Lengthy investigation brings fraudsters to justice

A lengthy investigation by the Insolvency Service has resulted in five people being sentenced for their involvement in a £500,000 fraud and money laundering scheme.

Ringleader and convicted fraudster, Neale Rothera, set up businesses that claimed to sell furniture and carpets, and used them as vehicles to commit the offences.

The other four companies, ostensibly managed by his four accomplices, also purported to be in the business of selling carpets and furniture.

However, investigations by the Insolvency Service revealed that all the companies, and most of the associated invoices, were “in large part a sham”.  

As a Chief Investigator at the Insolvency Service said at the hearing, it had been an extremely complex investigation taking place over a number of years into a “very sophisticated, persistent, and carefully planned fraud”.

He added that Rothera was the brains behind the fraud, devising the schemes and orchestrating their implementation.

However, he could not have succeeded in his fraudulent enterprise without the four co-accused who fronted the companies or helped him launder the fraudulently obtained funds while he acted as a shadow director.

The fraud centred on so-called ‘invoice factoring agreements’ between financial services institutions and the four companies controlled by Rothera.

Invoice factoring is a legitimate type of finance, which allows businesses to access the money tied up in unpaid invoices from banks, instead of having to wait 30-90 days to be paid by their customers.

However, the Insolvency Service discovered that many of the customers Rothera’s companies claimed to deal with either did not exist or they had not traded with them in the manner suggested by the invoices.

Once the credit had been successfully secured, the funds were either withdrawn in cash by each of the defendants or transferred into other accounts.

Roger Isaacs, Forensic Partner at Milsted Langdon, said: “Invoice factoring is prone to fraud but is not the only area in which fraudsters invent non-existent entities. 

“Another common fraud is employee fraud, which involves a company purporting to pay non-existent members of staff in circumstances in which the fraudsters divert these phoney salaries to themselves.

“Forensic accountants are often engaged to investigate these types of cases but often it is only by visiting the purported staff or customers in person that the frauds are uncovered.”

Sources: Gov.UK

Posted in The Forensic Blog.