Two companies who fraudulently secured £230,000 worth of Covid-19 support loans have been wound up in the courts
LV Distributions Ltd and SIO Traders Ltd were wound up in the High Court in front of Judge Burton, in separate hearings on 27 July 2021 following inquiries conducted by the Insolvency Service, which proved neither company ever traded.
After the wind-up order was announced an official receiver was appointed as liquidator of the two companies.
The petition against SIO Traders Ltd was presented under s124A of the Insolvency Act 1986 on 17 May 2021 at the Business and Property Court in Manchester in front of DJ Bever and the petition against LV Distributions Ltd was presented on 25 May 2021 at the High Court in London in front of Judge Burton.
The two companies submitted false documents to at least 41 local authorities and the government’s bounce back loan scheme to secure £230,000 worth of grants put in place to support businesses during the Covid-19 pandemic.
The Insolvency Service investigation uncovered that SIO Traders registered their offices in Whitchurch, Shropshire, but provided false lease documents and utility bills to 14 different local authorities to fraudulently claim they traded out of the premises.
SIO Traders also claimed that they supplied PPE and secured £95,000 worth of business grants from 10 local authorities, on top of this the company received a £50,000 Bounce Back Loan (BBL) they were not entitled to.
LV Distributions had registered their offices in Redhill, Surrey, and claimed to sell medical care products and in a 10-day period, between 17 and 27 August 2020, the company provided false lease documents and utility bills to 27 local authorities.
LV Distributions then fraudulently secured £35,000 in business grants from two local authorities, as well as a £50,000 bounce back loan.
Investigators at the Insolvency Service uncovered that the premises LV Distributions falsely claimed to operate from were unoccupied, up for rent, or occupied by a different company.
Paul Scully, small business minister said: ‘This decisive enforcement action shows that we will not tolerate shameless attempts to defraud the taxpayer and falsely claim public money intended to help businesses through the pandemic.
‘We are cracking down on Covid-19 fraud across the board and those who have tried to take support they were not entitled to, which was given in response to the worst crisis of our lifetimes, can expect to face heavy consequences.’
Herefordshire County Council was targeted on two occasions by SIO Traders and initially paid out £10,000 for SIO Traders’ first fraudulent application but was able to recover the funds in full, before rejecting a second £10,000 application and reporting the company’s activities.
The council also received a further £10,000 application from LV Distributions, which was also rejected. This saved the local authority a total of £30,000 in fraudulent grant claims.
Herefordshire Council’s councillor Liz Harvey, cabinet member for finance, corporate services, and planning, said: ‘We have spent more than a year allocating millions of pounds of financial support for local businesses who have been affected by the pandemic.
‘To see companies trying to take advantage of this difficult and unprecedented situation, and fraudulently claim support that is intended to help those who really need it, is despicable. Herefordshire Council will not tolerate fraud, and it is pleasing to see these two companies wound up.’
There is currently a bill before parliament that will give the Insolvency Service extra powers to investigate bounce back loan fraud.
The Ratings and Directors Disqualification Bill, if passed, will give the Insolvency Service powers to investigate, and if appropriate take action to disqualify directors of companies that have fraudulently claimed bounce back loans, even after they have been dissolved, giving retrospective enforcement powers.
