Category: News

Our coverage continues on the Insolvency Service’s initiative to uncover financial wrongdoing connected to the Covid-19 Bounce Back Loan Scheme (BBLS), amid sustained efforts to identify businesses and individuals who exploited the scheme intended solely for vulnerable businesses during the pandemic.

With 6 further cases of BBLS-related fraud reported in the last 3 months, and a positive conclusion to a previously reported case.

Bounce Back recap

In January of 2023, we reported on the director of Digital Business Box Ltd, who fraudulently secured a £50,000 Covid Bounce Back Loan by exaggerating his company’s turnover. After spending the loan on personal expenses and a BMW, then attempting to dissolve his business, he received a suspended prison sentence and a director ban in December 2022.

After his conviction, the Insolvency Service initiated crime proceedings, compelling Mr Saeed to sell his BMW and his flat in east London to repay the £50,000 loan. The sale of Mr Saeed’s property was completed in late October 2024, along with an additional payment, ensuring the full repayment of the loan.

Bankruptcies and bans

Shaun David Dixon, a self-employed electrician from Middlesbrough, faces 7 years of stringent bankruptcy restrictions following his abuse of the Covid Bounce Back Loan scheme.

He improperly claimed 2 separate loans totalling £23,750 by overstating his business turnover, receiving an unentitled excess of £16,250.

Made bankrupt in November 2023, Mr Dixon did not dispute the inaccurate information provided during his second loan application, leading to bankruptcy restrictions that prevent him from acting as a company director and borrowing over £500 without declaring his bankruptcy status. These restrictions are set to last until October 2031 to prevent further misuse and protect public funds.

Ruxanda Guja, a former decorator in Romford, has been banned from acting as a company director until December 2037 and must pay over £100,000 in compensation after unlawfully securing 3 Covid Bounce Back Loans totalling £145,000 for her company, Roxy Contracts Limited.

Despite the rules stating businesses were entitled to a single loan of up to £50,000 depending on their turnover, Ms Guja applied for 3 separate loans in 2020, obtaining 1 of £45,000 and 2 others of £50,000 each from different banks by misrepresenting her company’s turnover.

She has been ordered to pay £107,038 in compensation and £7,592 in costs. The Insolvency Service conducted the investigation, emphasising that Ms Guja’s actions breached clear scheme guidelines, constituting misuse of taxpayer money. Liquidators were appointed for Roxy Contracts in June 2021.

Nazia Khan, a Dubai-based sales consultant, received a 9-year company director ban in the UK for fraudulently securing a £25,000 Bounce Back Loan for her dormant company, LC247 Limited, by falsely claiming a turnover of £100,000.

The Insolvency Service’s investigation found that the company, which was supposed to offer consultancy services for a variety of luxury items and consumer goods, had minimal trading activity and was not entitled to the funds. Ms Khan misused the loan for personal expenses, including rent and shopping, rather than business development. The company was liquidated in February 2022, with over £28,000 in debts.

Her disqualification began on 5^th December 2024, preventing her from any management role in a UK company without court permission.

Kieron Minto-St.Aimie, a former professional footballer, has been disqualified from serving as a company director for 8 years for making a false declaration to secure a £25,000 Covid Bounce Back Loan for his business, when it was eligible for much less.

His sports academy in Brent was entitled to only £10,000 based on its actual turnover, but he overstated the figure by £60,000. The academy, which provided football coaching and mentoring, opened in 2016 and was dissolved in January 2023.

Suspended sentences

Muhammadh Chaudhry, a Surrey director who used to be known as Masood Jamati, has been handed a suspended sentence and a 7.5-year director disqualification after fraudulently securing £100,000 in Covid Bounce Back Loans.

He applied for these loans for 2 businesses that seemingly never traded, using “cynically invented” turnover figures of £200,000 for each to obtain the maximum loan amount. After receiving the loans, Mr Chaudhry transferred the funds through family members’ bank accounts and then back to himself, using some for personal expenses like holidays to Pakistan.

While Mr Chaudhry has repaid 1 loan in full and has started to pay back the second loan – agreeing to repay the remaining balance – his actions were deemed a deliberate exploitation of a scheme intended to support legitimate businesses during the pandemic.

Irena Tokarczyk, a director from Watford, was sentenced to a suspended 2-year prison term for fraudulently acquiring a £50,000 Bounce Back Loan and subsequently dissolving her company, Good Food Shops Ltd, without repaying the loan. The company was dissolved in October 2020, triggering an Insolvency Service investigation, which found that the company had never traded.

