Boss of collapsed £2bn ‘shadow bank’ accused of stealing money from lender

Core Viewpoint - The collapse of Market Financial Solutions (MFS), a £2 billion shadow bank, is linked to serious fraud allegations involving the founder Paresh Raja and a network of fake companies used to defraud creditors [2][4]. Group 1: Allegations and Legal Actions - Paresh Raja is accused of using eight companies to extract money from creditors under false pretenses, as claimed by a creditor group [2]. - Creditors successfully placed the eight companies into administration, revealing that they were not genuine borrowers but closely connected to MFS [3]. - A judge described the fraud allegations against MFS as "very serious," prompting an investigation by the Bank of England [4][6]. Group 2: Connections and Financial Implications - Magus Chartered Accountancy, which acted as accountants for MFS, is linked to the ownership of many companies that received loans from MFS [4][6]. - Over 130 companies associated with Magus received loans from MFS, potentially representing up to 20% of MFS's total clients [7]. - More than half of the companies controlled by Magus received loans from different MFS lenders on the same day, secured by the same property, leading to a financial hole of over £1.3 billion in MFS's accounts due to double-pledging of collateral [8]. Group 3: Company Background and Response - MFS was established in 2002 and operated as a shadow bank, funding its loans by borrowing from itself without taking deposits [4]. - Legal counsel for Paresh Raja stated that while mistakes were made, there was no intention to defraud, and Raja did not benefit from any alleged shortfall [9].