Director banned after taking out bounce back loans to repay ex
A company director has been banned after fraudulently obtaining £200,000-worth of bounce back loans, which he used to repay a personal loan to his former partner.
Stephen Burke, 63, from Rotherham, overstated turnover for his four construction contractor companies to secure four of the government-backed loans for the full £50,000 permitted under the scheme.
The bounce back loan scheme was launched in May 2020 to deliver funding to struggling microbusinesses during the pandemic as quickly as possible. The loans are 100 per cent guaranteed by the government, meaning the lenders do not have to shoulder any of the risk.
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Burke was director of four companies that provided services to construction projects. One was listed as dormant with Companies House by January 2020 and the other three companies had turnover ranging from just £635 to £3,400, according to their latest full-year accounts.
Despite this, Burke stated on the application forms that turnover was between £200,000 and £320,000 for each company.
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He then spent £174,000 repaying a personal loan to his former partner, which was a breach of the loans’ conditions as they are meant to be spent on legitimate business costs.
In February 2021, Burke sought to dissolve all four companies but this was blocked as the outstanding loans were identified.
The companies have been placed in liquidation and the liquidator has begun recovery action.
Burke has admitted to his fraudulent actions and has been disqualified from being a company director for 11 years, effective from 4 August 2022.
Read more: Watchdog slams Bounce Back Loan fraud checks as “inadequate”
The disqualification prevents him from directly, or indirectly, becoming involved in the promotion, formation or management of a company, without the permission of the court.
“Coronavirus support schemes were introduced to help British businesses through the most testing of times, providing them with the financial support to protect jobs and return to prosperity,” said Rob Clarke, chief investigator at the Insolvency Service.
“Stephen Burke not only sought to defraud the bounce back loan scheme for personal gain, but then sought to cover his tracks by dissolving the companies he’d used. This abhorrent conduct has rightly resulted in a lengthy ban, removing his ability to trade with the benefit of limited liability until 2033.”
The bounce back loan scheme has attracted extensive criticism for its high levels of fraud, to the cost of the taxpayer.
Treasury and Cabinet Office minister Lord Agnew of Oulton resigned in January having criticised the government over its failure to tackle Covid loan fraud.
The £47bn bounce back loan scheme saw six-year loans of between £2,000 and £50,000 issued to small businesses between May 2020 to March 2021, at 2.5 per cent interest.
Estimates of how much may be lost due to fraud range between £4.9bn and £17bn.