Tag: Bounce Back Loans

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:

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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:

 

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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).

May 2024 was a particularly busy month, with 7 separate updates from the Insolvency Service on the topic of Bounce Back Loans.

Suspended sentences

Several individuals have received suspended sentences for misusing the Bounce Back Loan Scheme.

Sehrish Yasmin, a restaurant manager in London, was given a suspended sentence after using £12,000 of Bounce Back Loan money to purchase jewellery instead of supporting her business. The £12,000 was taken from 2 £50,000 loans obtained by Ms Yasmin, despite companies only being eligible for a single loan under the scheme. Moreover, Ms Yasmin failed to deliver records to the liquidator when her company was liquidated in May 2021.

Another case involved a cleaner, Anna Dalecka, also based in London, who received a suspended sentence for abusing the loan scheme. Ms Dalecka “wildly overstated her takings by £216,000” in claiming the maximum £50,000 loan.

Sheffield-based James Todd was sentenced after spending a fraudulently obtained loan for a non-existent business on a BMW, among other personal expenditure. Mr Todd obtained a £50,000 loan for Pro Detailing, a business he invented – along with its £255,000 turnover – for the purpose of applying for a Bounce Back Loan. He spent £49,755 of the loan funds “on personal purposes” in less than a month.

Similarly, Rian O’Keeffe of Hammersmith, London used a fictitious business to acquire his £50,000 Bounce Back Loan. Mr O’Keeffe invented a £312,000 turnover for ‘Trainersource’ when applying for the loan. He withdrew £22,000 in cash and spent the loan money “on general living expenses”, eventually being declared bankrupt in November 2021.

Ms Yasmin was handed a 10-month prison sentence, suspended for 12 months, at Manchester Crown Court on 16^th May 2024. She has since repaid both loans in full and has been ordered to pay £5,000 in compensation and costs.

Ms Dalecka was sentenced to 18 months in prison, suspended for 24 months, on 3^rd May 2024 at Snaresbrook Crown Court. She was also ordered to complete 300 hours of unpaid work and was handed a 3-month curfew.

Mr Todd was also sentenced to 18 months in prison, suspended for 24 months. His sentencing took place at Sheffield Crown Court on 20^th May 2024. Mr Tood must complete 240 hours of unpaid work and pay £2,000 in compensation.

Mr O’Keeffe was also given an 18-month prison sentence, suspended for 2 years, at Southwark Crown Court. He is subject to a 3-month curfew and 30 days of rehabilitation activity.

All 4 have been handed lengthy directorship bans in addition to their suspended sentences.

These cases highlight the severe consequences individuals faced for misusing the emergency loans, even if the sentences were suspended.

Directorship bans

While the suspended sentences handed out in May’s reported cases represent the most stringent punishments, other abusers of the Bounce Back Loan Scheme were given directorship bans.

A husband and wife estate agency team from Cornwall were disqualified from directorships for 6 and 5 years, respectively, after acquiring a £50,000 Bounce Back Loan using a false turnover figure and then using the money for personal gain instead of business purposes.

Another notable case involved a London-based builder who received a 10-year ban for obtaining a £50,000 Bounce Back Loan through fraudulent means and failing to provide proof of how the funds were used.

A greengrocer from London was disqualified for 7 years and told to pay over £37,000 in compensation for using £19,000 of the £35,000 Bounce Back Loan he acquired to invest on the stock market. Emra Kayam dissolved his business in November 2020 with the full value of the loan still outstanding.

Ongoing investigations

May’s flurry of updates is a reminder that, while many cases of Bounce Back Loan fraud have been prosecuted, there are ongoing investigations into suspected misuse of the scheme. In relation to the husband and wife estate agency business, Chief Investigator at the Insolvency Service, Kevin Read said: “Tackling abuse of the Bounce Back Loan scheme is a key priority for the Insolvency Service.”

Similarly, Lawrence Zussman, Deputy Head of Company Investigations at the Insolvency Services said (in relation to a different case): “[This] lengthy ban shows the Insolvency Service will pursue those who seek to abuse taxpayers’ money and remove them from the business arena.”

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

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).

While there was only one such update in September from the Insolvency Service last month, there was an important statistical update from the Department for Business & Trade with one statistic, in particular, widely reported by the press…

Marked increase in Bounce Back Loans flagged as suspected fraud

In the ‘Covid-19 loan guarantee schemes performance data‘ quarterly update to the end of June 2023, published by the Department for Business & Trade, the value of BBLS loans “flagged by lenders as suspected fraud” rose to £1.65 billion – a near 40% increase since the March 2023 update.

The official commentary on the statistics states: “Since fraudulent loans are likely to be among the first to default, it is assumed that the proportion of guarantee claims linked to loans with a suspected fraud flag should decline as the scheme matures, although this will only become apparent over time.”

