Midlands directors banned for £80k covid fraud

Peninsula Blog

November 03 2022

Two East Midlands bosses have been banned for falsely claiming more than £80,000 in bounce back loans

Muhamad Rais, sole director of Lokma BBQ Ltd in Leicester, operated as a takeaway until the company went into liquidation in January 2022.

Rais exaggerated the turnover of his takeaway business during the pandemic to fraudulently claim £31,000 of bounce back loans.

The company came to the attention of the Insolvency Service following its liquidation before investigators uncovered that Rais applied for a £50,000 bounce back loan, stating that the takeaway’s turnover the previous year had been £200,000.

However, Lokma BBQ’s actual turnover for 2019 was around £74,000, resulting in the company receiving £31,000 in government-backed loans.

Rais has agreed with the liquidator to re-pay £8,000 of the money owed through monthly instalments.

Lee Mankelow, sole director of Wolf Timber Ltd in Nottinghamshire, traded as a provider of timber products to builders. The company, however, entered into liquidation in December 2020.

Investigators uncovered that Mankelow applied for a £50,000 bounce back loan in June 2020, after the company had seen a rise in online business during covid lockdowns.

Mankelow then transferred the full £50,000 the day after he received the loan to a former director of the company, breaching the terms of the loan.

Investigators found no evidence to support Mankelow’s claims that the money was used to pay the wages, bonuses, dividends and expenses of the former director who had stayed on as an employee of the company.

The two directors received the money as part of a government scheme to support businesses facing hardship during the covid pandemic.

Companies were entitled to bounce back loan payments of up to 25% of their 2019 turnover, to a maximum of £50,000, for the economic support of their business.

Tom Phillips, assistant director of investigation and enforcement services for the Insolvency Service, said: ‘Bounce back loans were put in place to provide vital support to help viable businesses through the pandemic. Both Mankelow and Rais completely abused the government-backed loans to further their own interests, which was totally unacceptable.

‘Mankelow and Rais’ bans should serve as a stark warning to other directors who may have misused financial support during the pandemic that we have the ability to bring your actions to account and remove you from the corporate arena.’

The disqualifications prevent Mankelow, who has been banned for six years, and Rais, for nine years, from directly, or indirectly, becoming involved in the promotion or formation of a company, without the permission of the court.

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