As we’ve been reporting, the Insolvency Service’s recent press releases have been awash with director disqualifications and bankruptcy restrictions related to misuse of the Bounce Back Loan Scheme (BBLS).
The details of four cases were released in April, as well as a summary of BBLS-related director disqualifications in the 2022-23 tax year.
Here’s a roundup of what was announced:
Six criminal prosecutions were brought against directors for pandemic-related misconduct, all of which resulted in convictions.
The Bounce Back Loan Scheme featured most prominently in these cases and was the only scheme mentioned by name by Director of Investigation and Enforcement at the Insolvency Service Dave Magrath’s commentary on the figures:
“These fraudsters are just the latest to find out that we will not hesitate to take firm action where we uncover such abuse, and this can ultimately result in a jail sentence.
“The purpose of the Bounce Back Loan scheme was to support businesses during the pandemic, but it is clear a minority of company directors chose to maliciously abuse the scheme and defraud the taxpayer. Our team of experts continue to work round-the-clock to bring these criminals to justice.”
As well as being numerous, Covid-related punishments have been more severe than pre-Covid bans, with the average length of disqualifications up from five years ten months to seven years four months.
Bahar Dag and her husband Baris Dagistan have received prison sentences of two years six months and two years, respectively.
Dag was the sole director of Mexy Chicken Ltd (now dissolved) from its incorporation in January 2019. Dag obtained the maximum £50,000 loan under the Bounce Back Loan Scheme by inflating the company’s turnover figures. The company’s actual turnover for the relevant period was around £40,000, but Dag’s application stated it was £200,000.
Despite repaying the loan in full once “the couple realised they had been caught”, Dag and Dagistan were charged with fraud offences and both pleaded guilty before being sentenced at St Albans Crown Court.
In a separate case, Rajesh Dhirajlal Vaghela, from Stanmore in London, has been handed a suspended six-month prison sentence, after he pleaded guilty to Bounce Back Loan Scheme fraud.
Vaghela had also repaid the loan in full by the time of sentencing.
He acquired a £25,000 loan through his company RKV Consultancy Ltd in May 2020. Vaghela filed for the company’s dissolution “within a week of receiving the money”. He did not inform the lender that he intended to dissolve the business, which breached the law.
Vaghela then went on to transfer the loan funds to his personal bank accounts.
He was sentenced at Harrow Crown Court in April, where he was also ordered to pay court costs of £2,150.
Jubelur Rohman of Wrexham has been handed an eleven-year director disqualification for his abuse of the Bounce Back Loan Scheme in October 2020.
Rohman obtained the full £50,000 loan through his company, Better Day Ltd, which traded as a restaurant in Wrexham. To be eligible for a Bounce Back Loan, companies had to have been trading at the start of March 2020. When investigators stepped in after Rohman’s company went into liquidation last year, they found that Better Day Ltd had stopped trading in October 2019.
The director withdrew £40,000 in cash from the company’s bank account over a six-month period following the successful Bounce Back Loan application. “Yet there was no evidence to show the funds had been spent for the economic benefit of the company.” Better Day Ltd had debts of more than £150,000 when it entered liquidation.
Also banned for eleven years is Craig McCourt, who was sole director of Craig McCourt Electrical Services Ltd until its dissolution in October 2020.
Insolvency Service investigators found that the company had ceased trading in September 2019, making it ineligible for the Bounce Back Loan Scheme. Despite this, McCourt successfully applied twice under the scheme – the first time for a £15,000 loan which he “immediately transferred … to another bank account”, and the second time for a top-up loan of £5,000 a month after the company had been dissolved.
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