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Fraudulent signing of Accountants Reference for Mortgage

A friend of mine works in an accountancy practice where the proprietor has no formal qualifications but is a member of the ICPA. He has discovered by accident from paperwork in a file that in order to provide an accountants reference for one of his clients to obtain a mortgage, his boss signed my friends name and and entered his qualification on the request. He is quite rightly furious. Surely this is fraud. What course of action would be suggested?

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Was the reference true?

Out of interest, if all the information had been placed before your friend would he have signed an identical reference, or was the reference untrue (as well as being falsely signed)?

If so it is, in my view at least, more serious.

Was your friend's firm paid for providing the reference?

Incidentally I would class the offence here as forgery, contrary to s1 Forgery & Counterfeiting Act 1981.

David

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Thanks for that.

No he would not have signed the reference had he been asked.

 

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@J449

Difficult possibly, but surely that's:

Say nothing and continue to have a job, but become party to a fraud or, say something and almost certainly find himself unemployed without references. but still have his qualifications

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Realistically your friend needs to find a new employer sooner rather than later.  Times are difficult but I think if he is still in the same job six months from now he has made a mistake.  The relationship of trust between him and his employer is gone and cannot be restored.

Dodgy mortgage references are used in a variety of situations - from a single property purchase to a multi-million pound 'empire' of fraudulently obtained properties.

If the boss was (unwisely but) good-naturedly helping out a client in a bit of difficulty then simply play 'dumb' and move on as soon as possible.  If this is part of a larger fraudulent enterprise then he should talk to a solicitor about how best to protect himself from appearing to be a party to a fraud (which may involve blowing the whistle to the authorities).

A difficult situation!

David

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Looking forward

Step forward 3 years when one of HMRC's investigators finds that your friend made a false mortgage reference and in steps HMRC with a £50K fee (the new fine for errant accountants next year) and possibly a lot more grief

 

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Time To Go!

If it were me, I'd start looking for alternative employment as soon as possible (Note: keeping this entirely confidential).

You'll need to have a good reason for moving to the new employer too.

Before you leave, make sure you have copies of all documents necessary to establish a case against the employer.  Once gone, involve the police (forgery + potential fraud) and ensure the case is also reported to the professional body, as (to me) this is clear breach of professional conduct and must be dealt with. 

These sorts of actions only serve to discredit the profession.

I once worked for a moron who did a similar thing to me, but it didn't end pretty.

20:20 hindsight vision!

 

If you're unclear on anything, I'd suggest contacting your professional body (or that of the firm) - again, very confidentially - and ask for some guidance.  I'm sure they would have some form of ethics committee that will be able to help out.

 

The reason I say it's time to go is 2-fold:

You cannot continue to work under such an employer who has a flagrant disregard for the trusted position that he is in with clients, disregard for the law of the land and for proper ethical behaviour;You really cannot let this thing go untreated.  If you don't report it, someone else may find out and it will be them who might report it, thereby implicating you in the scheme.  You then find yourself up s**t creek without a paddle and sinking fast!

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Involve the Police - this
"Involve the Police - this must be dealt with".....

OTT surely ???

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Surely the longer you leave to report it the more doubt is cast on his good name. What would his answer be( when his employer is charged with assisting mortgage fraud) to the question when did you find about the problem and why didn't you not immediately report it. The suggestion look for another job first won't work with disciplinary hearings or the courts 

I agree consult a solicitor and get the matter settled ASAP

 

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I'd also advise your friend to discuss with the ethics helpline of his institute.

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MLR

You can't avoid making a report under the MLRs. If you don't, you may end up serving time as well.

It doesn't matter that it's a forged signature. HE KNOWS ABOUT IT AND MUST REPORT IT.

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Not his signature though
Remember it's not his actual signature though, it is a forged signature so not necessarily implicated in the same way. Still would be looking for another job then deciding if I report it or not after I found one.

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Don't kneejerk, but don't delay either

Making a disclosure to a third party may raise more problems.  What if boss denies the forgery?  What if the real culprit is another employee and the boss has acted in good faith?

Friend needs to sort this out directly with the boss but he needs to take some employment law advice first to make sure that his livelihood is protected.  If boss is guilty then the friend can probably negotiate a termination deal that includes undertakings by the boss to make disclosure (on his own or jointly with the friend) and to provide references.

