A gang of fraudsters asked for collateral of almost half the value of the multi-million pound loans they were offering to desperate businessmen, a court heard yesterday.

George Steen, 54 Dennis Alexander, 47, and David Andrews, 38, were said to have agreed to lend millions - but deals often fell apart because of the huge security they demanded.

By the time the deals collapsed, the alleged swindlers had made a fortune in fees, Southwark Crown Court heard.

Richard Latham, prosecuting, said Mr Steen, a businessman from Darlington, was asked by police how much a collateral bond would cost.

"He was given a specimen $10m loan over ten years and he said it would cost $4m - 40 per cent of the loan," said Mr Latham.

Mr Steen admitted that his company had not carried out any site inspections for potential clients.

He also told detectives he became concerned when complaints came flooding in from confused customers over the collateral bond.

However, he said applicants were always warned to get legal advice before taking out a loan.

Mr Steen, of Hanover House, Victoria Road, Darlington, Mr Alexander, of Rottingdean, and Mr Andrews, of Halisham, both East Sussex, all deny one charge of conspiring to defraud between January 1, 1996 and June 6 1999.

Colin Hardy, of Redcar, east Clevland, was also allegedly involved in the fraud, but died last year.