas present would be to see this muppet going down along with seizure of his assets which would include his share of the 5% FS fee
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