The Fast and the ‘Fraudulent’
How many Ferraris does the owner of a niche property lending firm need?
In the case of Paresh Raja, the flamboyant founder of collapsed mortgage firm Market Financial Solutions, the answer was allegedly six . . . along with three Aston Martins, two Mercedes and three Rolls-Royces.
The fleet of luxury cars is among the trophy assets that MFS’s administrators claim in a new lawsuit that Raja purchased after “plundering” his company “to fund a lavish lifestyle”.
MFS borrowed £2.6bn from lenders before its spectacular implosion, prompting heavy losses for banks such as Barclays and private credit firms including Apollo’s Atlas unit. MFS’s administrators allege that at least £1.3bn of this borrowed money has been misappropriated.
A spokesperson for Raja told the FT that he “strongly denies the allegations” and “has consistently maintained there was no fraud or dishonesty”.
Before its collapse, MFS was one of the UK’s largest providers of bridging loans — short-term mortgages taken out by borrowers who struggle to obtain traditional bank finance.
The FT took a closer look at this very British form of property lending, discovering that US private credit money has turbocharged the high-octane niche.
Take Duncan Kreeger. Having started out working at his father’s mortgage brokerage as a teenager, the 42-year-old has since co-founded two bridging lenders. He candidly states on his personal website that “around 50 per cent of the businesses he has been involved in have failed”.
US private credit firms have proved willing lenders to Kreeger’s firm, TAB, which has not been accused of any wrongdoing, but has previously racked up losses on non-performing loans.
In an interview with the FT, Kreeger clarified that his failed businesses primarily comprised ventures from his youth, such as trying to sell alloy wheels online and opening a poker club in North London.
“Lending money is the oldest business in history,” he said. “Bar one maybe.”