Insolvency Practitioners Duties Regarding Bounce Back Loan Abuse!

[N-UPS]

It seems they are really ramping up penalties.
If you were one of the early ones, with multiple 50K loans, you'd feel like you got off lightly.
Perhaps these sentences need revieiwng.

 

[Lee Green]

Should get a Charging Order on Property if a home owner.

If he was a home owner the then Trustee will look to realise anyway, since he was declared bankrupt.

 

[UK Contractor Accountant]

looks like sole traders also coming under the wrath of the Insolvency Service investigations - petitioning for Bankruptcy Orders or Undertakings for fraudulent BBL applications. Zack the Gardener was given a lengthy 12 year Bankruptcy Undertaking.

Must have a cut a few lawns to reach the turnover level for the full £50K entitlement!

Zbigniew Majewski accepted a 12-year BRU which came into force on Wednesday 28 February.

Majewski secured two £50,000 Bounce Back Loans in July and December 2020 for his Zack the Gardener business, breaking the rules of the scheme which permitted only one loan for a company.

The 72-year-old, of Perryn Road, London, was also declared bankrupt in March 2023.

 

[IanSuth]

looks like sole traders also coming under the wrath of the Insolvency Service investigations - petitioning for Bankruptcy Orders or Undertakings for fraudulent BBL applications. Zack the Gardener was given a lengthy 12 year Bankruptcy Undertaking.

Must have a cut a few lawns to reach the turnover level for the full £50K entitlement!

Zbigniew Majewski accepted a 12-year BRU which came into force on Wednesday 28 February.

Majewski secured two £50,000 Bounce Back Loans in July and December 2020 for his Zack the Gardener business, breaking the rules of the scheme which permitted only one loan for a company.

The 72-year-old, of Perryn Road, London, was also declared bankrupt in March 2023.

the guy is 72, what effect does bankruptcy have on pensions ?

 

[japancool]

But his name's not Zack...

 

[UK Contractor Accountant]

should claw back the fraudulent BBL amount from his State Pension entitlement every 4 weeks.

 

[IanSuth]

should claw back the fraudulent BBL amount from his State Pension entitlement every 4 weeks.

Theoretical question

I believe there is a pension credit in the uk which exists to ensure all pensioners receive a minumum amount. Can an attachment of earnings order be put on a pension and does it get taken into account for pension credit (as in pointless to take money from state pension if a different benefit just tops it back up)

What happens if he goes into care ?

A lot of these punishments look more symbolic than effective

 

[Newchodge]

Theoretical question

I believe there is a pension credit in the uk which exists to ensure all pensioners receive a minumum amount. Can an attachment of earnings order be put on a pension and does it get taken into account for pension credit (as in pointless to take money from state pension if a different benefit just tops it back up)

What happens if he goes into care ?

A lot of these punishments look more symbolic than effective

You cannot put an attachment of earnings order on a state pension. It only applies to earnings. There are other methods of takinh money from those barely existing on state benefits, but I'm not sure they apply to state pension.

 

[IanSuth]

You cannot put an attachment of earnings order on a state pension. It only applies to earnings. There are other methods of takinh money from those barely existing on state benefits, but I'm not sure they apply to state pension.

As i said then - pointless making a 72 year old bankrupt for 12 years as won't likely have much affect and def won't get any money back to the state overall.

 

[N-UPS]

Follow the money. I doubt he spent it all. Claw it back.

 

[UK Contractor Accountant]

Follow the money. I doubt he spent it all. Claw it back.

proceeds of crime confiscation orders?

 

[N-UPS]

To me it seems like it was planned out, and his age was part of the equation in how he can protect the proceeds of crime. Anyone want to bet if these funds ends up with his family/loved ones? Meanwhile the book stops with him and his pension ages protections?

What boils me is when I see the people going around who are struggling to make ends meet (from an external perspective, they could of course be millionaires that dont change clothes often) who are picking up litter and caring.

