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Director used four companies to swindle £200k in Bounce Back Loans

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Yet another director has been banned for overstating their turnover to exploit the Bounce Back Loan scheme. The latest offender fleeced £200,000 from the Covid support scheme.

24th Aug 2022
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Rotherham-based director Stephen Burke is the latest in a long line to get disqualified after defrauding the Bounce Back Loan (BBL) scheme. He overstated the turnover for his four construction companies to rinse the Covid financial scheme out of £200,000. Each of his construction companies took out the full £50,000 permitted under the scheme. 

The Insolvency Service reported that one of the four companies, Yorkshire Site Preparation Ltd, was listed as dormant with Companies House by January 2020, while the company accounts for his three other companies had turnovers ranging from £635 to £3,400. 

However, Burke inflated the turnover on the BBL application forms to between £200,000 and £320,000 for each company. He then used the funds to repay a £174,000 personal loan to his former partner. This added to the breaches of the scheme as the repayment of a personal loan had no economic benefit to the company.  

Burke was eventually rumbled after he tried dissolving all four companies in February 2021. Instead the companies were put into liquidation due to the outstanding loans. 

Disqualified for 11 years

The director was disqualified for 11 years after he admitted to wrongly obtaining £200,000 in BBLs. Now banned, Burke can’t directly or indirectly form or manage a company without the court. 

This disqualification for misuse of BBLs is becoming a regular report on the pages of the Insolvency Service. Recent bans for fraudulently claiming £50,000 out of the Covid support scheme include a hair and beauty retailer and a grocer, while a takeaway owner abused the state-backed business aid to claim £20,000. 

Rob Clarke, chief investigator at the Insolvency Service said: “Coronavirus support schemes were introduced to help British businesses through the most testing of times, providing them with the financial support to protect jobs and return to prosperity.

“Stephen Burke not only sought to defraud the Bounce Back Loan scheme for personal gain, but then sought to cover his tracks by dissolving the companies he’d used. This abhorrent conduct has rightly resulted in a lengthy ban, removing his ability to trade with the benefit of limited liability until 2033.”

BBL was rife with fraud

The treadmill of disqualifications comes as the insolvency service has gained new powers to investigate directors without a formal insolvency process.

The BBLs in particular have been exploited to bilk the Covid financial support. The Public Accounts Committee expects Covid fraud and error to reach around £15bn, with £4.9bn of that coming from Bounce Back Loans. 

The scale of possible BBL fraud was the subject of a scathing National Audit Office report that found that the government’s priority of speed in getting the money to small businesses “is apparent in the high levels of estimated fraud”.

Appearing at the Business, Energy and Industrial Strategy Committee (BEIS) session in March, Lord Agnew said the British Business Bank presided over one of the most “colossal cock-ups in recent government management” when dishing out Bounce Back Loans.

Replies (16)

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By Hugo Fair
24th Aug 2022 16:39

I was under the impression that the Insolvency Service's new powers were not merely to allow them to "investigate directors without a formal insolvency process" - but also to be able (in certain circumstances such as those described in this article) to go after the responsible director for repayment personally (without the need for prior court approval).

I've probably described that slightly wrongly (not being an IS specialist), but why do we not hear of these happening?
Being "banned (from) directly or indirectly forming or managing a company" isn't much of a disincentive to the kind of people who have such regard for the law that they've been acting like this since well before the pandemic.
Losing personal assets and/or being made bankrupt at least attracts their attention!

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By Ian McTernan CTA
24th Aug 2022 16:59

I would have hoped to hear that he had been prosecuted, sentenced to a decent jail term and had a proceeds of crime order against him, with bankrupcty if he couldn't pay. £174k personal loan from a previous partner....suggest he had sufficient assets to make it worthwhile.

Being banned from being a director is almost nothing, and if that was his only section he must be laughing.

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By Justin Bryant
24th Aug 2022 17:22

A wrist slap for stealing £200k. It's nearly as good as a decent tax-free lottery win. Nice work if you can get it and all that.