Boss won't fancy the prospect of the lender finding out from a third party.  The FSA has put lenders under pressure to clean up their act in this area and the boss could find his firm blacklisted.

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All the advice is reasonable but.........

nobody has asked, "are you sure who did it?"  If there are just the two of them it seems obvious that, if he did not, the Boss did.  If there are more than two, how does he know who did it?  Make sure first before you do anything.  Also there are three parties here, your friend, the boss, the client.  If questions are asked of the client the finger might point at your friend; can he prove he did not sign it?  The longer he leaves it, the less likely someone is to believe it was not him if he has done nothing.

ICPA has a code of ethics for members.  It holds itself out as a representative body and should take the same view of a member acting fraudulently as any professional body.

My thoughts are he has to get out and have the evidence; he surely cannot stay in, if he has found one instance where else has his name and ticket been used?  Report the matter to his professional body, he will not have its support if he keeps quite; to the ICPA; to the regulator with whom his boss is registered for money laundering; possibly the lender from whom funds may have been obtained by deception and even the client, he may not be complicit to this.

I'm not sure about the police as the money laundering report should set the process rolling on a mortgage fraud side but might be appropriate as there is also the issue of forgery.

 

 

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Dare I ask

if the information on the reference was correct?

 

Perhaps your friend should suggest that in future that he will be happy to sign a reference (if it is true etc) for a fee?

 

 

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david Winch

Hi David - you asked if the firm was paid for the reference. 

What difference would this make?  If they were or were not please.

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Being paid for the reference

pauljohnston wrote:

Hi David - you asked if the firm was paid for the reference. 

What difference would this make?  If they were or were not please.

From the information provided by the OP (original poster) it is not clear whether anyone has obtained a benefit as a result of the forgery.  If no-one has (knowingly) obtained a benefit as a result of the forgery then, in my view, no report is required in relation to suspicions of money laundering.  (So I would not be as quick as some other respondents have been to say that the OP's friend has a statutory obligation to report his suspicion.)

If the firm has received payment (and I am assuming the OP's friend believes the forger was the proprietor of the firm) then a reporting obligation is likely to have arisen under MLR 2007 / s330 PoCA 2002.  Technically the OP's friend's obligation would be to report his suspicion to the firm's MLRO (who probably is in fact the person the OP's friend suspects of the forgery!) but a report could also be made direct to SOCA or, for example, by a solicitor from whom the OP's friend has sought advice (i.e. the OP's friend could ask the solicitor to make a report on his behalf).

We do not know from the OP whether any mortgage was in fact obtained as a result of the reference or whether the client who applied for the mortgage was aware that the reference was forged / incorrect.  So the client may have done nothing wrong and / or may have received no benefit (in any financial sense) from the forgery.

David

N.B.  It is not the forgery that triggers an obligation to report - it is the acquiring of a benefit of criminal conduct (such as payment for supplying a reference which has been forged) which triggers an obligation to report (because acquiring a benefit of criminal conduct amounts to money laundering and money laundering - nothing else - is reportable).

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Ethical Dilemma

here's an extract from CIMA re Ethical Dilemma which may be useful

The following is taken verbatim from the section of CIMA's Code of Ethics that givesguidance on managing ethical conflicts. When initiating a formal or informal conflict resolution process in response to achallenge to the fundamental principles, a professional accountant should considerthe following:Having considered these issues, a professional accountant should determine theappropriate course of action that is consistent with the fundamental principlesidentified. The professional accountant should also weigh the consequences of eachpossible course of action.If the matter remains unresolved, the professional accountant should consider theinternal safeguards available to them. If the issue has organisational consequencesthis may include escalating the issue to those charged with governance of theorganisation, such as the board of directors or the audit committee.The professional accountant should document the substance of the issue and detailsof any discussions held or decisions taken.If a significant conflict cannot be resolved, a professional accountant may wish toresort to external safeguards and so avoid breaching confidentiality. For example,a professional accountant may have encountered a fraud, the reporting of whichcould breach the professional accountant's responsibility to respect confidentiality.The professional accountant should consider obtaining legal advice to determinewhether there is a requirement to report.If, after exhausting all relevant possibilities, the ethical conflict remains unresolved,a professional accountant should, where possible, refuse to remain associated withthe matter creating the conflict. The professional accountant may determine that,in the circumstances, it is appropriate to withdraw from the specific assignment, orto resign altogether from the employing organisation.

 

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David Winch

Thank you for explaining this so well

Paul

 

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