Then we get people doing things like ripping the tax payer off, and even when caught, bang to rights they are getting away with it a punishment that is meaningless compared to the gains. In short, the value proposition favors doing it again.

I see a direct line between that person, and the other. One is putting their boot on the neck of the other.

 

[N-UPS]

I welcome these updates though, and thank you for them.

 

[IanSuth]

I welcome these updates though, and thank you for them.

Agreed - it is useful to see them all in one place.

But it does gall to see the minimal effect of the sanctions given in these cases compared with the stressed people in other threads worrying they might be chased down for minor theoretical infractions.

 

[Newchodge]

Agreed - it is useful to see them all in one place.

But it does gall to see the minimal effect of the sanctions given in these cases compared with the stressed people in other threads worrying they might be chased down for minor theoretical infractions.

Compared, perhaps, with the punishment given to unpaid carers who dared to earn more than £151 per week?

 

[N-UPS]

At least we get to vote our dissatisfaction this summer.

 

[IanSuth]

Compared, perhaps, with the punishment given to unpaid carers who dared to earn more than £151 per week?

precisely (one of our friends is caught out as a group of 3 mums of disabled children have been taking it in turns to use each other for respite with the PIP payments made through the local authority but that means each time they do it - for that week they earn enough they shouldn't have got the PIP - if they could have found a carer they would have paid them and they would have been fine - it just makes no sense)

 

[ecommerce84]

At least we get to vote our dissatisfaction this summer.

My monie’s on mid-late September.

The options are grim though - the government is clueless and the leading opposition party is only fractionally less so. Even Owen Jones has thrown in the towel on Labour.

That said a Labour win is all but guaranteed imo with the Tory collapse and the SNP fracturing.

 

[japancool]

precisely (one of our friends is caught out as a group of 3 mums of disabled children have been taking it in turns to use each other for respite with the PIP payments made through the local authority but that means each time they do it - for that week they earn enough they shouldn't have got the PIP - if they could have found a carer they would have paid them and they would have been fine - it just makes no sense)

PIP isn't income dependent though?

 

[IanSuth]

PIP isn't income dependent though?

no but the group of mums using it to pay each other for respite care is interacting with their carers allowance. If they had paid a 3rd party (more) it would have been fine, but paying each other now and again means in the weeks that any one of them put the invoice through they weren't eligible for carers allowance (or something like that - I don't know all the minor details, we are friends with one of them who has a 19 year old disabled daughter)

They thought they were saving money overall and helping each other out but appear to have caused themselves a heap of pain

 

[UK Contractor Accountant]

This bad boy escaped a conviction (not sure why!) but was given a 13 Year ban instead plus a compensation order thrown in for good measure. Wonder if the BBL Bank also claimed under the Guarantee?

Marian Ghimpu, 58, from Croydon, has been disqualified as a director for 13 years, and ordered to repay over £50,000 to the public purse.

The compensation order, the first secured by the Insolvency Service in court, is the result of abuse of the Bounce Back Loan scheme by Ghimpu during the pandemic.

In October 2020, he took out the maximum £50,000 available despite his company only being eligible for a loan of £2,000, the minimum amount available

The bank accounts for his company, Deea Construct Ltd, showed no activity for a year up to the point when he claimed the loan, and only a handful of small transactions totalling just over £4,000 from a construction firm in the summer of 2019. However, he told his bank his company’s turnover was £200,000.

After receiving the £50,000 loan into the company account, Ghimpu transferred over £40,000 to himself and took the rest out in cash withdrawals.

In April 2021, he put the company into liquidation which triggered an Insolvency Service investigation.

As efforts to recoup the loan money by the liquidator were not successful, the Insolvency Service sought a compensation order against Ghimpu in court.

On 25 July 2023, Chief ICC Judge Briggs at High Court of Justice, Rolls Building imposed a compensation order of £52,163. Ghimpu was given 5 weeks to pay this, to ensure the taxpayer has not lost out.

