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Covid | AccountingWEB | Accountant banned for abusing Covid loan scheme
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Accountant banned for abusing Covid loan scheme

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The Insolvency Service has banned a chartered accountant after his firm received five times what it was entitled to under the Bounce Back Loan scheme.

3rd Apr 2024
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A chartered accountant who ran a business supporting ex-offenders has been banned as a director for 12 years after being found to have abused the Bounce Back Loan scheme.

Dion Mailich led Renovare Financial Service Ltd, with the company falling into liquidation in December 2022.

A report from the company’s liquidator triggered an investigation by the Insolvency Service into Mailich’s conduct, which found that in May 2020, the Borehamwood chartered accountant had applied for a £25,000 Bounce Back Loan on behalf of the firm. This was the maximum his business was eligible to receive.

The investigation subsequently found that Mailich applied for a second Bounce Back Loan of £50,000 for the business – less than two weeks after he had received the first – before making a third £50,000 loan application in June 2020. 

As such, Renovare Financial Services Ltd received five times what it was entitled to under the scheme.

Abuse of public money

On 15 March 2024, Mailich gave the Insolvency Service an undertaking to pay £75,000 compensation, while the Secretary of State also accepted a disqualification undertaking from Mailich, with the 12-year ban beginning on 20 October 2023.

Rob Clarke, chief investigator of Insolvent Investigations North at the Insolvency Service, said: “The rules were very clear but Dion Mailich ignored them and took an extra £100,000 from taxpayers that his business was clearly not entitled to.

“We will not tolerate such abuse of public money. Mailich now has a lengthy ban and has undertaken to pay tens of thousands of pounds in compensation.

“This outcome should be a warning to others that we will be seeking action against cases of abuse by company directors.”

Director disqualifications

Last year, figures published by the Insolvency Service showed that Covid fraud accounted for 459 of the 932 director disqualifications in 2022/23.

The average length of director disqualifications has increased to seven years and four months, up from five years the year before, which the Insolvency Service put down to the higher number of disqualifications linked to Covid-19 support fraud.

At the time, about £10bn had been lost to fraudsters taking advantage of the Covid support schemes.

In July 2022, the Insolvency Service used its new powers for the first time against directors who terminate businesses to avoid debts, as part of its fight against abuse of the government’s emergency Covid-19 loan schemes.

Replies (27)

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By Justin Bryant
03rd Apr 2024 17:32

So why isn't he in jail? This is merely a wrist-slap.

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Replying to Justin Bryant:
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By FactChecker
03rd Apr 2024 23:14

"Mailich .. has undertaken to pay tens of thousands of pounds in compensation" - but the total doesn't even cover the amount he obtained fraudulently!
Surely clawing that back should be the *starting* point, with compensation/fines and costs on top ... otherwise he's making a profit from crime?

And the "he now has a lengthy ban" would be laughable if it wasn't so transparently pointless.
He may need to hire front-people (as in so many cases of banned Directors) IF he wants to continue ploughing the same furrow ... but it is out of the same playbook as those drivers who are found guilty of driving without a valid driving-licence (or even having ever passed the test), who are 'banned from holding a driving-licence for N years'!

Of course they've missed an opportunity (with no jail sentence) of bringing circularity to this story ... given the arena in which his business focussed.

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By Roland195
04th Apr 2024 10:05

This is all well & good but the only reason this seems to have come to light is because the director in question was fool enough to appoint liquidators himself. If he hadn't tied this noose himself, what would the Insolvency Service do then?

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Replying to Roland195:
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By Paul Crowley
04th Apr 2024 10:41

Agree
They are only finding the idiots that walk into their doors. Even then only the ones that made fraudulent claims, not those that took the money and kept it.

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By Self-Employed and Happy
05th Apr 2024 09:33

I said it at the time, absolutely no checks whatsoever.

How could it be possible that he obtained a second let alone a third loan. We'll be paying for this absolute ****show for decades.

Thanks (16)
Replying to Self-Employed and Happy:
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By AndrewV12
05th Apr 2024 13:02

Just like everything else theses days, chucking it on the national debt has become the norm.

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BirdnCo
By BirdnCo
05th Apr 2024 09:45

Crazy - what has ICAEW done, nothing I bet...

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By AndrewV12
05th Apr 2024 09:45

'The investigation subsequently found that Mailich applied for a second Bounce Back Loan of £50,000 for the business – less than two weeks after he had received the first – before making a third £50,000 loan application in June 2020. '

I am aware the BBL scheme was riddled with fraud, but this is taking it to another level.

Thanks (8)
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By Martin1951
05th Apr 2024 09:47

And kicked out of the Institute also I hope....

Thanks (6)
Replying to Martin1951:
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By Ben Alligin
05th Apr 2024 11:59

You'll have to wait at least 8 years before that happens, the wheels of ICAEW justice turn very slowly. You can't rush these things you know.

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By JS23
05th Apr 2024 09:52

One out of many caught, there are so many of them who are out in the dark having a happy ending taking advantage of these Covid grants, etc.

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By graydjames
05th Apr 2024 10:06

It does beggar belief that he managed to successfully apply for a second and third loan - assuming these applications were in the same name as appears to be the case. This is a blatant case of fraudulent applications, but, responding to those who want him clapped in irons, it is highly improbable that any criminal conviction would result in a case such as this even if it is technically possible under the Fraud Act. This is true just as it is rare for criminal convictions to be made against those who commit tax fraud - often involving millions rather than thousands of pounds. Whereas benefit fraud (much lower in total amount) results in far more cases. Funny that; you don't hear the right complaining about that.

