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A recap of August 2023’s Bounce Back Loan Scheme-related stories.
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 frequency of updates on the subject from the Insolvency Service certainly appears to have slowed, recently. (In fact, there were none at all in July.) However, the cases being reported now are interesting in that the errant company owners are being penalised with more than only director disqualification in more and more instances.
35-year-old Aleksander Staskiewicz has been sentenced to eight months in prison for offences under the Fraud Act 2006 and the Companies Act 2006 related to the Bounce Back Loan Scheme (BBLS).
The Southampton-based plumber successfully applied for a Bounce Back Loan for his company Think Gas Ltd in May 2020, early in the Covid-19 pandemic.
The Polish national’s company was already facing financial challenges before the pandemic began, though. Staskiewicz “had considered closing it down.” This fact alone meant Think Gas Ltd should not have been eligible for the scheme.
As we have seen in so many other BBLS cases, the director inflated the company’s turnover when applying through the scheme and obtained a £20,000 loan.
Staskiewicz withdrew nearly all of the money a day after the loan reached the company’s bank account. And a day later, he completed a striking-off application to dissolve Think Gas Ltd.
Dissolving a company without informing creditors within seven days is a criminal offence. In this case, Staskiewicz did not inform the bank that provided him with the Bounce Back Loan.
Staskiewicz was sentenced at Southampton Crown Court on 17th August 2023, having pleaded guilty at a hearing on 20th July 2023 to fraud by misrepresentation contrary to sections 1 and 2 of the Fraud Act 2006 and failure to notify creditor of a strike off application contrary to section 1006 of the Companies Act 2006. He was handed an eight-month sentence for both offences, to be served concurrently.
Peter Fulham – Chief Investigator of the Criminal Investigation Team at the Insolvency Service, said: “Aleksander Staskiewicz thought he could abuse the rules to exploit a scheme, backed by taxpayers, specifically designed to help businesses get through the pandemic. He now has a criminal conviction as a consequence of his actions. We will not hesitate to prosecute such cases.”
In court, Staskiewicz said “he had hoped to repay the loan…within twelve months”, but the money was still outstanding after three years.
In another case involving the dissolution of a company after securing a Bounce Back Loan, Ivan Hristov Fratev was given a two-year suspended prison sentence, a four-month electronically tagged curfew from 19.00 to 7.00 each night, a six-year director disqualification and fifteen days rehabilitation activity requirement at Snaresbrook Crown Court.
The Bulgarian national ran a construction, security and extermination business, BI&F Ltd, in Chingford, London. Fratev obtained a £50,000 Bounce Back Loan (the maximum amount under the scheme) in May 2020.
Using powers granted in December 2021 to investigate directors of dissolved companies, the Insolvency Service found that Fratev moved to dissolve his company less than a fortnight after receiving the loan money. He did not inform the bank that provided the loan.
Two cases of exaggerated turnovers to secure Bounce Back Loans, now, that were uncovered due to the companies involved entering liquidation.
Ryan Moir, an Eastbourne-based builder, took out the maximum £50,000 Bounce Back Loan in May 2020 through his company Croxton Group Ltd.
In order to obtain the maximum loan amount, Moir claimed that the company’s turnover was £250,000 for the relevant period. Insolvency Service investigators found that Croxton Group Ltd’s actual turnover was under £21,000 – less than 10% of the figure Moir used in the loan application.
Moir’s company went into liquidation owing more than £184,000 in May 2022, including the majority of the loan (£49,400). Croxton Group Ltd’s liquidators, from FRP Advisory, “are taking action to recover the money.”
Separately, Bradley Malone also obtained a £50,000 loan through the Bounce Back Loan Scheme in June 2020. Malone recorded the turnover of his company – ONENETPRINT Ltd – as £200,000 (the amount needed to claim the maximum loan value).
The company’s actual turnover was around £90,000 – less than half that stated by Malone – the Insolvency Service found, once the company had gone into liquidation in February 2022 with the full loan amount still outstanding.
Both Malone and Moir have received ten-year director bans.
Interestingly, Malone claimed that all he had done through the Bounce Back Loan application process was “clicked ‘next’ on his phone, and the money arrived within the hour.” This perception by some directors of the Bounce Back Loan Scheme as providing easy money with few or no checks goes some way to explaining the issues being uncovered now, as companies are dissolved or enter insolvency.
Seeing the whole picture in insolvency and debt cases is key to maximising returns to creditors. For more information on how ESA Risk can help to identify hidden assets or locate targets who have gone to ground, contact Mike Wright, Investigations and Risk Management Consultant, at mike.wright@esarisk.com, on +44 (0)843 515 8686 or via our contact form.
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