 

[Tornado220]

Bad boy no2 for today - A Devon Plumber who ran the taps dry on a £60K BBL. Well at least he ended up with a nice family holiday and a puppy (lets hope its wasn't a XL bully!), followed by a bit of gambling with taxpayers money.

Michael Bingham, was sentenced to 20 months in prison, suspended for two years, when he appeared at Plymouth Crown Court on Thursday, January 25. He was sentenced for two counts of fraud by false representation, contrary to section 2 of the Fraud Act 2006.

He must do 150 hours of unpaid work to be completed in the next 12 months. Julie Barnes, Chief Investigator at the Insolvency Service, said: “Michael Bingham showed a complete disregard for a scheme to help businesses survive in the pandemic on not just one, but two separate occasions.

“He spent taxpayers’ money on his own personal living expenses, using the loans for a family holiday, gambling, and even to buy a puppy. Bingham provided a totally fictitious turnover for his business, invented another, and never had any intention of paying the money back.”

Bingham first applied for a £10,000 loan in June 2020, claiming his PCB Plumbing business had a turnover of £40,000. In subsequent interviews, he admitted to Insolvency Service investigators that he invented this figure.

Bingham ignored the rules of the scheme which stated the loans had to be used for the economic benefit of the business by transferring the money to his personal account.

Just one month later, Bingham successfully applied for a £50,000 loan, inventing the company name M and B Gas Installations the day before his application. M and B Gas Installations never traded or was registered with Companies House.

Bingham transferred £22,000 to his father-in-law with a view to starting a drive-laying business which ultimately turned out to be short-lived. He spent the remainder of the money on a camping holiday with his family, Christmas presents, a puppy, and gambling, the court heard.

Gambling ? so he bought a lottery ticket for £2.50 then ??

 

[UK Contractor Accountant]

This fraudster claimed a £50K BBL for a company that never existed which also managed to have a turnover of of £312,000! Unbelievable incompetence by the Bank which I hope had its Guarantee yanked as a result.

The Fraudster avoided jail-time and made himself bankrupt for good measure.
During the pandemic, Rian O’Keefe, from Hammersmith in London, applied for the maximum £50,000 bounce back loan for a company that never existed.

Due to a lack of checks on companies under the bounce back scheme, O’Keefe was given the full loan after claiming turnover of £312,000 a year. As soon as he received the loan, he admitted to using the money for his personal expenses.

O’Keefe made up a company called Trainersource in March 2020 and applied for the loan in June 2020. In these few months, O’Keefe claimed the company had revenues of £312,000. However, he later admitted to never incorporating the company at all. He claimed he had applied for the loan because he wanted to open Trainersource as a legitimate business.

In interviews, he admitted to Insolvency Service investigators that his statement was inaccurate, accepting he had not started a business on that date or subsequently.

O’Keefe made over 250 transfers to two of his bank accounts between August and October 2020, and he also withdrew £14,000 the day the loan came in and £8,000 more a month later.

He admitted to using the money for his personal use and was given an 18-month sentence, suspended for two years at Southwark Crown Court. He is also under a three-month curfew and must complete 30 days of rehabilitation activity.

Julie Barnes, chief investigator at the Insolvency Service, said: ‘Rian O’Keeffe abused the government-backed bounce back loan scheme designed to help businesses through the pandemic.

‘He claimed to own a business that was never in existence, provided a totally fictitious turnover, and used the funds he fraudulently secured for his own personal use.’

In November 2021 O’Keefe declared himself bankrupt and was given a 12-year bankruptcy restrictions undertaking (BRU) in October 2022. He has been banned from being a company director for the 12 years, and cannot borrow more than £500 without declaring the (BRU). He was also given restrictions on working in the health and education sector.

 

[N-UPS]

Why restrict his ability to work in the health and education sector?

FORCE him to work in the health and education sector, and pay an additional tax till the 50K debt to society is repaid.

 

[Tornado220]

Why restrict his ability to work in the health and education sector?

FORCE him to work in the health and education sector, and pay an additional tax till the 50K debt to society is repaid.

what ? force him to clean drains and dig holes ! give decent jobs to decent people !!!