In addition to the suspended sentence, Ms Tokarczyk must perform 100 hours of unpaid work, undergo 10 days of rehabilitation activity, and is disqualified from directing a company for 3 years.

She breached the Companies Act 2006 by not informing creditors about the dissolution and committed fraud. The Insolvency Service plans to recover the funds through a Proceeds of Crime Confiscation Order, which will be evaluated in court this month.

Insolvency and debt investigations

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)343 515 8686 or via our contact form.

You can also learn more from our Insolvency & Debt Investigations brochure:

Download your copy

We’re continuing our reporting on The Insolvency Service’s ongoing efforts to identify financial misconduct linked to the Covid-19 Bounce Back Loan Scheme, as attempts to crack down on businesses and individuals who abused the scheme across the country continue.

The last 3 months have seen 10 further cases reported, with key action taken against those who misused government financial aid, including both the Bounce Back Loan Scheme (BBLS) and the Eat Out to Help Out scheme.

Suspended sentences

A Bristol-based builder and his father were handed substantial suspended sentences for jointly defrauding £100,000 in Covid-related financial aid for 2 construction firms that were not trading at the beginning of the pandemic. The duo, found guilty of concocting fake claims, were sentenced to 2 years suspended for 18 months, and 16 months suspended for 12 months, respectively.

In another notable family-linked fraud case, the Deegan’s, a father and daughter from Merseyside, were convicted after their plot to exploit Covid loan provisions came to light.

Of the £50,000 and £25,000 they were entitled to for their 2 companies – long-running family business Bootle Car and Commercial, and the almost identically named Bootle Cars & Commercials, set up in February 2020 – Catherine Deegan fraudulently claimed a further £15,000 2 weeks after the initial loan via a different bank. Gerard Deegan later applied for an additional £50,000 in June 2020; despite knowing (and later admitting) his business was not entitled to it.

Their collaborative efforts to deceive financial authorities ended with both receiving suspended sentences. Mr Deegan has also been disqualified as a company director for 10 years and placed on an electronically monitored curfew.

Business consultant, Mr Mushtaq, fraudulently applied for and secured 2 maximum-value Bounce Back Loans on consecutive days in early June 2020. The funds, intended for business relief, were instead diverted for personal luxury expenditures, with “£78,000 sent to a money transfer service based in California”, the Insolvency Service reports.

Appearing at Derby Crown Court on 13^th August, Mr Mushtaq was sentenced to 20 months in prison, suspended for 22 months, and ordered to complete 120 hours of unpaid work.

Stanislav Genadiev, an electrician from Romford, has been ordered to repay over £56,000 after fraudulently securing £100,000 through 2 Covid Bounce Back Loans. He misused the funds for personal debts, groceries, and designer clothing instead of his 2 businesses, as the loan was intended.

Both loans were obtained through false claims regarding the turnover of his companies in 2020. Mr Genadiev must repay the amount within 3 months or face 18 months in jail, though he will still owe the money if imprisoned.

Mr Genadiev was previously sentenced to a 2-year suspended prison term and 150 hours of unpaid work. Further asset recovery actions by the Insolvency Service are possible if additional assets are discovered.

Lee Walkey, a Sussex-based company director, was not only sentenced for Bounce Back Loan fraud but was also found to be involved in a phoney investment proposal. After securing £50,000 from the BBLS, Mr Walkey “misused £21,756 of the loan”, transferring this money into personal accounts.

Continuing his unlawful behaviour, Mr Walkley later encouraged someone he knew to invest more than £7,000 in a proposed footgolf course, promising 20% control and a return on his investment at a future date. Crawley Borough Council later confirmed he never had permission to create the footgolf course to begin with.

Mr Walkley was handed an 8-month prison sentence, suspended for 12 months, and ordered to complete 150 hours of unpaid work.

Bankruptcies and bans

Further to suspended sentences, many individuals faced hefty directorship bans and tough bankruptcy restrictions.

A significant case involved Matthew Littlechild, a business owner in Devon who faced legal action after misusing £250,000 in Covid loans.

Mr Littlechild claimed 5 separate £50,000 Bounce Back Loans for his businesses between May and June 2020, despite this, Mr Littlechild became bankrupt in January 2024. Investigations into his bankruptcy found he’d provided false information on the turnover of all his businesses, resulting in 13 years of stringent bankruptcy restrictions, preventing him from acting as a company director or borrowing more than £500 without first declaring the sanctions.

Potential asset realisations are still being reviewed by the Official Receiver.