As we have seen from the number of Bounce Back Loan Scheme fraud cases discussed on this website over the past couple of years, the scheme was open to fraudulent activity, as lenders were encouraged to provide businesses with financing as quickly as possible.

The loans handed out under the scheme were, of course, 100% guaranteed by the UK government and the public purse has so far paid out on £1.27bn of loans with a suspected fraud flag (around 18% of the total paid out so far under the BBLS guarantee scheme).

The data release from the Department of Business & Trade (formerly the Department for Business, Energy & Industrial Strategy) includes a set of notes specifically relating to suspected fraud reporting, which admits that the “figures for suspected fraud will vary from quarter to quarter” as lenders evolve their “processes for identifying and combatting fraud”. The release also notes that a flag of suspected fraud will not always mean actual fraud, and that reporting will differ by lender depending on their “fraud tolerance thresholds”. The general message is that the figures for this metric are “indicative” as at a moment in time.

First Bounce Back Loan compensation order secured in court

The Insolvency Service has secured its first compensation order in court, which orders Marian Ghimpu to repay £52,163 for his abuse of the Bounce Back Loan Scheme.

Ghimpu, from Croydon, obtained the maximum £50,000 Bounce Back Loan in October 2020 after he claimed his company’s turnover was £200,000 in his application. In fact, his company, Deea Construct Ltd, was only eligible for the minimum loan amount of £2,000. There was no activity at all for the year to October 2020 in the company’s bank accounts, and only around £4,000 in revenue in summer 2019 (which fell in the qualifying period for the loan application).

On receiving the loan funds, Ghimpu transferred more than £40,000 to his personal bank accounts and withdrew the remaining money in cash.

Just six months after acquiring the loan, the director placed Deea Construct Ltd into liquidation, which in turn led to an Insolvency Service investigation. The company’s liquidator, from Capital Books, was unable to recover the loan money. As a result, the Insolvency Service sought a compensation order, which was imposed on Ghimpu by Chief ICC Judge Briggs at High Court of Justice, Rolls Building on 25^th July 2023 (but only reported by the Insolvency Service on 1^st September 2023).

Ghimpu also received a thirteen-year director disqualification order.

Nina Cassar, Deputy Head of Investigations at the Insolvency Service, said: “Marian Ghimpu’s actions, providing false information to the bank, allowed Deea Construct Ltd, and himself, to have an unfair advantage over other businesses impacted by Covid-19. Abuse of taxpayers’ money will not be tolerated and I am delighted we have secured this compensation order. Where there have been similar cases of abuse by company director, we will be seeking further compensation orders and disqualifications.”

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

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.

• Custodial sentence for Bounce Back Loan Scheme fraud
• Suspended sentence plus curfew
• Exaggerated turnovers

Custodial sentence for Bounce Back Loan Scheme fraud

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 17^th August 2023, having pleaded guilty at a hearing on 20^th 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.

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Suspended sentence plus curfew

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.

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Exaggerated turnovers

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.

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

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).

While there were only two updates from the Insolvency Service on the subject in June, those updates covered £600,000 of Bounce Back Loans and thirteen companies.

Network of sham companies wound up

Eleven companies have been wound up after an Insolvency Service investigation uncovered “systematic fraud” to the tune of £500,000 through the Bounce Back Loan Scheme.

While the group of companies listed various registered office addresses across England, no evidence of trading premises nor trading could be found for any of the companies. Despite never having traded, the companies obtained Bounce Back Loans during the Covid-19 pandemic, with nine of the eleven claiming the maximum £50,000 loan and one company securing two loans.

Money was moved around the network of fake companies – which were also linked by their registered addresses, in some instances – before eventually “being transferred to entities registered in Hong Kong.” The investigation started after the Insolvency Service found links between these eleven companies and five other companies that were wound up in 2021 and 2022. The five companies in the earlier investigation fraudulently obtained £250,000 through the BBLS, as well as £350,000 through other schemes.

The companies were wound up in the High Court in Manchester with the Official Receiver appointed liquidator and now “working to trace the funds and those responsible, with a view to recovering the money.”

The eleven companies in question are:

• Laslett Industries Limited (company reg no 11690274).
• JP Capital Management Ltd (formerly called Hampton Brookers Limited) (company reg no 11690206).
• CMJA Limited (company reg no 11690056).
• JK Distributions Limited (company reg no 11667454).
• Kubrick Trade Ltd (company reg no 11386566).
• Lowe Brokers Limited (company reg no 11474219).
• Rubeum Auri Limited (company reg no 11886277).
• Share Apartment Limited (company reg no 12248395).
• Stella Management Limited (company reg no 11886188).
• Globexel Ltd (company reg no 12063877).
• JLS Enterprises Limited (company reg no 11830409).