I bet he's laughing and thinking he would have been an absolute mug not to have done this.

The above link says "The Liquidator has begun recovery action.", but in 99% of cases like this there is diddly squat to recover.

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Replying to Justin Bryant:
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By sanjay100
25th Aug 2022 12:18

Yes but if they can't recover then it should go criminal and jailed. It is just stealing. If I lied on my Mortgage application with a bank then I would expect criminal proceedings.

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Replying to sanjay100:
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By JustAnotherUser
25th Aug 2022 15:12

I cannot tell if this is an argument or a defence ?!

The punishment for mortgage fraud ranges from 12 months to 10 years in prison.

Isn't fraud / fraud (criminal)?

Also, I guarantee if just 1% of checks done in the case of mortgages were done for BBL, this fraud wouldn't have happened .... can imagine an underwriter for a BBL loan laughing his pants off at some of these claims and throwing them in the bin without a second look.

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By JustAnotherUser
25th Aug 2022 10:29

what on earth, so many things wrong here...

This chap is 63, defrauded the government for 200k and is told he cannot be a director for 11 years now in retirement.. sign me up.

how did this scheme get approval with such blatant manual ways to fraud, why not a simple cross reference with data already held to spot check the turnover...

in fact , is it fraud? that would indicate criminal deception... I see no prosecution here!

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By tedbuck
25th Aug 2022 11:21

Why, oh why is there no prosecution for fraud? Why is there no jail sentence?

The legal system here doesn't work any longer. The judges seem to be on the side of the criminals and believe that a slap on the wrist will solve all problems - they even let suspected murderers out on license so that they can cause further deaths.

The police aren't interested in anything but traffic offences - common complaint where I live that they don't bother to come out for a fracas or a burglary.

The place is a madhouse now - no common sense any longer.

Pity they stopped the BBLs I could have formed a few companies and grabbed a million and retired overseas - just doesn't pay to be honest any longer

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By sanjay100
25th Aug 2022 12:15

I imagine there will be such cases on weekly if not daily basis. Its absolutely scandalous these people get away with this. Claiming 200K bounceback loans when he had only around 5K in total turnover in four companies is just staggering.

We are talking about a significant amount of money in this case. How can anyone justify disqualification. It is appalling derelict of duties by everyone involved.

I keep hearing about disqualifications but nothing else. For 200K I wouldn't mind being disqualified.

This case should be highlighted in the press when the country is going to the mire.

I am losing faith in human nature. Crime certainly pays. When I look back the people that seem to be successful are the ones that have an edge that took risks and exploited people or the situation even if it means being dishonest.

Maybe next life I will come back as a liquidator.

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Replying to sanjay100:
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By Hugo Fair
25th Aug 2022 12:45

'I'll be back' ... Sanjay in The Terminator (sorry Liquidator)!

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Replying to Hugo Fair:
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By sanjay100
25th Aug 2022 14:16

Actually there is a film called the accountant why not make one the Liquidator .

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Replying to sanjay100:
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By Hugo Fair
25th Aug 2022 14:22

Very apposite - given that The Accountant (unlike you) was working for the Mafia!

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Replying to sanjay100:
paddle steamer
By DJKL
29th Aug 2022 11:16

There is already one, though the liquidating is a tad more brutal.

https://en.wikipedia.org/wiki/The_Liquidator_(1965_film)

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Replying to DJKL:
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By Hugo Fair
29th Aug 2022 22:29

Wow now that's what I call a cast list (some of my favourites of the time).
Don't know how it escaped my attention in 1966, but will have to track it down now!

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By Paul Crowley
26th Aug 2022 10:45

If only one person in authority had considered getting a free first meeting with an accountant and asked whether the suggested rules might, just might, be subject to massive fraud

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By steve 12321
29th Aug 2022 14:38

How long inside will these people get? 1 year per £50k seems fare where blatant fraud. If only !!

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By A L
30th Aug 2022 09:18

A simple check at the the time would have saved all this issues.

Go to HMRC portal and check turnover on the last CT600 submitted.

How long would that have taken?

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