Loan frauds netted $1.2 million in fees

By GREGG WYCHERLEY

A mortgage broker who persuaded dozens of homeowners to let him arrange second loans has admitted 54 fraud charges.

Victor Douglas Bracken, 45, skimmed $1.2 million in brokerage fees or "investment funds" from fraudulently approved loans the Serious Fraud Office estimates total $7 million.

It is alleged that he sometimes paid kickbacks to an associate.

Bracken appeared in the Auckland District Court last Friday and was remanded to Mt Eden Prison for sentencing next month.

The fraud office filed charges in June last year, and in January Bracken was arrested in Australia and extradited.

He began his scheme in May 1999, preying on people who were already struggling with unpaid debts. He advertised in newspapers in Auckland and the Waikato offering to obtain re-financing for people with rates or mortgage arrears.

Bracken or an agent approached people who had expressed interest, offering them a way out. His victims were invariably deep in debt, often facing imminent mortgagee sales.

Bracken was the sole director and shareholder of Gadsby Investment Ltd, a company set up to receive mortgage brokerage commissions and investment funds.

He also traded under the name Direktiv Mortgage Brokers.

Bracken would tell the victims that he could arrange a second mortgage to cover their immediate debts.

He tricked them into signing blank loan application forms which he would later fill out himself, and used their identification, employment and salary information to obtain the loans.

If they had bad credit ratings, he would ask if a family member or friend could make the application, or instruct the women to use their maiden names.

Sometimes he would even help women to get passports in their maiden names so they would have identification.

When the home owners asked him about his brokerage fee for arranging the mortgage, he would ask them to sign an agreement, with the amount of his fee left incomplete.

The fees he received were between $1500 and $17,000, with the average being $10,000 to $12,000.

When questioned by fraud office staff, Bracken said he had been introduced to a person who had helped him devise a system to falsify documents and get loans approved.

The borrowers were unaware of the falsification, and, after the loans were approved, Bracken would sometimes offer to "invest" part of their loan proceeds.

He told them he would pay their mortgage repayments and in three years the investment would have earned enough to pay off their total mortgage.

In this way he convinced some victims to pay him up to $200,000 from their loans for the "investments".

He obtained $794,290 by this method but did not tell the victims how the money would be invested, and none was ever repaid.

Bracken said he used the money to refit his boat, the Northern Challenger, for commercial fishing in Tonga and Papua New Guinea.

He said that when he fled to Australia he had only about $50,000 left of the fraudulently obtained money.

The Northern Challenger was under arrest at Tauranga from February 2000 until October last year.

The owners of the $9 million superyacht Ultimate Lady had claimed that refit work on the nearby fishing vessel had caused rust to stain their boat's pristine paintwork.

Ultimate Lady Ltd eventually lost its claim for $385,000 for repainting and ancillary work, but too late to help Bracken.

The Northern Challenger was reportedly sold for a fraction of its value.

Fraud office spokeswoman Rachel Reed said Bracken's offending was detected during an investigation into Focus Finance. That investigation resulted in the successful prosecution last year of Prem Kumar, Tuhoea Watene, Tony Burrell and Miles McKelvy in relation to a separate mortgage type of fraud.