Personal use of loan funds and exaggerated turnovers

George Pinnegar successfully applied for the maximum £50,000 Bounce Back Loan through his company London Sound Engineering Ltd in July 2020. In the application, he gave an estimated turnover of £250,000 for 2019, as the company began trading after 1^st January that year, making the company eligible for the maximum loan amount. However, investigators found that the company had not been trading on 1^st March 2020. Under the rules of the Bounce Back Loan Scheme, companies had to be trading on that date to be eligible for a loan.

Pinnegar “transferred almost £38,000 of the loan money to his personal bank account” and the other £12,000 “into the bank account of a connected company.”

London Sound Engineering Ltd was listed as a temp agency on Companies House, but traded as a sound engineering business. The company’s liquidator – Ian Yerrill of Yerrill Murphy LLP – “is currently working to recover the funds.”

Pinnegar has been disqualified as a company director for eleven years from 20^th June 2023.

Azmi Shafi Ahmed also obtained a £50,000 Bounce Back Loan in July 2020 through his company AZ Fiancials Ltd, a bookkeeper in Ludgate Hill, London. He claimed the company’s 2019 turnover was £200,000 (the amount needed to apply for the maximum loan through the scheme). However, investigators found that Ahmed had exaggerated that figure by more than five times the true turnover, which was “less than £40,000”.

Ahmed moved the entire £50,000 he secured through the scheme into his personal bank account just three days after his company received the money.

He has repaid £25,000 of the the loan and has agreed to repay the remaining £25,000.

Ahmed has been disqualified for six years from 13^th June 2023.

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:

 

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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).

While there were no announcements from the Insolvency Service on the subject in May, there were two interesting stories related to Bounce Back Loans from other sources – one from the Traffic Commissioners for Great Britain and another from the BBC.

Group of companies now in insolvency received c. £2m in Bounce Back Loans

The BBC reports that JVIP Group – a group of companies in the property sector – obtained “more than 40 Bounce Back Loans, each of about £50,000.”

The businesses, based in Tunbridge Wells, Kent, have faced insolvency since the start of last year, with the companies now either in administration or liquidation.

On the face of it, there is nothing necessarily wrong with companies in the group receiving loans under the Bounce Back Loan Scheme, designed to help businesses through the Covid-19 pandemic. However, the BBC article suggests that some of the companies were unlikely to have met the turnover requirements to access the maximum £50,000 loans, therefore implying that figures were manipulated during the application process.

Additionally, the article questions whether the JVIP Group companies were in financial difficulty before the pandemic, which would have made them ineligible for the scheme. The article quotes “a former member of staff who…said alarm bells were ringing in January 2020, three months before the first lockdown.”

Investors in the JVIP Group are “facing losses of up to £30m collectively”. Group director Peter Dabner “denies any wrongdoing.”

With formal insolvency processes underway across many of the group’s companies, it is only a matter of time before the facts about JVIP Group’s use of the Bounce Back Loan Scheme is revealed.

Bounce Back Loan Scheme abuse cited in licence decision

Gregorys Transport Ltd’s application for a goods vehicles operator’s licence was refused at a public inquiry, in part due to the director Gregory Swartz’s misuse of the Bounce Back Loan Scheme in his previous company.

Investigators found that GMAKX Ltd had a Bounce Back Loan of £40-45,000 which remained outstanding when the company was sold earlier this year. “The company had not had the necessary turnover to have been eligible for that Bounce Back Loan in the first place.”

Swartz was seen as “disposing of the company” by the Traffic Commissioner for the West of England, Kevin Rooney, in order to “avoid insolvency proceedings” and “avoid significant liabilities” including the Bounce Back Loan. His attempt to set up again almost immediately, using a new company, was blocked with the reason given that the commissioner was not satisfied that Gregorys Transport Ltd “is of good repute”.

Perhaps the most interesting element of the case, as set before the public inquiry, is the company that purchased GMAKX Ltd in January 2023 – Atherton Corporate Limited – and the director who replaced Swartz after the sale – Neville Taylor.

There are, apparently, “hundreds of businesses which appear[…] to have the same Mr Taylor listed as director albeit with several different dates of birth and addresses.” And additional research led to the discovery of related “websites touting services to protect reputations from insolvency.” A quick web search returns a host of sites doing just that with anti-insolvency practitioner messaging, promises of quick wins and specific mentions of Covid-related loans.

The commissioner decided that “if the sale was not illegal, it was certainly unethical.”

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.

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After February’s relative lull in Bounce Back Loan-related announcements, March saw a return to form with five stories shared by the Insolvency Service.