The message is, if you f**k up you get a half decent job easily !!

 

[N-UPS]

Excellent idea. Sewer cleaning it is then

 

[UK Contractor Accountant]

This is anew one or me! YOUPOPUP LTD

Liquidators of the opinion that the Directors misused £50K BBL funds and engaged Solicitors to commence proceedings against the Directors under the Insolvency Act 1986 and/or Companies Act 2006.

Following negotiations settlement terms were agreed with both Directors resulting in £10K having to be paid to vacate the action. The £10K was then swallowed up in Liquidator fees.

seems a good deal - £10K only to walk away with £50K.

Thought the Insolvency Service makes the decision on prosecutions & compensation orders?

 

[IanSuth]

This is anew one or me! YOUPOPUP LTD

Liquidators of the opinion that the Directors misused £50K BBL funds and engaged Solicitors to commence proceedings against the Directors under the Insolvency Act 1986 and/or Companies Act 2006.

Following negotiations settlement terms were agreed with both Directors resulting in £10K having to be paid to vacate the action. The £10K was then swallowed up in Liquidator fees.

seems a good deal - £10K only to walk away with £50K.

Thought the Insolvency Service makes the decision on prosecutions & compensation orders?

Seems like a great deal for insolvency practitioners "we think you are a naughty boy, agree with us and pay us x (via the liquidation fee) and you don't have to go to court"

Bit "protection racket" however,especially if picked up on by less scrupulous operators who could advertise "cheap rate liquidations" then spring this on the owners

 

[Frank Wessely]

Looking at the documents filed at Companies House, the liquidators were paid a fee of £38.69 as office holders. They also received a fee of £5k for the preparatory work to place the company into liquidation, including dealing with the statutory statement of affairs.

Interestingly, the liquidator's lawyers received £5k fees for their work. They presumably took on the legal work on a contingency basis as there were no funds in hand to pay their costs.

@UK Contractor Accountant you are correct as regards the Insolvency Service. However by the look of things, this action was not related to any compensation order.

I hope that helps.

 

[UK Contractor Accountant]

Well never knew that you didn't even need to have a pulse to apply for a BBL!

A Co Antrim painter who fraudulently applied for a £50,000 Covid-19 bounce back loan in the name of his late father was today (Thursday) handed a two-year suspended sentence.

Gareth Taylor, 37 and of Whitewell Drive, Newtownabbey, pleaded guilty to a single charge of fraud by false representation. Belfast Crown Court heard that on March 24, 2021, police received a report from the Bank of Ireland over a £50,000 fraud.

Prosecution barrister Kate McKay said the fraud arose when an application was made by F T Contracts (NI) Ltd for a bounce back business loan available through a government scheme post the Coronavirus pandemic.

“The owner of the account to which the loan was to be paid was Mr Francis Taylor, date of birth May 29, 1960,” said Mrs McKay.

“He was deemed a suitable candidate and the loan was approved. Prior to the money being deposited in the account, a discrepancy was noticed in the address given. The application came from 102 Eglantine Avenue, Belfast while the business address was 2 Whitewell Parade in Belfast.

“The bank spoke to a person purporting to be the loan applicant Francis Taylor on May 20, 2020. It was discovered at that stage Francis Taylor was deceased, having passed away some six months earlier.”

The court heard the £50,000 loan was deposited into F T Contracts account on June 2, 2020, following the receipt of an electronic signature from Francis Taylor “which was clearly done by this defendant”.

The defendant subsequently moved the money from F T Contracts account to two accounts held in his name with £10,000 deposited in Santander and £40,000 lodged with online Starling Bank.

“Bank of Ireland, using the phone number supplied on the loan application, spoke to the defendant on March 16, 2021, who said his father had passed away three months ago when in fact had died 16 months ago,” said the prosecutor.

 

[Newchodge]

“The bank spoke to a person purporting to be the loan applicant Francis Taylor on May 20, 2020. It was discovered at that stage Francis Taylor was deceased, having passed away some six months earlier.

