More And More People To Court Over Bounce Back Loans Frauds
7th December 2022
Ben Hamilton, 34, from Middlesbrough, has been sentenced to 15 months imprisonment, suspended for 18 months, after being convicted under the Companies Act following abuse of the Bounce Back Loan financial support scheme in 2020.16 Nov 2022
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Bankrupts provide false details to secure loans
Bankrupts from Birmingham, Stoke-on-Trent and South-West London handed bankruptcy restrictions after all provided false details to secure £165,000 of loans.
Nadia Butt, from Birmingham, and Dorota Suchocka, from Barnes, South-West London are subject to 11-year and 10-year Bankruptcy Restriction Undertakings, while Heidi Carruthers is subject to a court-imposed 8-year Bankruptcy Restriction Order.
All three received their additional bankruptcy restrictions after the Official Receiver conducted separate investigations and deemed Nadia Butt, Dorota Suchocka and Heidi Carruthers a risk to future creditors.
Nadia Butt, Dorota Suchocka and Heidi Carruthers are restricted from being able to borrow more than £500 without disclosing their bankrupt status and they also cannot act as a company director without permission from the court.
Nadia Butt was made bankrupt in August 2021 and the Official Receiver was appointed as her trustee. The Official Receiver discovered that Nadia Butt wanted to start an online consultancy to help smaller businesses and secured a £50,000 Bounce Back Loan.
However, Nadia Butt was ineligible to receive a Bounce Back. She declared her anticipated turnover was £220,000, which was vastly exaggerated, and that the business had been trading on 1 March 2020, which was not true.
Further enquiries found that after Nadia Butt received the government loan, she made various payments to family members and a friend but has been unable to prove that this benefited the business.
Dorota Suchocka was self-employed mini cab driver and was made bankrupt in October 2021 before the Official Receiver was appointed her trustee.
The Official Receiver found that in October 2019, Dorota Suchocka successfully applied for three loans worth £75,000.
However, each application included false details. Dorota Suchocka used a fake employer and inflated her income as being four times higher than what she earned as a mini cab driver. The monthly repayments for the three loans were more than Dorota Suchocka's average monthly earnings.
And Heidi Carruthers was made bankrupt in February 2021 and was unemployed at the time the Official Receiver was appointed her trustee.
The Official Receiver's enquiries uncovered that in September 2018 Heidi Carruthers used a third party's name to secure just under £34,000 to buy a car on finance before selling the vehicle to someone who was unaware she didn't own the car outright.
At the time Heidi Carruthers secured the loan she was insolvent and couldn't make the payments as she had three unpaid County Court Judgements and her only income was through benefits.
Heidi Carruthers refused to co-operate with the Official Receiver and this resulted in the court imposing her 8-year Bankruptcy Restrictions Order on 4 August 2022 in the County Court at Birmingham before District Judge Rich .
Official Receiver David Chapman said:
When applying for loans or any type of credit, the onus is on the applicant to provide correct information so that the lender can make an accurate assessment before making any payments.
Nadia Butt, Dorota Suchocka and Heidi Carruthers all showed a complete lack of disregard to their duties as an applicant or the consequence of their actions on their lenders. All three have received substantial bankruptcy restrictions and this will protect potential creditors from further abuse.
Nadia Butt is of Birmingham and her 11-year BRU was effective from 7 September 2022
Dorota Suchocka is of Barnes, South-West London, and her 10-year BRU was effective from 30 May 2022.
Heidi Carruthers is from Stoke-On-Trent, and her 8-year BRO was effective from 4 August 2022.
Bankruptcy restrictions are wide ranging. The effects are the same whether you are subject to a bankruptcy restrictions order or to an undertaking. Guidance on the main statutory consequences flowing from a bankruptcy restrictions order or undertaking.
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Two Leicestershire company directors banned for a total of 19 years
Restaurant and fashion bosses banned for misconduct including Bounce Back Loan abuse and failing to keep company books and records.
Savio Gilbert Pereira, 46, and Sajid Anver Valimohammed, 37, have been disqualified as company directors for a total of 19 years following separate Insolvency Service investigations which uncovered financial misconduct.
