Long and complex investigation results in charges

The former Chief Financial Officer of Patisserie Valerie, Christopher Marsh and three other former employees have been charged with conspiracy to defraud.

Mr Marsh, his wife, accountant Louise Marsh, Financial Controller Pritesh Mistry and financial consultant, Nileshkumar Lad, have been charged by the Serious Fraud Office (SFO) with conspiring to inflate the cash in Patisserie Holdings’ balance sheets and annual reports from 2015 to 2018.

During this time, the company also reported holding £28 million in accounts, yet concealed £10 million in debts from its investors and creditors.

Messrs Marsh, Lad and Mistry are also charged with five counts of fraud by false representation, as well as one count of making and supplying articles for use in fraud.

Mr March also faces an allegation of making false statements as a Company Director.

The SFO opened a full investigation into the individuals’ conduct, codenamed “Operation Venom”, in October 2018.

This came two days after the company abruptly suspended trading, closing 70 stores and causing the loss of over 900 jobs across the country.

The chain went into administration in January 2019 around three months after it said its Board had been notified of potentially fraudulent accounting irregularities.

Roger Isaacs, Forensic Partner at Milsted Langdon, said: “This is yet another in a long line of cases in which fraud has caused the demise of a very large company that would have been subjected to an annual audit.

“Although an audit is not guaranteed or even intended to uncover fraud by directors, there is a general public perception that having an audit should give some comfort to stakeholders, including employees, investors and creditors, that an independent third party has reviewed the finances of the business.

“It is likely that questions will, therefore, now be asked about what work was undertaken by Patisserie Valerie’s auditors and whether their work might have fallen below an acceptable standard?

“Typically, the auditors or their professional indemnity insurers will seek an independent opinion from an accountancy expert witness as to whether any potential claims for negligence that may be submitted have merit.

Such forensic accountants are typically also asked to opine on the extent to which losses could have been avoided had the allegedly negligent auditors acted differently.”

Source: Sky News

Posted in The Forensic Blog.