And yet they still made the loan to the deceased person 2 weeks later? Is that not acceptance, on the part of the bank, that the company was entitled to the money, despite the death of the account holder?

 

[UK Contractor Accountant]

They are clever that lot over at the Cabinet Office - some bright spark has put 2 and 2 together and worked out that from a previous pilot test detecting fraud in companies applying for BBL that there is a good change that there is fraud in the sole trader applications as well! Who knew?

The Department for Business (DBT), the Cabinet Office and HMRC have established a pilot scheme to look for potential fraud committed by sole traders against the Bounce Back Loan Scheme (BBLS).

The pilot aims to identify sole traders who either applied for a Bounce Back Loan when they were not trading during the eligibility period or misrepresented their turnover to obtain a loan. This follows a similar pilot in 2021 to detect fraud by limited companies who applied for BBLS loans.

The first stage of the pilot will see the Cabinet Office and DBT sharing sole trader borrowing data with HMRC, which will match this data to information it holds on those individuals. The Cabinet Office will then identify high-risk populations where fraud is suspected, which will be shared with DBT to enable it to select cases for investigation.

In the second stage of the pilot, the Cabinet Office will share the identified risk flags with accredited BBLS lenders to support its investigations. Where lenders suspect fraud, they could then share this data with DBT.

Sole traders received £9.6bn through the scheme prior to its closure to new applications on 31 March 2021. Based on a previous pilot addressing limited companies that borrowed through the scheme, the government anticipates that the risks of fraud relating to falsified income or turnover is probable in the sole trader population as well.

 

[UK Contractor Accountant]

Another conviction - 10 Months Prison Sentence

Here we go again - looks like open season for convictions has started. This one fancied a bit of jewellery with taxpayers money and also liked the BBL scheme so much thought she might as well apply for another one!

• Sehrish Yasmin applied for two Covid Bounce Back Loans for her Manny Steak House Ltd business based in south Manchester, which was not allowed under the rules of the scheme

• More than £12,000 from the loan was spent by Yasmin at the Jewellery Quarter in Birmingham
• Yasmin was given a suspended sentence and has paid the two loans back in full

A Manchester restaurant manager who fraudulently obtained two Covid loans worth £100,000 and spent taxpayers’ money on jewellery has been handed a suspended sentence.

Sehrish Yasmin was sentenced to 10 months in prison, suspended for 12 months, at Manchester Crown Court on Thursday 16 May.

The 32-year-old was also ordered to pay costs and compensation totalling £5,000 within 28 days.

Yasmin, of Grasmere Road, Cheadle, Greater Manchester, should have started repaying each loan one year after she received the funds in 2020, but only started to do so once Insolvency Service investigations began in December 2022.

 

[N-UPS]

• Yasmin was given a suspended sentence and has paid the two loans back in full

First time we've seen that. GOOD on her.

 

[UK Contractor Accountant]

Another conviction - 18 Months Prison Sentence

This one fancied a BMW car with taxpayers money! wonder if he still has it

• James Todd applied for and secured a £50,000 Bounce Back Loan for a fictitious business he named Pro Detailing, inventing a turnover of £255,000 to gain the maximum amount applicants were entitled to

• Todd was in full time employment at the start of the pandemic and when he applied for the loan in July 2020. There was no evidence that Pro Detailing had ever traded
• He received the money in mid-July and had spent all but £245 of it on personal purposes by the end of the month

A man who cheated taxpayers out of £50,000 by using the funds from a Covid loan to replace his car has been sentenced for fraud.

James Todd, 37, was sentenced to 18 months in prison, suspended for two years, when he appeared at Sheffield Crown Court on Monday 20 May.

Todd was also ordered to complete 240 hours of unpaid work and pay compensation of £2,000 at a rate of £100 a month.

 

[UK Contractor Accountant]

Another conviction - 18 Months Prison Sentence

Fake book-keeper who was actually a cleaner scammed away £50K of taxpayers money and then tried to wriggle out of it by declaring bankruptcy.

