Property fraudsters sent to jail for up to seven years
- 17 January 2013
- From the section Business
Two men from London have been sent to jail after being found guilty of defrauding two banks, Allied Irish Banks and Bank of Scotland, of £61m.
Achilleas Kallakis and Alexander Williams, both 44, were sentenced to seven years and five years respectively, at Southwark Crown Court.
Between 2003 and 2008, they duped the banks into lending them the money to buy properties and a super-yacht.
Kallakis used the money to buy Bentleys, a plane and helicopter.
The trial of the two men - both of whom had previous convictions for fraud - took four months.
It was the second time they had faced this set of charges relating to the two banks.
Their first trial in 2011 was brought to a halt when one of the two men fell ill.
The two men operated from offices in Mayfair in London where Kallakis pretended to be a property tycoon and Williams posed as a financial consultant.
Ronan Duff of the Serious Fraud Office (SFO) said: "This was an audacious, persistent fraud that enabled these defendants, Mr Kallakis in particular, to lead the lifestyle of the super-rich."
"The SFO have been equally persistent in investigating this elaborate scam and in ensuring that justice has been delivered."
Judge Andrew Goymer described Kallakis as the prime mover in the fraud. But he said the banks were partly to blame for their losses.
"AIB and BoS have undoubtedly acted carelessly and imprudently by failing to make full inquiries before advancing the money," he told the court during sentencing.
"Indeed the latter bank was given clear and precise warnings by its lawyers about the risks of accepting assurances in a letter from an alleged co-conspirator, a Swiss lawyer.
"It almost beggars belief senior management chose to disregard that warning and rushed to complete the deal at all costs.
"It is apparent from the evidence both the defendants took full advantage of the prevailing banking culture in which corners are cut, and checks on them superficial and cursory," Judge Goymer concluded.
The bogus loans
The losses to the two banks were dwarfed by the initial sums of money involved in the frauds.
Claiming to operate as the Pacific Group, the two men used bogus documents over a period of five years to dupe Allied Irish Banks (AIB) into lending them £740m to buy a portfolio of 16 different commercial properties.
The properties and their purchase were real, but their value was inflated, letting the fraudsters siphon off £60m for their own ends.
The bank only realised it had been defrauded when it learned that Kallakis had a previous conviction under a false name.
In a separate fraud, against the BoS, the two men persuaded it to agree a loan of 29m euros, supposedly to convert a former passenger ferry into a luxury super-yacht.
Again, forged documents were used and the boat in question, on which the loan was secured, was in fact leaking and contaminated with asbestos.
By the time this was discovered, only 5.7m euros of the loan had been handed over to the fraudsters.