As in previous months, we’ve put together a summary of those announcements:

• Company dissolutions after obtaining loans
• Abuse of multiple Covid support schemes
• False turnovers used to obtain loans.

Company dissolutions after obtaining loans

March 2023’s roundup starts with two directors who dissolved their companies soon after acquiring Bounce Back Loans, without notifying their creditors.

Simon Gorgin, from Kings Langley in Hertfordshire, obtained a £45,000 Bounce Back Loan in May 2021 through his company P3 Estates Ltd. He had applied to dissolve the company a month earlier, in April 2021. Gorgin did not inform the Bounce Back lender that he had applied to dissolve P3 Estates.

Despite the company having been incorporated in April 2010, investigators revealed that P3 Estates had never traded and was therefore not entitled to support through the Bounce Back Loan Scheme (BBLS).

Gorgin fabricated a 2019 turnover of £180,000 in order to acquire the loan. Furthermore, he transferred the full amount of the loan from P3 Estate’s business bank account to his personal bank account three days after receiving the funds.

Gorgin has received a twelve-year director disqualification.

Rukia Begum ran a takeaway in Oldham from September 2018. She obtained a £35,000 loan through the BBLS for her company New Polash Oldham Ltd in May 2020.

In July 2020, only two months later, Begum applied to dissolve the company and failed to tell her creditors about the application.

In addition, Begum had continued to trade in the three months before applying for the company’s dissolution – also an offence under the Companies Act 2006.

And, Insolvency Service investigators found that New Polash’s turnover had been inflated by Begum in her BBLS application. The director stated that the company’s turnover was £154,000 when it was, in fact, less than £44,000. As a result, Begum had been able to obtain a loan at more than three times the value New Polash was entitled to within the scheme.

Begum has been banned from holding directorships for ten years.

Peter Smith, Deputy Head of Dissolved Company Investigations at the Insolvency Service, said about the cases:

“Bounce Back Loans were designed to help businesses to survive the pandemic. Rukia Begum and Simon Gorgin abused the scheme and took taxpayers’ money at a time when many businesses were in genuine need.”

The money is yet to be recovered from either director.

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Abuse of multiple Covid support schemes

James Ireri successfully applied for the maximum £50,000 allowed under the Bounce Back Loan Scheme (BBLS) through his Surrey-based recruitment business Safi Care Ltd in May 2020.

A lack of company account keeping by Ireri meant that Insolvency Service “investigators were unable to determine whether Safi Care Ltd had ever been eligible to apply” for the loan based on the company’s turnover.

During the Covid pandemic, companies were able to apply for either a Bounce Back Loan or a Coronavirus Business Interruption Loan. Despite having secured a loan through the BBLS, Ireri applied for and obtained a £100,000 loan (from a different lender) through the Coronavirus Business Interruption Loan Scheme, three months after Safi Care was given its Bounce Back Loan.

Businesses were allowed to “obtain a second loan if the money was used to repay the first in full.” However, Safi Care went into liquidation a year later (in August 2021) owing around £231,000 including the full amount of both loans.

In the fifteen months between obtaining the first loan and Safi Care’s liquidation, nearly £500,000 was withdrawn from the company’s bank account, with over £80,000 used by Ireri “for personal spending” and nearly £94,000 transferred into his personal bank accounts.

Ireri has received a seven-year director disqualification.

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False turnovers used to obtain loans

Michael Higgins, from Sheffield, ran Steel Rigging Ltd – a company working on outside TV broadcasts providing driving services – from March 2015. Higgins obtained a £20,000 Bounce Back Loan in November 2020 by claiming his company’s turnover in 2019 was £80,000.

In fact, Steel Rigging’s 2019 turnover was around half the figure stated by Higgins. The company was therefore entitled to only half of the acquired loan (at most).

Steel Rigging went into liquidation just over a year later in December 2021, owing the full amount of the Bounce Back Loan.

Higgins has been banned for eight years.

Dean Miller, also from Sheffield, incorporated his company IBODYTALKS Ltd in April 2019.

Companies incorporated after 1^st January 2019 were told to use an estimated turnover in their Bounce Back Loan applications. Miller claimed that IBODYTALKS had been dormant until April 2020 when he applied for a £42,000 loan in May 2020. However, investigators found that the company has been trading since December 2019 and Miller had exaggerated the turnover estimation in comparison to money received by the company during its trading period.

In addition, “Miller transferred £41,000 to a connected company, and did not provide any evidence to show the money was used for the benefit of IBODYTALKS”, one month after receiving the £42,000 loan.

Miller has been disqualified for nine years.

Director disqualifications prevent individuals from directly or indirectly becoming involved in the promotion, formation or management of a company without the permission of the court.

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