London taxi driver, Mr Ahmad, has been slapped with an 11-year sanction after falsely claiming 2 loans on the Bounce Back Loan Scheme, totalling £100,000, then failing to use the money for the economic support of his businesses as intended.

Mr Ahmad was made bankrupt in February 2024, after investigations by the official receiver found he had overstated the turnover of his 2 businesses, to claim more money than was allowed under the scheme.

Nick Addison, a construction contractor from Bedfordshire received a directorial ban after misallocating a £50,000 loan meant for business overheads. Addison claimed a turnover of £250,000 for his business Addison’s Quality Ltd, but investigations showed the actual earnings weren’t even a quarter of his stated claim, culminating in a ban from holding any directorial position until 2037.

It was stated that “between May and September 2020, more than £48,000 was paid to Mr Addison’s personal account” from his company’s account, highlighting the significant financial discrepancies.

The maximum directorship ban of 15 years has been handed to the sole director of a data processing and equipment sourcing business. Richard Oliver, director of Exact Data Trading Co. Ltd, inflated his company’s turnover to secure a £50,000 Bounce Back Loan in June 2020. It was also discovered that no trading income was paid into the business’s account between March and July of that year, indicating the business was not operating at the start of lockdown.

Between June and July 2020, Mr Oliver provided false and contradictory information to councils and registered for business rates to receive Small Business Relief Grants through 21 local authorities, despite not occupying or trading from any of the addresses he registered.  He received grant payments of £95,000 from 7 of these local authorities off the back of these applications.

Finally, Belal Ahmed, owner of Bengal Tandoori Lichfield Limited, has been banned from company directorship after abusing both the Covid Bounce Back Loan and Eat Out to Help Out schemes.

Mr Ahmed submitted claims totalling £56,500 under the Eat Out to Help Out scheme, a programme subsidised by the government, where customers received 50% off food and non-alcoholic drinks during certain days of the week at participating restaurants and cafes.

The analysis of the restaurant’s bank statements revealed that their in-house restaurant sales for a particular month were only £8,055, however, the company obtained “at least £48,445 more than it was entitled to”.

Mr Ahmed had previously, and fraudulently, attained a Bounce Back Loan earlier that year by inflating his turnover.

Winding up

The Insolvency Service has shut down Ledbridge Consultants Limited and Montague Partners Ltd after investigations proved that both companies fraudulently received over £1 million in Covid support loans without entitlement. Registered in Birmingham and London, respectively, neither company genuinely traded but instead acted as vessels to illicitly obtain substantial funds.

They initially obtained 2 maximum loan amounts via the Bounce Back Loan scheme and a further £1.5 million from the Future Fund – another government Covid support scheme – in the name of 3 other companies, quickly distributing these funds to 35 individuals. 10 of these beneficiaries received more than £75,000 each, spread out over multiple small transactions in a short period of time.

The ongoing investigation revealed they had also stolen identities, providing the details of previous job applicants to falsely set up company structures and financials without consent.

Both companies failed to cooperate with the Insolvency Service, leaving the exact control and intentions behind these significant transactions unclear. Consequently, both companies have been wound up at the High Court, and the Official Receiver has been appointed as liquidator.

A Lincolnshire-based eel protection company was shut down after investigations revealed egregious misuse of Covid-19 financial support. The directors of The Eel Screen Company Ltd submitted inaccurate revenue figures to obtain a £50,000 bounce back loan in 2020, and subsequently engaged in additional misconduct with a £225,000 application for the Recovery Loan Scheme in January 2022.

Purportedly, the company was involved in the installation of screens to protect eels in rivers, though the directors provided conflicting information on the nature of the business when questioned during the investigation.

The Insolvency Service found inconsistencies in the company’s accounts, in addition to bank statements that appeared doctored.

It was later revealed that “of the £225,000 The Eel Screen Company received, £148,000 was withdrawn as cash”, directors also failed to produce accounting records on request.  As of today, only 1 repayment has been made, with £213,750 and £30,726 in interest outstanding.

David Hope, Chief Investigator at the Insolvency Service, said: “The Insolvency Service will not hesitate to apply to have companies wound-up in the public interest in such cases.”

As investigations continue, businesses and individuals alike face the consequences of their actions during the pandemic; a stern reminder that the misuse of government aid is a serious offence with significant penalties.

Insolvency and debt investigations

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)343 515 8686 or via our contact form.

You can also learn more from our Insolvency & Debt Investigations brochure:

 

Download your copy