Achilleas Kallakis and Alexander Williams guilty of defrauding banks in property financing deals
16 Ionawr, 2013 | Eitemau newyddion
Today at Southwark Crown Court two businessmen, Achilleas Michaelis Kallakis (44) and Alexander Martin Williams (44) both of London, have been found guilty of defrauding banks of millions of pounds and euros through deception and forgery to obtain finance. They have been remanded in custody for sentencing tomorrow, 17 January. Confiscation proceedings are to be instituted.
The borrowing represented £740 million for property transactions and also included a yacht conversion representing a loan agreement of £29 million.
A third person, Michael Becker, is also alleged to have conspired with the defendants. He is a lawyer and businessman based at the time in Lugano, Switzerland. He was closely involved in the fraud and was director of companies presented to the banks in the loan agreements as “borrowing companies”. He is a Swiss national who has not been charged due to his absence from this jurisdiction.
The defendants, who operated out of a Mayfair office as the Pacific Group of Companies, conspired over a five-year period (2003-2008) to defraud Allied Irish Banks (“AIB”) by using forged or false documents or claims in order to obtain substantial loans to finance the purchase of what was mostly a commercial property portfolio. The loans to enable Kallakis acquire the 16-property portfolio amounted to £740 million.
The transactions were structured in a way that the bank loans exceeded the purchase price of the properties. This was achieved by providing the bank with a guarantee from a Hong Kong company, Sun Hung Kai Properties Limited (“SHKP”), of long term payment of rents at top market rates, , to the landlord of the commercial properties. SHKP are a large, well established Hong Kong property company with a high credit rating and the guarantees therefore had the effect of increasing the value of the properties substantially. The rationale provided to the banks for SHKP’s involvement was that a subsidiary company of SHKP would receive large cash payments called a reverse premium, which was factored into the value of the loans, and a share of the profits on the sale of the properties. However, the reality was that SHKP had not entered into any guarantees and had no knowledge of the transactions or the purported subsidiary companies that had entered into them. The SHKP documents provided by Kallakis and Williams to AIB were forgeries and the reverse premiums were channelled into the pockets of the fraudsters.
Kallakis and Williams were able to maintain the deception over five years through skilful forgeries and manipulation of the bank. When in 2007 the bank requested a meeting with a representative of SHKP, Kallakis and Williams set up a meeting at their Mayfair offices with an individual who presented himself as being from the SHKP Treasury Department. SHKP have no knowledge of this meeting or the individual who purported to represent them.
A similar false arrangement to mislead the bank were guarantees provided by Oregon Finance Corporation, represented by Kallakis to be a billion dollar ship-owning company belonging to the Kallakis family trust. This claim was based upon forged and/or false letters regarding the company’s assets, bogus financial statements of the company and evidence of its shipping assets taken from the internet. Oregon Finance was later found in reality to have no assets but liabilities of millions of pounds.
The loans advanced by AIB represented £60 million in excess of the cost of the properties and was designed to feed into the bogus reverse premiums. However by August 2008, alarm bells rang at AIB when they learnt that Kallakis had a previous fraud conviction in the name of Stefanos Michalis Kollakis and had subsequently changed his name, and they contacted SHKP to discover that they knew nothing about the guarantees.
During 2007 and 2008, in another fraud following similar lines to the property loans fraud the Bank of Scotland agreed a loan of €29 million which was wanted, claimed Kallakis, for the conversion of a former passenger ferry into a super-yacht for his personal use. He provided the bank with a worthless guarantee from Oregon Finance Corporation, using accounting documents that were false and bearing forged attribution certificates. Kallakis and Williams also provided a number of forged documents to the bank as it sought to carry out checks on the family trust, including a death certificate of Kallakis’s mother in which her surname had been altered to hide Kallakis’s name change. The ferry upon which the loan had been secured turned out not only to have no value but instead was a significant net liability as a result of work that had been carried out which had now ceased leaving the vessel contaminated with asbestos and no longer water tight. By the time suspicions were raised, the bank had advanced only a proportion of the loan, i.e. €5.7 million.
Investigation and Proceedings
The suspected fraud was reported to the SFO by SHKP and AIB also reported the fraud. An investigation, supported by the City of London Police, commenced in January 2009. The defendants’ London residences and their Mayfair office were searched in March 2009 and they were charged in February 2010; appearing at the City of London Magistrates Court in March 2010 where the case was transferred to Southwark Crown Court for trial which opened in September 2011 presided over by HHJ Goymer. However the jury in that trial were discharged due to the illness of one of the defendants and a retrial opened in September 2012.
During the trial the jury were told that Kallakis used the proceeds of his fraud to fund the lifestyle of the super-rich in which he maintained a fleet of chauffer driven Bentleys, a private plane, a private helicopter, a luxury yacht moored in Monaco harbour and a collection of high value art works.
The jury returned unanimous verdicts on two counts of conspiracy to defraud. One count related to Allied Irish Banks and the other to Bank of Scotland.
Notes for editors:
- Williams has previous convictions (under his then surname of Martin Lewis) for four offences of deception in relation to obtaining false passports. His forgery skills contributed to the execution of the fraud against the banks.
- Williams (then named Martin Lewis) and Kallakis (then named Stefanos Kollakis) were convicted in 1995 of conspiracy to commit forgery relating to the production and selling of bogus certificates conferring honorary titles.
- During trial the jury were informed of property loan applications during 2000 to 2002 where similar tactics that were later used on AIB were used in earlier dealings with the Bristol &West Building Society. Evidence was presented to allege a similar modus operandi. The defendants were not prosecuted in relation to these events which came to light during the investigation into the AIB related fraud. An example presented as evidence to illustrate dishonesty was a falsely produced letter presented by Kallakis to Bristol & West purporting to be a reference from the late Lord Harris of High Cross