Mr Humphreys and Mr Moore were both also banned from acting as directors of a limited company for seven years. The convictions follow an initial investigation by the Official Receiver’s Office, Newcastle-Under-Lyme and an investigation and prosecution by the Department for Business, Innovation and Skills (BIS).
Both directors pleaded guilty to fraudulent trading and misconduct in the course of winding up when they appeared at court on 26 July 2011. However, for legal reasons the sentencing hearing was adjourned until 16 May 2012.
The court heard that between 2004 and 2006, Mr Humphreys and Mr Moore ran Churchwood Corporate Services Ltd from an office in Alderley Edge, Cheshire. They targeted companies who had been served with a winding-up petition from HM Revenue and Customs (HMRC).
The defendants persuaded the companies to sign up as clients, promising the owners and directors that CCSL would negotiate with HMRC for a delay in the winding-up proceedings. Instead of assisting them however, Mr Humphreys and Mr Moore took the client companies’ money and used it to fund their expensive lifestyle.
Both of the defendants spent clients’ money on holidays, and at restaurants and off-licences. In addition, Daniel Moore used clients’ money for flying lessons and Benjamin Humphreys used it to support his significant on-line gambling activities.
In an added greedy twist, Mr Humphreys and Mr Moore also charged the corporate clients 17.5 % VAT on all invoices, despite the fact that CCSL was never registered for VAT with HMRC. When CCSL was itself wound-up in 2006, the two directors provided the Official Receiver with ‘doctored’ client invoices to disguise the fact that they had fraudulently charged their clients VAT.
As a result of the dishonest trading, three client companies, all successful businesses albeit with cash flow problems, went into liquidation. The effects of this were devastating for the staff, who lost their jobs and the owners, who had invested their own money into the companies.
Michael Williams, Deputy Chief Investigation Officer, Department for Business (BIS), said:
“Through their company Mr Humphreys and Mr Moore purported to give assistance, and therefore hope, to the directors of failing companies. However they did the exact opposite. By using the money held on trust by them to live the ‘good life’ they put those companies in a far worse situation, losing money they could ill afford. This is a disturbing and callous part of the case.
“The offence is a very serious abuse of the privilege of running a limited liability company. The Department will fully investigate such abuse and take robust action to protect corporate governance, which is at the heart of business activity in this country.”
Notes to Editors
1. Both Benjamin Humphreys and Daniel Moore live in Wilmslow, Cheshire.
2. Both defendants pleaded guilty to Fraudulent trading, contrary to section 458 of the Companies Act 1985 and to Misconduct in course of winding up, contrary to s208(1) a and (5) of the Insolvency Act 1986.
3. The sentences passed were 21 months’ imprisonment on each of counts 1 and 3 (to be served concurrently).
4. On passing sentence, HHJ Hale said that by the end of the offending the defendants had ‘milked their clients for all they were worth’.
5. Count 1 Indictment
STATEMENT OF OFFENCE
Fraudulent trading, contrary to section 458 of the Companies Act 1985
PARTICULARS OF OFFENCE
Benjamin HUMPHREYS and Daniel MOORE, between 7 February 2006 and 13 December 2006 were knowingly parties to the carrying on of the business of Churchwood Corporate Services Ltd for a fraudulent purpose, namely to defraud its corporate clients: RDM Limited, Multitrax Limited, Typikon Limited and SSI Projects Limited.
STATEMENT OF OFFENCE
Misconduct in course of winding up, contrary to s208(1) a and (5) of the Insolvency Act 1986
PARTICULARS OF OFFENCE
Benjamin HUMPHREYS and Daniel MOORE, being officers of CCS, a company which was being wound up, did not to the best of their knowledge or belief fully and truly discover to the liquidator all of the company’s property, and how and to whom and for what consideration the company disposed of any part of the property, namely the £99,506.56 comprising cash drawn from ATMS, cash drawn by cheques, hotel and restaurant expenditure, foreign travel, money spent at off-licences and money spent during on-line gambling.
6. 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. The Service also 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 is available from www.bis.gov.uk/insolvency
7. All public enquiries concerning the affairs of the company should be made to: The Official Receiver, Public Interest Unit, 2nd Floor, 3 Piccadilly Place, London Road, Manchester, M1 3BN. Tel: 0161 234 8531 Email: firstname.lastname@example.org
8. Media Enquiries should be directed to: Kathryn Montague, Media Relations Manager, Telephone 020 7674 6910 or Ade Daramy, Press Officer on 020 7596 6187