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ICAEW excludes FD over fraudulent contract scheme

A finance director has been excluded from the ICAEW after he engaged in a fraudulent scheme to borrow money against falsified contracts to the tune of £160m.

6th May 2020
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Carl Cumiskey, who was the FD of a company that laid fibre optic cables through sewers, was found guilty at Southwark Crown Court in 2017 of two counts of conspiracy to commit fraud by false representation and sentenced to 10 years imprisonment.

Since Cumiskey was convicted, the ICAEW disciplinary tribunal had no other choice but to exclude the Chester-based finance director, but didn’t assign any additional financial penalties. Although the Investigation Committee sought costs of £6000, the tribunal, taking into account the respondent’s financial circumstances, decided to make no order.

The disciplinary tribunal heard how Cumiskey’s company was struggling over finance and that then morphed into a byzantine scheme which included bribery and contract tampering.

It started when Cumiskey’s company needed funding. But soon after securing the money, he became aware of the ease of securing funds through false representations.

Initially, the company received funds in exchange for assigning a contract to ‘D ltd’ for the entitlement to the rental income from the customer.

It didn’t take long for the owner of D ltd to realise that he could alter the figures on the original contract by increasing the annual rentals of £10,000 to £100,000 or more.

Cumiskey maintained that he didn’t know how much his company was being paid in fraudulent contracts. However, Judge Gledhill asserted that he “could not have failed to see how much money was being paid to [his company] on the altered and fictitious contracts”.

The court also heard how Cumiskey worked “hand in glove” with his co-fraudsters by creating and signing documents used to defraud the banks, although the Judge accepted that on a number of occasions his signature had been forged.

In a letter to the ICAEW Investigation Committee, Cumiskey claimed that all the money his company received was properly accounted for and blamed the fraud on D ltd.

However, Judge Gledhill said that Cumiskey was motivated by the huge amount of money he would have made as a shareholder if the scheme was successful and led to large profits.

The court did recognise though that Cumiskey didn’t end up receiving any cash benefit from the fraud. His eventual reward was his salary and bonuses totalling £267,000 gross over the three tax years - in stark contrast to the sizable amount pilfered by his co-defendants.

Cumiskey told the ICAEW tribunal that the Judge’s sentencing remarks painted a worse picture than was actually the case. In fact, he claims that what he did to secure finance was what would be expected of any “diligent finance director”. He said he was recommended to D ltd through his bank and that D ltd was the one who orchestrated the fraud.

Cumiskey was also given a confiscation order for the £267,000 – he now has £77,000 left to pay. However, that may be waived.

The ICAEW recognised his good character and the fact he now performs a role similar to that of the Samaritans in prison. But despite his clean disciplinary record, the ICAEW disciplinary tribunal had no option but exclusion due to the conviction.

Chris Cope, solicitor/ director of Accountants National Complaint Services Limited who represents accountants before tribunals, comments:

Although the respondent protested his innocence, the tribunal could not go behind the conviction. The respondent had also sought permission to appeal, but had been refused.

The respondent was represented by two members of the ICAEW who were familiar with the facts of the case. They needed the permission of the tribunal to represent the respondent. Although their application was opposed by the Investigation Committee (we are not told why), the application was granted.

The respondent was banned by the court from acting as a company director for ten years. Why not the maximum of 15?

If you are presently subject to a complaint, you can call the Accountants National Complaint Services Limited for advice (01769 581581) or visit their website.

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