Dharam Prakash Gopee guilty of acting as an illegal money lender

The trial of Dharam Prakash Gopee concluded today at Southwark Crown Court with the jury returning a guilty verdict to the charges brought by the Financial Conduct Authority (FCA) for offences under the Consumer Credit Act 1974 and the Financial Services and Markets Act 2000. 

Mr Gopee described himself as “a lender of last resort” and engaged with consumers who were often vulnerable and in difficult circumstances. He regularly registered charges over the homes of borrowers to enable him to take possession of a property if the borrower failed to pay the debt.

The offences related to Mr Gopee’s operation of money lending businesses from August 2012 to December 2016 despite neither having a consumer credit licence from the OFT, nor any authorisation from the FCA.

During the period from August 2012 to December 2016, he entered into 147 new credit agreements with new consumers, for sums totalling over £1,000,000. He also continued to collect on pre-existing loans with no authorisation to do so, sending ledgers applying high rates of monthly compound interest, making demands for payment, registering charges over consumers’ properties and pursuing court actions for money judgements and for possession.

In an effort to avoid the relevant regulations, Mr Gopee invented a complex new type of agreement for his lending which the prosecution alleged was simply a work of fiction.

Under this agreement, consumers would purportedly sell their home for the value of the loan, often as little as £2,000 - £5,000, to one of Mr Gopee’s companies. Another company owned by Mr Gopee then purportedly loaned the purchase money to the first company to finance the transaction. The consumer was given a licence to remain at the property on the condition that they pay the monthly liability under Mr Gopee’s intercompany loan. In this way, Mr Gopee claimed he was not entering into consumer credit agreements directly with consumers.

In reality, the complex new agreement was nothing more than a cover for Mr Gopee to continue lending to often vulnerable consumers in the same way that he had before. The inter-company mortgage between his companies only existed on paper, and none of the consumers who gave evidence in court understood or believed that they were selling their home in order to obtain the loans that they were seeking. 

Mark Steward, Director of Enforcement and Market Oversight at the FCA, said: 

“Unauthorised money-lending is a criminal offence and causes serious harm, often to vulnerable communities. Mr Gopee’s actions showed utter contempt for the law. The FCA will continue to take whatever action is necessary to stop this misconduct.”

The case has been listed for 10am on Friday 9 February 2018 for sentence.

Notes to editors

1. What offences had he breached?
   • Two offences contrary to S.39(1) of the Consumer Credit Act 1974 of carrying on a consumer credit business without a licence between 17 August 2012 and 1 April 2014, and two offences contrary to S.23(1) of the Financial Services and Markets Act 2000 of carrying on regulated activities (regulated credit agreements) without authorisation or exemption between 31 March 2014 and 16 December 2016.
2. Until 31 March 2014, consumer credit was regulated under a licencing regime by the Office of Fair Trading. Following that date, regulation transferred to the Financial Conduct Authority who have operated an authorisation regime, requiring prospect consumer credit lenders to obtain authorisation.  Only one company run by Mr Gopee ever had a credit licence – Reddy Corporation Limited – and the OFT refused to renew its licence. Mr Gopee’s appeals against that decision were unsuccessful. In refusing his appeal, the First Tier Tribunal (Credit) found that Mr Gopee failed to adhere to relevant consumer protection regulations, treating them as discretionary, and failed to deal with consumers fairly.
3. Mr Gopee has registered over 1,000 charges over consumer properties at HM Land Registry.
4. An alternative offence included in the indictment relating to entering regulated Sale and Rent Back agreements did not require a verdict from the jury.
5. Mr Gopee wrote to the FCA on behalf of two of his companies on 31^st January 2015 (two and half years after first using his new model) in an attempt to obtain a confirmation from the authority that his practice did not fall to be regulated. Mr Gopee said: “We are involved in lending short term finance to Limited Companies. We do not deal with individuals … We are writing to enquire whether we need to be authorised by your organisation to do this type of business.” [Mr Gopee’s emphasis] The FCA submitted this correspondence into evidence before the jury as it demonstrated, the prosecution said, a wholly disingenuous approach to the authorities, deliberately hiding the role of consumers in his dealings.
6. On the 1 April 2013 the Financial Conduct Authority (FCA) became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
7. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
8. Find out more information about the FCA[2].

For more information contact the FCA press office on 02070663232.