Investigation leads to closure of linked fraudulent companies that filed false accounts to get credit
Foldlight Ltd and Qaisar Ltd, two companies exclusively formed to carry out fraud, to the detriment of creditors, were wound up by the High Court on 11 December 2015.
The winding up orders follow an investigation conducted by Company Investigations of the Insolvency Service, with assistance from Companies House.
The investigation found that the companies filed accounts with no validity whatsoever at Companies House and then used those accounts to try and obtain goods on credit and lease terms, an activity known as short term fraud.
Between them, the companies obtained cars to a value of £97,000, VOIP services - technologies for delivering voice communications and multimedia sessions over the internet - of £25,000, boilers and related equipment of £72,000 and a commercial lawnmower worth £15,000.
The investigation also found that these companies were linked to a string of other companies with similar accounts filed, some of which were otherwise inactive and others of which had supplied false trade references to get credit.
Of the 26 sets of accounts scrutinised during the investigation, 20 had the same grammatical error and spelling mistake, and two had quoted the names of auditors without permission or connection.
The court heard that there were links to over 100 companies via filings at Companies House, including to other companies previously wound up by the Insolvency Service using the same powers, as well as by HMRC and creditors. Other crimes such as drug related offences were also linked to some of these companies, through the investigation.
The investigation was helped extensively by staff at Companies House, a sister agency of the Insolvency Service also sponsored by the Department for Business, Innovation & Skills.
Scott Crighton, Group Leader with Company Investigations North said:
The Insolvency Service will investigate and bring to a halt the activities of companies that seek to use fraudulent means to obtain goods and services on an organized basis using an extensive network of deception and misdirection. In doing so, we look to fellow regulators, victims and potential victims who provide us with the information to take action.
Business owners should take care when dealing with potential new traders who seek credit and whose bona fides consist solely of accounts filed at Companies House with little to validate the information in those accounts.
Notes to editors
Foldlight Ltd (CRO No. 8012262) was incorporated on 29 March 2012. The company’s registered office is at New Bartholomew House, 42 – 44 New Bartholomew Street Birmingham B5 5QS.
Qaisar Ltd (CRO No. 8507122) was incorporated on 29 April 2013. The company’s registered office is at Regus House, Central Boulevard, Blythe Valley Park, Shirley B90 8AG.
The petitions to wind-up Foldlight Ltd and Qaisar Ltd were presented under s124A of the Insolvency Act 1986 on 13 October 2015 and the Official Receiver was appointed as Liquidator of both companies on 11 December 2015.
Short term fraud usually occurs when a limited company is specifically incorporated or acquired for the purposes of establishing a false existence and creditworthiness by, for example, filing false accounts at Companies House showing a highly favourable but entirely fictitious financial position.
The fraudulent business has no legitimate existence or day-to-day trading activity but instead uses the false accounts as a basis to obtain goods on credit with no intention of ever paying for them.
Company Investigations, part of the Insolvency Service, uses powers under the Companies Act 1985 to conduct confidential fact-finding investigations into the activities of live limited companies in the UK on behalf of the Secretary of State for Business, Innovation & Skills (BIS). Further information about live company investigations is available.
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: 22 December 2015
From: The Insolvency Service