Following an investigation by the Insolvency Service, the Director of a construction company has been jailed for two-and-a-half years and banned as a Director for 10 years for overstating his company’s turnover to secure two £50,000 Bounce Back Loans, when businesses were only entitled to one.
In addition, the money was not used for the economic benefit of the business, as was required under the terms of the Bounce Back Loans (BBL) scheme.
In July 2020, Arti Deda approached two separate banks and submitted fraudulent BBL applications, falsely declaring the turnover of his Knight Workers Limited as £390,000 and £495,000 for 2019.
Having secured the funds, a total of £490,000 was transferred to an associate. A further £13,000 was later transferred to a third party and £20,000 was transferred from the account with the reference “material”.
Deda then applied to have the company liquidated in November 2021 to avoid repaying the loans and by April 2023, when the business was finally dissolved, Deda had made no repayments.
The Insolvency Service is currently attempting to recover the fraudulently obtained funds under the Proceeds of Crime Act (POCA).
As an investigator from the Insolvency Service said after the sentencing, the “significant” sentence reflected the “seriousness of Covid-related fraud.”
Speaking about the case, Roger Isaacs, Forensic Partner at Milsted Langdon, said: “This case shows that the Insolvency Service is continuing its investigations into abuses of the BBL scheme and attempting to ensure that fraudsters who exploited the system are held accountable.
“However one suspects that only a small percentage of the fraudulent loans have been identified. Even in those cases like this in which a prosecution has been secured, there is often little chance of recovering the misappropriated funds in full,
“The facts of this case seem to suggest that the fraud was so blatant and unsophisticated that it probably did not even warrant the instruction of forensic accountants who can play a vital role in uncovering financial misconduct and tracing misused funds in more complex cases.”
Sources: BBC News