This whole Bounce Back Loan thing was a mess from the start. I had a client who applied through two companies for more than their entitlement in both (borrowed more than turnover allowed and in one case it was dubious as to the use to which it was put). I was advised by my professional body that I had to make an SAR and resign and advice any new firm of why I had resigned. I did all of this, but another Chartered firm were perfectly happy to take these companies on. There was a real sense that applications that stretched the boundaries, even to excess, was fair game and jolly good sport.

I am retired from practice now and don't care, but, at the time, it really wound me up that I had to lose substantial fees to another firm's gain. To be clear I am NOT saying I agree with those who flouted the rules. I certainly do not.

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By Paul Morton
05th Apr 2024 10:09

Perhaps HMRC ought to try and up standards for chartered accountants :)

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Replying to Paul Morton:
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By Arbitrary
05th Apr 2024 14:48

It's been tried the other way round without success, so why not?

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By KIKISROSSIDES
05th Apr 2024 11:43

In my opinion the punishment should have begun from the people giving out these loans without any checks in the first place. My unqualified grandmother could have foreseen this disaster let alone these idiots dishing them out in the first place!

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Replying to KIKISROSSIDES:
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By Roland195
05th Apr 2024 12:37

If you remember, the first version of loans to support businesses were shot down by the banks who refused to lend on the usual responsible lending principles that HMG insisted upon. Bounce Back Loans were deliberately set up to let Capt. Mainwaring act without all this red tape, don't they know there is a war..pandemic on?, and a fantastic success they were.

I'm not sure how this was extended to no checks at all & everything on the honour system but here we are. I have seen nothing further to suggest how this will be dealt with in the thousands of companies currently awaiting striking off but blocked from doing so - Will the Insolvency Service ever get to work here?

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Replying to Roland195:
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By kim.shaw-and-co.com
05th Apr 2024 14:49

Roland195 wrote:

If you remember, the first version of loans to support businesses were shot down by the banks who refused to lend on the usual responsible lending principles that HMG insisted upon. Bounce Back Loans were deliberately set up to let Capt. Mainwaring act without all this red tape, don't they know there is a war..pandemic on?, and a fantastic success they were.

I'm not sure how this was extended to no checks at all & everything on the honour system but here we are. I have seen nothing further to suggest how this will be dealt with in the thousands of companies currently awaiting striking off but blocked from doing so - Will the Insolvency Service ever get to work here?

So mass "desertion" of companies is going to be the norm then now ? All directors have to do is resign and leave the companies to sink because there are no assets left to find and nothing in it for the creditors to pay them to look ?

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Replying to kim.shaw-and-co.com:
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By Roland195
05th Apr 2024 15:24

All the cases I have read about (no first hand experience at all) where a director is held to account for the amount of a Bounce Back Loan or the use it has been put to is where an Insolvency Practitioner has been engaged by the director themselves or a Creditor (but never seemingly the Bounce Back Loan lender or HMRC).

I find it increasingly unlikely that action will be taken now, around 4 years later. If nothing has been filed with Companies House, and other than possibly our every helpful SARs, how would they begin to separate genuine business failures?

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Replying to Roland195:
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By kim.shaw-and-co.com
05th Apr 2024 16:29

Roland195 wrote:

I find it increasingly unlikely that action will be taken now, around 4 years later. If nothing has been filed with Companies House, and other than possibly our every helpful SARs, how would they begin to separate genuine business failures?

Which is pretty depressing really, although never say never.

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Replying to kim.shaw-and-co.com:
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By Roland195
05th Apr 2024 16:37

I suppose we might feel worse about it if the Insolvency Service was let loose on a futile exercise to attempt to investigate at an even greater expense to the taxpayer.

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Replying to Roland195:
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By legerman
07th Apr 2024 20:36

Roland195 wrote:

I have seen nothing further to suggest how this will be dealt with in the thousands of companies currently awaiting striking off but blocked from doing so - Will the Insolvency Service ever get to work here?

I have an ex-client (who I also know socially) who has waiting to have his company struck off since November 2022 (hospitality sector) The BBL was spent in the business so no issues there, but apart from debt collectors chasing the BBL about a year ago he's heard nothing from the bank involved. He's tried contacting them and got nowhere. In the meantime the Ltd Co just sits there, going nowhere.

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Replying to legerman:
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By Roland195
08th Apr 2024 09:43

I assume at some point, Companies House may be frustrated into action eventually but I doubt it - quite possible the companies in this position will sit there pending strike off for ever more.

The lenders are clearly unwilling to commit to the cost of taking recovery action via a formal Insolvency process so I can only assume that HMG does not actually require this for the guarantee to kick in.

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By NIGEL SCOTTTTTTT
05th Apr 2024 12:46

looking at the company's filed accounts, glad he wasn't in practice!!

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By Nebs
05th Apr 2024 13:32

Tip of the iceberg. I'd bet there are loads of businesses that went bust to write off their loans but are still trading under a different name.

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By Arbitrary
05th Apr 2024 14:54

The banks were so keen to lend on this scheme that they were were phoning clients of mine who had loads of cash to suggest Bounce Back Loans.

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By 2TunTed
05th Apr 2024 15:12

The BBL scheme was a reworking of the loan guarantee scheme with a fur lining and brass knobs on. A banker colleague told me at the time that the scheme was an invitation to commit fraud and so it came to pass. I am sure that most practices have clients with BBL loans in default some genuinely that can be demonstrated. Sorting out the fall out seems to be completely random, with no focus or objective purpose. I am sure most of us would like to see the chancers clobbered and the unfortunates discharged. The government would actually have to do something to give effect to this so nothing will happen.

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By moneymanager
05th Apr 2024 19:16

While the vaccine fraudsters get off scott free and we pay their billions.

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