Web of tiny accounting firms audited collapsed MFS property lending empire

A collection of small London-based accountancy firms was tasked with auditing a sprawling property lending empire whose collapse has threatened billions of pounds in losses on Wall Street.

The collapse of Mayfair-based Market Financial Solutions and several linked companies owned by its founder Paresh Raja last week has prompted allegations of fraud from creditors that extended more than £2bn to the group.

MFS, which claimed to offer “complex, property-backed lending” comprised of short-term bridging loans, was last audited by high street accounting firm Berkeley Finch, which signed off its 2024 accounts with an unqualified opinion.

Berkeley Finch was paid £72,375 that year for its work at MFS, which owed money to UK lender Barclays and a unit of US private capital group Apollo Global Management when it fell into insolvency.

The accounting firm, which shares a floor with a children’s book publisher in its north London office block, had just 11 employees that year, according to its own accounts. Its page on the Institute of Chartered Accountants in England and Wales website shows only one chartered accountant linked to the firm, Ajay Yadav, who founded it in 2012.

The Finchley-based business was one of several small audit firms that signed off the accounts of parts of Raja’s lending empire, which provided loans through several linked companies.

Auditors and lenders often consider the lack of a single consolidated group audit by a major firm as a potential red flag, raising questions over the due diligence carried out by the large financial institutions that funded MFS’s lending.

A senior auditor at one of the UK’s largest accounting firms said: “When the major audit firms look at group audit, we insist on auditing the whole group or enough of the group to give an understanding of the full picture. It is a pulsating red flag when there is a patchwork quilt of small audit firms who can only ever see part of the picture.”

Raja’s Amber Bridging and Zircon Bridging, which are also both in administration and filed their own creditor claims against MFS last week, were audited by Silver Levene, based in Tottenham Court Road.

Silver Levene also provided an unqualified audit opinion to the 2024 financial statements of the two entities’ parent company, Zircon Group, which had a £1.2bn loan book at the end of that year.

Silver Levene was bought last year by Xeinadin, a top-20 UK accountancy that has grown rapidly by rolling up smaller firms. Xeinadin said at the time that Silver Levene had 19 partners and “nearly 150 members of staff”, hailing its “strength in niche industries” such as film, television and music.

Administrators are investigating the background to the collapse of some MFS-linked companies, including some that were audited by Silver Levene, but only MFS has been accused of wrongdoing.

Several other entities in Raja’s group were audited by Sterling Young, an accounting firm registered to a mailbox address in Wimbledon and whose own accounts state that it had an average of four employees in the financial year to June 2024.

Raja’s PSR Equities, which received an unqualified audit for 2024 accounts that disclosed a £450mn loan book at the end of that year, was among entities audited by Sterling Young. It is among MFS-linked entities that last week filed notice of intention to appoint administrators.

Several subsidiaries of PSR Equities, such as EarthAve Bridging and Garnet Bridging, were audited by FW Smith Riches & Co, a four-partner firm that joined the MGI Worldwide international accounting network in 2017.

Several of Raja’s entities are registered to the same address as Berkeley Finch’s offices. MFS’s founder appears to have praised Yadav in an online review of Berkeley Finch.

“Ajay is one of the most knowledgeable and proactive accountants we have come across,” a Google Maps user called Paresh Raja wrote six years ago, adding that the accountant was “very friendly and always willing to help & assist”. Raja did not respond to a request for comment.

Berkeley Finch, Silver Levene and Sterling Young did not respond to requests for comment. Xeinadin declined to comment.

FW Smith Riches said its audits were carried out in compliance with the law. “None of the five [Raja-controlled] companies where we completed audits have defaulted on the liabilities” set out in the 2024 accounts, the firm told the FT.

FW Smith Riches added it had been appointed to audit three other entities, including PSR Equities, but “did not sign off [their] audits”. The firm said it had ceased to act for the “PSR Equities Limited group of companies” in October, adding that client confidentiality obligations meant it could not comment on the reasons.

“We took on these companies as clients because auditing them was well within our capabilities and capacity,” it added.

It added that “it is entirely reasonable and appropriate for more than one firm to be involved in auditing a group of companies” and that professional rules make clear that the use of multiple firms “is not, of itself, a ‘red flag’”.

It said it had been appointed as the sole auditor of the entities within the PSR group of companies, meaning it had been able to see “all relevant transactions within the legal group” and that at the time of its appointment there had been “no ‘patchwork quilt’ of small [audit] firms”.