Bounce Back Loan fraudster also sells flat and car to pay back in full the money he fraudulently received
In this case, a company director who exaggerated his company’s turnover to secure a Bounce Back Loan has received a suspended prison sentence and a 3-year director disqualification ban for spending the money on personal items, including a car, rather than on supporting his business. He has also had to sell his car and flat to repay the loan. Our director disqualification specialists detail the facts of the case and comment on the outcome. Plus take a look at Covid loan enforcement data.
The facts of this Director Disqualification case
Sameer Saeed was the sole director of Digital Business Box Ltd and The Home Wills Ltd, companies he set up in April 2019 and March 2020.
Saeed was sentenced to 20 months in prison, suspended for 18 months, and a 3-year director disqualification ban in December 2022 after admitting fraudulently securing a £50,000 Bounce Back Loan in 2020 and unsuccessfully applying for another.
The 44-year-old also applied to have his Digital Business Box Ltd company struck off the Companies House register 12 days after receiving the £50,000 loan.
Confiscation proceedings brought by the Insolvency Service led to Saeed first selling the BMW he bought and now his flat to repay the £50,000 he illegally obtained.
Alexander Grierson, Head of Asset Recovery at the Insolvency Service, said:
“Sameer Saeed cynically accessed emergency Covid support scheme funds by overstating his turnover and then applied to have his company struck off in the same month.
His actions were premeditated, and he never planned to use the money for the economic benefit of his business.
Since his conviction, investigators at the Insolvency Service have worked hard to identify his assets and recover the money he fraudulently obtained. This has been a long process but demonstrates our commitment and determination to recover money lost to the public purse.”
The Insolvency Service’s investigation discovered that:
- The Home Wills had never traded and had no turnover.
- Despite this, Saeed fraudulently applied for a £50,000 Bounce Back Loan for Digital Business Box in June 2020, claiming his turnover was £200,000.
- Saeed conceded the actual figure was closer to £60,000 in interviews.
- He said money from the loan was used to pay off personal debts and provide for his family.
- He also spent £19,000 on car repairs and a 2015 BMW X5 SUV.
- Just 12 days after receiving the Bounce Back Loan in his account, Saeed applied to have Digital Business Box struck from the register at Companies House.
- Saeed breached his legal duty to creditors by making this voluntary strike-off application without informing the bank who had lent him the loan of his actions.
- In July 2020, Saeed also fraudulently attempted to secure a £50,000 loan for The Home Wills, but his application was rejected by the bank.
In addition to his suspended sentence, the director disqualification and being ordered to repay the money, he was also ordered to complete three hundred hours of unpaid work and make a £2,000 contribution to the prosecution costs incurred by the Insolvency Service.
Digital Business Box was dissolved in October 2020 and The Home Wills was dissolved in June 2021.
Our Director Disqualification specialists comment on this case
Bounce Back Loan fraud is a serious offence. Government figures show that over £47 billion was drawn down in Bounce Back Loans during the Pandemic. It is estimated by the Public Accounts Committee, however, that £4.9bn of that total was lost to fraud.
In this particular case there could have been no other outcome than the punishments the director received.
However, each case turns on its own facts and our Director Disqualification specialists have had a number of recent successes when defending directors being investigated for BBL fraud, leading to the Insolvency Service dropping the case.
Example one:
In this case, the Insolvency Service were investigating our client for alleged misuse of funds received from a BBL. Following detailed analysis of the full facts of the case, our specialists in Director Disqualification were able to present them to the Insolvency Service who subsequently dropped their investigation.
Example two:
In this case, the Insolvency Service were investigating our client for allegedly providing false information relating to the date of incorporation of his company when applying for a Bounce Back Loan (BBL) and failure to maintain, preserve and/or deliver up adequate accounting records of the company following its liquidation.
We were able to prove the director had not given false information regarding the date the Company started trading and also provide conclusive evidence that the Director had not failed to deliver up accurate records.
The Penalties of using Bounce Back Loans in an improper manner explained
As laid out above, it is clear to see that acting in a manner considered to be unfit for any member of a board of directors, such as not meeting their obligations can lead to severe penalties.
This can include the personal liability for any money deemed to have been incorrectly received and can result in disqualification for up to 15 years.
Being disqualified as a director, as explained in the Companies Director Disqualification Act means that you cannot direct, even in an indirect manner, any company or limited liability partnership.
It should also be remembered that making your company insolvent, an act that will undoubtedly involve insolvency practitioners as liquidators, will attract the attention of the Insolvency Service. And, if during their investigation of your company any directors are found to have committed any offences or are shown to have committed any type of misconduct, the said directors could be in deep trouble, as in the case highlighted here.
Legal Advice for Directors from our Director Disqualification specialists when they need it the most
Both of the above examples from our work demonstrate that there may be specific and particular circumstances in which the application for a BBL was made and how the sums received were applied that answer and meet the Insolvency Service’s concerns. Each case needs to be looked at in great detail, this being one of those areas of law where with the right support and detailed approach, the Insolvency Service can be persuaded to drop their investigations.
Our experienced team is able and ready to assist you, or a client, if you face similar circumstances to those referred to above. Simply contact us or call us on 0121 200 7040 for a confidential, free of charge and no obligation initial chat.