Pereira, of Market Harborough was sole director of Himalayan Zest Takeaway Limited, which was incorporated in April 2018 and traded as Himalayan Zest on Market Street in Lutterworth until it went into liquidation in November 2021.
In June 2020, Pereira applied for a Bounce Back Loan on behalf of Himalayan Zest. Bounce Back Loans were government-backed loans designed to help businesses stay afloat during the Covid-19 pandemic.
Under the rules of the scheme, companies could apply for loans of between £2,000 and £50,000, up to a maximum of 25% of their turnover for 2019.
Pereira stated that Himalayan Zest’s turnover was around £207,500, which allowed the restaurant to receive the maximum £50,000 loan.
When the business went into liquidation the following year owing around £51,500, it triggered an investigation by the Insolvency Service which found that Pereira had exaggerated Himalayan Zest’s turnover in order to falsely claim the loan.
Investigators discovered that the company only had around £54,600 in its bank account following receipt of the Bounce Back Loan, and between June and August that year, Pereira had made a £10,000 payment to himself, £28,000 in various debit payments to an unknown recipient and had withdrawn a total of £16,800 in cash.
Pereira was unable to prove that these transactions were for the economic support of the restaurant.
A second director, Sajid Anver Valimohammed, of Leicester, was director of J Dee Designs Ltd, which was incorporated in July 2019 and traded as a fashionwear finisher from Upper Charnwood Street in Leicester until it went into liquidation in December 2020.
But Valimohammed had failed to keep business accounts and records - a legal requirement of company directors - and was unable to hand them over to the company’s liquidators, which led to an investigation by the Insolvency Service.
Investigators discovered that Valimohammed had withdrawn more than £286,000 from the company bank account through 199 separate transfers with the reference ‘Mrref Self FT’ during the time J Dee Design was in business.
They found that around £315,300 was withdrawn from J Dee Design’s bank account during the period - including £30,000 from a Bounce Back Loan that the company had applied for – but Valimohammed could not prove that the transactions were for legitimate trading activity, or whether the loan money had been used for the benefit of the company.
And due to his failure to keep company accounts, investigators were also unable to verify whether J Dee Designs had paid the correct amount of tax it owed, or to ascertain the true financial position of the company when it went into liquidation, including whether liquidators would be able to make any recovery of debts.
Valimohammed did not contest the disqualification order at court and was banned from being a director for 8 years on 9 November this year. His ban began on 30 November and the court also awarded full costs to the Insolvency Service.
Separately, the Secretary of State accepted a disqualification undertaking from Savio Pereira in October, after he did not dispute that he had caused his restaurant to falsely apply for a Bounce Back Loan of £50,000, and had failed to use the money for the economic benefit of the company.
Pereira’s disqualification started on 15 November this year and lasts for 11 years. The bans prevent the two directors from directly or indirectly becoming involved in the promotion, formation or management of a company, without the permission of the court.
Dave Elliott, Chief Examiner at The Insolvency Service, said, "The Insolvency Service takes Bounce Back Loan abuse and the failure to keep, preserve and deliver up books and records very seriously.
"The length of these directors’ bans reflects the gravity of their misconduct, and should serve as a warning to others."
Savio Gilbert Pereira is from Market Harborough. His date of birth is November 1976.
Himalayan Zest Takeaway Limited (Company Reg no. 11320639).
Sajid Anver Valimohammed is from Leicester. His date of birth is March 1985
J Dee Designs Limited (Company Reg no. 12093343).
Disqualification undertakings are the administrative equivalent of a disqualification order but do not involve court proceedings.
Persons subject to a disqualification order are bound by a range of restrictions.
Notes
During its tenure, almost 1.56 million businesses were approved for finance.
A cumulative value of around £47.4 billion was provided via the BBLS.
Some £17 billion won’t be repaid due to fraud and defaults.
NATIS has opened 273 investigations into BBLS fraud with a total value of £160 million (Sept 2022).
78 suspects have been dealt with, and 49 arrests have been made (Sept 2022).
The Insolvency Service had issued 242 director disqualifications, 101 bankruptcy restrictions and one criminal prosecution for BBLS fraud (Sept 2022).
