Newport finance firm charged fees on loans that weren’t paid (From South Wales Argus)

Newport finance firm charged fees on loans that weren’t paid

2:10pm Wednesday 9th January 2013 in News

A NEWPORT company which made “up to £1.4 million” by charging fees on non-existent loans has had its assets seized.

Judge Philip Richards described the fraud by DirectFinanceUK as “despicable” at Newport Crown Court on Friday.

Lee Reynolds, prosecuting for Newport City Council, said the company made up to £1.4 million by charging customers administration fees worth between £39.99 and £49.99 on loans which many did not receive.

Mr Reynolds told the court that the company, based in Commercial Road, bought lists of names of people who had been turned down for “mainstream credit” and contacted them to tell them they had been successful in securing a loan with Direct- FinanceUK.

Customers were told they would not be charged until the loan arrived in their bank account, but many were charged and did not receive a loan, the court heard.

Huw Jones, mitigating, said the company had shown a “high level of co-operation” and said there was no evidence the company had made £1.4 million.

The company admitted two charges of not having a licence to be a stockbroker or debt counsellor, and 23 charges of fraud dating from August 2008 to January 2010, at Abergavenny Magistrates’ Court in October 2011.

Mr Reynolds said company director Syed Umer Fawad had fled to Pakistan, and despite international arrest warrants, had not been brought back to the UK for prosecution.

“DirectFinanceUK made false claims that it was a broker and could guarantee a loan,” he said. “Money was taken from customers without the permission of the account owners.”

Around 19,000 people made loan applications to Direct-FinanceUK via its website, which displayed a Consumer Credit Licence number which belonged to another company, Mr Reynolds said.

Fewer than half a per cent of those people actually received a loan, and that money came from an intermediary rather than from DirectFinanceUK.

The company was given a two-year conditional discharge and £86,142.34 of its assets were confiscated and awarded to Newport City Council.

For the cost of forensically analysing 30 computers, Newport council was also awarded £25,968.20 in costs, also to be taken from the company’s assets.

DirectFinanceUK as a company dissolved in 2011, but was resurrected by Newport council in January last year in order to prosecute.

It will be dissolved again and no longer has any assets.

Despicable behaviour, says judge

SENTENCING, Judge Philip Richards said: “Whether it was £1.4 million or some other very substantial figure, it is despicable because financially vulnerable individuals were being required to pay charges which because of their plight it was known they could not pay.

“Very considerable efforts have been made to bring (the company director) back to this jurisdiction to be punished.

This has failed despite international arrest warrants.

“No-one should treat this as a green light to behave in this despicable manner towards vulnerable people.”