Two men have been found guilty of 11 charges of fraud by false representation following a prosecution brought by the Financial Conduct Authority (FCA), with false applications totalling £3m.

Larry Barreto, who is based in the East Midlands, had earlier pleaded guilty to two offences by arranging and advising on regulated mortgages without FCA authorisation.

At the beginning of the trial, chartered accountant, Tassib Hussain, Barreto’s co-defendant, pleaded guilty to fraud by false representation.

Between January 2015 and March 2018, Baretto gave advice to clients looking to take out residential mortgages without the necessary FCA authorisation.

In 11 cases, he also dishonestly inflated the mortgage applicant’s income in their application to the lender. Barreto charged the client a fee which he would then pay to Hussain in cash, who created false-employment and employment documentation to support mortgage applications for clients with insufficient income.

Hussain also produced multiple documents purported to have been issued by HM Revenue and Customs and containing false income figures, which in each case were sent to the lender by Barreto.

With Baretto’s knowledge, Hussain also claimed to employ two of the applicants to create a false impression of their income, producing false contracts of employment and payslips in support, which Baretto also forwarded to lenders.

As a result of the fraud, lenders granted mortgages to several applicants on a false basis, placing lenders at greater risk of loss, with the total of mortgages applied for totalling £3m.

Joint executive director of enforcement and market oversight, Steve Smart, said: “Mr Barreto and Mr Hussain knowingly lied and misled their clients and mortgage providers in order to benefit financially from mortgage applications. This put borrowers at risk of taking on unsustainable levels of debt, and left lenders open to losses.

“Today’s verdict demonstrates our commitment to tackling fraud and sends a warning to anyone involved in similar criminal activities that we will pursue them, so they face the full force of the law.”

Barreto had previously been struck off as a financial adviser by the Personal Investment Authority in 1996 and was also prohibited from carrying regulated activity by the Financial Services Authority in 2004.

The pair will be sentenced on 23 February 2024.

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