Diamond rip off results in 13 year ban for director
Director disqualified for 13 years for giving false information to customers and failing to keep proper company books and records.
An Investigation by the Insolvency Service has resulted in Craig Phillip O’Driscoll, director of failed investment company Ethical Elegance Limited, being disqualified by the High Court for giving false information to customers to persuade them to transfer valuable wines to the company in exchange for diamonds, and for failing to keep proper company records.
Ethical Elegance Ltd, which operated out of rented addresses in Bromley and Dartford in Kent, traded by offering diamonds to customers in exchange for fine wine assets and by promising to then sell the diamonds on the customers’ behalf.
The Insolvency Service’s investigations found that between May 2013 and August 2013 at least 7 customers were persuaded to transfer wines to the company after being offered diamonds stated to be worth over £240,000. But after transferring their wines none of the customers received any proceeds from the sale of diamonds. Instead customers were sent diamonds in the post, but the values of these were a fraction of the amounts promised. Ethical Elegance Ltd went into liquidation on 29 October 2013 owing debts of over £215,000 to customers.
The investigations also found that Mr O’Driscoll failed to provide any accounting records for Ethical Elegance Ltd to the Liquidators. Without the records it has not been possible to explain expenditure of over £177,000 made from the company’s bank account or to trace diamonds costing over £16,000.
Mr O’Driscoll (33) of Bromley, Kent was disqualified by an order made in the High Court on 13 April 2016, which prevents him from acting as a director of a company for 13 years from 4 May 2016.
Commenting on the disqualifications, Martin Gitner, Deputy Head Investigator at the Insolvency Service, said:
Mr O’Driscoll was responsible for the company making false promises to people to persuade them to enter into agreements. He was also responsible for the company failing to keep or produce proper accounting records, the absence of which means that not all the company’s funds and assets can be traced.
Consumers and the wider business community need protection from people who operate companies in such unscrupulous ways.
This disqualification should serve as a warning that if directors behave in this way their conduct will be investigated and they will be removed from the business environment.
Notes to editors
Ethical Elegance Ltd (CRO No. 05978081) was incorporated on 25 October 2006 and was dormant till it commenced trading in March 2013.
Craig Phillip O’Driscoll was appointed as director on 4 March 2013 and remained the sole director thereafter. His date of birth is 28 May 1983.
The company’s registered office address was 145-157 St John’s Street, London EC1V 4PW. The company operated out of rented properties in Bromley and Dartford in Kent.
The company traded by offering to exchange customers’ fine wine investment assets for diamonds and to sell the diamonds on the customers’ behalf. Between May 2013 and August 2013 at least seven customers entered into asset exchange agreements with the company whereby the customers transferred wine assets to the company after being offered diamonds stated to be worth £243,284. The customers’ wines were sold by the company for a total of £128,407. The company failed to acquire diamonds to the values offered to the customers and it failed to sell any diamonds on behalf of customers. The total cost of diamonds purchased by Ethical Elegance Ltd amounted to £44,458. Some of the customers were sent diamonds in the post, but the values of these were substantially below the amounts that had been promised to customers to induce them to enter into the agreements in the first place.
The company entered into creditors’ voluntary liquidation on 29 October 2013. Its assets totalled £3,527 and its liabilities totalled £239,600, giving a deficiency of £236,073. No accounting records for Ethical Elegance Ltd were provided to the Liquidators. In the absence of accounting records it was not possible to explain and account for expenditure from the bank account totalling £177,257 or to trace diamonds purchased by the company costing £16,411.
A disqualification order has the effect that without specific permission of a court, a person with a disqualification cannot:
act as a director of a company
take part, directly or indirectly, in the promotion, formation or management of a company or limited liability partnership
be a receiver of a company’s property
In addition that person cannot act as an insolvency practitioner and there are many other restrictions are placed on disqualified directors by other regulations.
Disqualification undertakings are the administrative equivalent of a disqualification order but do not involve court proceedings.
Further information on director disqualifications and restrictions can be found here.
The Insolvency Service administers the insolvency regime, investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. It may also use powers under the Companies Act 1985 to conduct confidential fact-finding investigations into the activities of live limited companies in the UK. In addition, the agency authorises and regulates the insolvency profession, deals with disqualification of directors in corporate failures, assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees, provides banking and investment services for bankruptcy and liquidation estate funds and advises ministers and other government departments on insolvency law and practice.
Further information about the work of the Insolvency Service, and how to complain about financial misconduct, is available.
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Published: 18 May 2016
From: The Insolvency Service