• Anna Dalecka wildly overstated her takings by £216,000 to falsely claim maximum Covid loan

• She transferred most of the money to personal accounts in the UK and Poland instead of using it for the economic benefit of her business
• Dalecka then declared herself bankrupt

A cleaner based in North London who falsely claimed a £50,000 Covid loan before making herself bankrupt has been given a suspended prison sentence.

Anna Emilia Dalecka, 48, of Devonshire Road, Enfield, was sentenced to 18 months in prison, suspended for two years, when she appeared at Snaresbrook Crown Court on 3 May 2024.

She was also given a three month curfew and must complete 300 hours of unpaid work.

Dalecka claimed to be a self-employed bookkeeper, trading from her Enfield home, when she applied for a Bounce Back Loan for her business in August 2020.

Under the rules of the scheme, businesses could apply for loans of up to £50,000, depending on their 2019 turnover. Dalecka claimed on the application that her turnover was £220,000.

But in March 2021 she petitioned for her own bankruptcy, which led to an investigation by the Insolvency Service.

Investigators discovered that in 2019 Dalecka was actually working as a self-employed cleaner and her turnover was around £4,000, meaning she had overstated the amount by approximately £216,000 to claim the maximum loan.

 

[Newchodge]

All of these prison sentences are suspended. Given that the crimes committed were all opportunistic and dependent on the idiocy of the BBL administration, the chances of any of the emver committing another offence and triggering the sentence is very, very low. So what is the point?

 

[UK Contractor Accountant]

So what is the point?

leads to confiscation orders or as above they are guilt tripped into paying the loan back when faced with possible Court action.

 

[UK Contractor Accountant]

Looks like now going after the double BBL fraudsters - wonder if Labour's new COVID Commissioner will get stuck in soon on the BBL & PPE fraudsters!

A Man has appeared in court to face a series of charges relating to alleged Covid bounce back loan fraud.

Shohid Ahmed faces five charges relating to Bradford-based company Red Square Restaurants LTD.
They date back to the early days of the Covid-19 pandemic.
He gave no indication as to how he will plead when he made his first appearance at Bradford Magistrates' Court on Thursday.
The charges faced by Ahmed, 39, of Bardsey Crescent, in the BD2 area, include three counts of fraud:

• On 06/05/2020 committed fraud in that you dishonestly made a false representation, namely by signing the agreement in the name of Taslima Akhtar who was not a director of Red Square Restaurants Ltd, that the business had been trading on March 1, 2020 intending to make a gain, namely or another, made representations to Santander for a Bounce Back Loan which were and which you knew were or might be untrue or misleading, namely , for yourself.
• On 12/05/2020 committed fraud in that you dishonestly made a false representation, namely by signing the agreement Taslima Akhtar who was not a director of Red Square Restaurants Ltd, that the business had been trading on March 1 2020 that the funds would be used for the economic benefit of the business, intending to make a gain, namely or another, made representations to Santander for a Bounce Back Loan which were and which you knew were or might be untrue or misleading, for yourself.
• On 15/06/2020 committed fraud in that you dishonestly made a false representation, namely by signing the agreement as Taslima Akhtar who was not a director of the Red Square Restaurants Ltd. that the business had been trading on March 1 2020 that this was the companies first and only Bounce Back Loan, intending to make a gain, namely or another, made representations to Starling Bank for a Bounce Back Loan which were and which you knew were or might be untrue or misleading, for yourself.

 

[UK Contractor Accountant]

Starling Bank & Lloyds Off to Court with Winding Up Orders! The BBL Bounty Hunters will be out & about soon!​

Court filings show that since May, Starling has filed winding-up petitions against 24 companies over unpaid debts. An analysis of corporate records indicates most of these entities have reported minimal business activity, with three having never filed accounts and six being dormant since incorporation. Eight were newly formed in 2019 or later before successfully obtaining loans from Starling Bank.