Director receives 11-year ban for fake COVID loan application
A Yorkshire-based manager whose companies provided services to construction projects has been disqualified for 11 years, after trying to defraud the Bounce Back Loan Scheme.
Stephen Burke, 63, of Rotherham, overstated his businesses’ turnover to secure £200,000 in taxpayer-funded loans he was not eligible for during the pandemic, the Insolvency Service has heard.
Burke was a director of four companies which provided services to construction projects, including Yorkshire Plant Hire and Sales Ltd, Yorkshire Site Preparation Ltd, Woodhouse Civil Engineering Ltd and Richmond Brokers Ltd.
One of the four companies, Yorkshire Site Preparation Ltd, was listed as inactive on Companies House records in January 2020. Of the other three, company accounts ending January 2020 showed turnover ranging from just 635 £ to £3,400.
However, Burke, who was the sole director of each company in 2020, claimed in his application for Bounce Back Loans that each company’s turnover was between £200,000 and £320,000, enabling him to obtain four separate loans for the full £50,000 allowed under the scheme.
He spent £174,000 to repay a personal loan to his former partner which breached the terms of the loans which could only be used for legitimate business expenses.
In February 2021, Burke sought to break up the four companies, but the breakup was blocked when outstanding loans were identified. Instead, the companies were placed in liquidation. The liquidators have now started remedial action.
The Secretary of State for Business, Energy and Industrial Strategy has accepted a disqualification pledge, which will see Burke banned for 11 years from direct or indirect involvement in promoting, forming or managing a company without the permission of the court.
Building News understands that Burke may also face a separate criminal prosecution as a result of his actions.
The Insolvency Service’s chief investigator, Rob Clarke, described Burke’s abuse of the scheme as “heinous”.
‘Coronavirus support schemes have been introduced to help UK businesses through the toughest times, providing them with the financial support needed to protect jobs and return to prosperity,’ he said.
“Stephen Burke not only sought to defraud the Bounce Back Loan Scheme for personal gain, but then sought to cover his tracks by breaking up the companies he had used.
“This heinous conduct rightly resulted in a long ban, stripping him of the ability to trade, with the benefit of limited liability until 2033,” Clarke added.
In June, two Devon-based administrators were disqualified for 11 years after applying for £100,000 in loans during the pandemic despite their company, Ace Building and Maintenance Services, being insolvent and unable to pay its debts.
The rebound loan scheme was introduced by the government in 2020, after the economy was hit during the pandemic. It was intended to help small businesses borrow between £2,000 and £50,000 at a low interest rate to help them out over the period.
Lenders have identified around 18,000 loans under the scheme as “suspected fraud”, according to government figures. In total, just over 1.5m loans have been issued during the pandemic, with an aggregate value of £47bn.