Eight year’s after the collapse of Manchester property lender Lexi Holdings the company’s administrators have so far managed to claw back more than £42m — with two-thirds of that being paid out to lawyers and accountants.
In its latest creditors’ report KPMG says that, of the assets it has managed to realise since the company’s 2006 crash, more than £28m of the £42.3m recovered — which includes £6.7m from negligence claims against Lexi’s former advisers — has been paid out to cover professional fees. Legal costs have gobbled up almost £9m, with KPMG itself taking just over £8m.
At its peak, Lexi Holdings had a £300m turnover. Shaid Luqman, its flamboyant boss, lived in a luxury Cheshire mansion and drove a Bentley Continental GT. When he wasn’t travelling the globe in his private Gulfstream IV jet, the businessman was included on the Sunday Times Rich List and lauded as Young Entrepreneur of the Year by accountants Ernst and Young.
By the time the truth emerged his family had cheated Barclays, and its syndicate partners Lloyds and Bank of Scotland, out £104m.
In the summer of 2011, after being charged with passport offences and while wearing an electronic tag, Luqman abandoned his Hale home and fled the country. A complex Serious Fraud Office investigation continued and painstakingly reconstructed the company’s accounts, resulting in Luqman’s 39-year-old brother and fellow director, Waheed Luqman, being charged with conspiracy to defraud and two charges of conspiracy to falsely account.
When he failed to show up for his trial, a seven-month Manchester Crown Court hearing continued without him and Waheed Luqman was found guilty in his absence and sentenced to seven-and-a-half years in prison. He was also been disqualified from being a company director for 15 years and ordered to pay £250,000 in costs.
During sentencing, Judge David Stockdale QC, said: “The fraud was complex and sophisticated and conducted on a massive scale – the ultimate purpose was to mask the diversion of large sums of money elsewhere for the benefit of the Luqman family.”
The court heard that Lexi Holdings provided short-term bridging loans to property investors from offices at St Ann’s Street in Manchester and Grosvenor Street in Mayfair. By falsifying entries in its loan books, both directors exaggerated the company’s worth between 2000 and 2006. This tricked Barclays into lending them ever greater sums of money, which Lexi were laundering through secret accounts.
“You may come to the conclusion that Barclays Bank — the main victim in this case — might have exercised greater control over what happened to its money,” said Judge Stockdale. “What Barclays did not now, was that Shaid Luqman’s fraudulent mishandling of his previous business, Modern Living, led to that company’s failure. Nor did they know that he had criminal convictions for fraud some years before that and that the university degree he proudly flaunted was a sham.”
Both brothers are now living in Pakistan — Shaid Luqman has launched a high-end fashion boutique in Lahore called La Societe — where the administrators are seeking to freeze more family assets. KPMG says court orders have already been issued covering worldwide assets worth £260m with judgements against a further 15 related parties and associates.
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