The UK Insolvency Service has shut down five companies that were conducting an IT equipment purchasing and finance scam.
The businesses were fraudulently raising finance to buy non-existent IT services in an “orchestrated” campaign. They were caught after a flurry of closely bunched finance applications aroused the suspicions of lenders.
Manchester’s High Court has now officially wound up Continental Meat Products Ltd, Fine Car Hire Ltd, Exclusive Worldwide Products Ltd, HSB Trade Ltd and Premier Snax Ltd; all of which were associated but registered in different locations.
The businesses had been registered between 2003 and 2017 and provided false accounts to Companies House. All five companies had been “abandoned”.
David Hope, Chief Investigator for the Insolvency Service commented that: “All five companies have been used as part of an orchestrated and cynical attack on finance companies to extract funds in a wholly inappropriate manner, all while using similar activities to connected companies we had previously taken action against.”
Following an investigation the Insolvency Service discovered that the firms were obtaining finance under the pretence that it would be used to lease IT equipment. In one case Continental Meat Products and Fine Car Hire manged to secure £134,000 in order to lease IT equipment that was allegedly sourced from Premier Snax.
However, upon investigation the Insolvency Service failed to find any physical evidence of the purchase of IT equipment. The court heard that the Insolvency Service was made aware of the companies after it took enforcement action against two other associate companies of the five: the scam appears to have gone deeper than the five.
IT Equipment Finance Scam
David Hope commented that: “By closing these companies down the court has protected other lenders from their actions and this demonstrates we will act robustly to protect legitimate businesses and prevent such abuse from taking place.”
Because it’s a government database, too often trading standards or other officers just take it as fact that it [Companies House] is reliable. But Companies House has no mandate to cross-check data, confirm identities, critics have warned.
Analysis by the customer intelligence firm HooYu last year showed that over 800 disqualified directors still appear to have an active directorship. The analysis also uncovered over 500 so-called “chameleon” directors who have been disqualified as a director, then subsequently made changes to their name or date of birth.
Analytics software provider SAS warned in April 2019 that the UK is a procurement fraud “capital” – with almost a third (31 percent) of businesses subjected to contract bid rigging and 43 per cent to duplicate invoices.
A May – August consultation by the Department for Business, Energy & Industrial Strategy on proposals that would require all of the UK’s existing 6.7 million company directors – as well as new applicants – to provide proof of identity to Companies House does not appear to have resulted in action.