Mr Gregory Wayne Davidson, lately of Clacton-on-Sea, was sentenced to 18 months imprisonment this week (Tuesday 22 February) when he pleaded guilty at Chelmsford Crown Court to obtaining money by deception, putting his assets beyond the reach of his creditors and failing to provide a satisfactory explanation for the same. The prosecution by the Department for Business Innovation and Skills followed a referral from The Insolvency Service.
Mr Davidson petitioned for his own bankruptcy on 20 July 2006 with debts exceeding £205,000. The initial routine investigation by the Official Receiver into Mr Davidson’s financial affairs leading up to the bankruptcy found that he could not provide a satisfactory explanation for the transfer of £120,000 to a third party at a time when he was insolvent and unable to pay his creditors.
The Official Receiver established that at the end of 2005 Mr Davidson fraudulently applied for three loans. The first an un-secured loan for £25,000 was paid directly into his account; the second, a mortgage of £220,500 secured against his property in Malvern Drive, Ilford, which after consolidation of other mortgages resulted in a payment of £57,712 into his account and the third, another mortgage of £119,930 that was also secured against his property resulted in a payment of £44,931 into his account. Due to the close proximity in time of the loan applications a Land Registry search did not reveal the first secured loan.
Mr Davidson then transferred the money, that he had obtained as a result of fraudulent representations to the mortgage companies as to his intention and ability to pay the loan, into his company account and then via a number of transactions transferred £120,000 to who he claimed, was his ex-partner.
Commenting on the case Graham Horne, Senior Official Receiver for The Insolvency Service said:
“People struggling with debt who want to benefit from the debt relief arrangements offered by the insolvency regime must be prepared to declare all of their assets or face the penalty imposed on them. It is for the Official Receiver to decide which assets should be sold for the benefit of the creditors and which may be retained by the debtor.”
Ian West, Deputy Chief Investigation Officer for BIS said:
“The length of the sentence handed down to Mr Davidson sends a clear and simple message - breaching bankruptcy laws and fraudulent behaviour are serious matters that will not be tolerated and anyone found guilty of these criminal offences can expect a serious punishment.”
The charges Mr Davidson pleaded guilty to were:
- On 17/01/06 Mr Davidson dishonestly obtained a money transfer of £25,000 by deception, by falsely representing to Co-Operative Bank PLC that he would repay the loan contrary to s15A Theft Act 1968;
- On 20/01/06 he dishonestly obtained a money transfer of £57,712.01 by deception, by falsely representing to GMAC Financial Services that he would repay the loan contrary to s15A Theft Act 1968;
- On 24/01/06 Mr Davidson dishonestly obtained a money transfer of £44,931.85 by deception, by falsely representing to First Plus Financial Group PLC that he would repay the loan contrary to s15A Theft Act 1968;
- Between 24/01/06 and 31/01/06, being in the five years preceding bankruptcy, Mr Davidson fraudulently transferred £120,000 to another contrary to s357(1) IA 1986;
- Between 02/08/06 and 15/06/07 being a bankrupt and having been required to do so by the Official Receiver failed without reasonable excuse to provide a satisfactory explanation as to the manner of the loss of a substantial part of his property, namely £120,000 contrary to s354(3) IA 1986.
Mr Davidson was sentenced to an immediate custodial sentence: 18 months for each of the Theft Act offences; 6 months for the fraudulent transfer; and 2 months for the failure to account. The sentences will run concurrently. Confiscation processing are on-going.
Mr Davidson was made the subject of a Bankruptcy Restriction Order in 2008 by Romford County Court, meaning that the restrictions by which he must abide as a bankrupt have been extended beyond the normal 12 months.
Notes to editors
1. The Department for Business, Innovation and Skills prosecutes a range of criminal insolvency cases in magistrates and Crown courts across the country. Most of the cases are referred by The Insolvency Service.
2. What is the role of the Official Receiver? When a court has made an insolvency order (a personal bankruptcy against an individual or a winding-up order against a company) the Official Receiver, a civil servant of The Insolvency Service with wide ranging statutory powers to obtain information, is responsible for collecting and protecting any assets for the benefit of creditors. When the Official Receiver thinks there is cause to do so they can also investigate, in the public interest, the conduct and financial affairs of the bankrupt for the period leading up to the insolvency order being made.
3. What are Bankruptcy Restrictions? These are restrictions set out in insolvency law that the bankrupt is subject to until they are discharged from bankruptcy – normally 12 months and include that bankrupts:-
must disclose their status to a credit provider if they wish to get credit of more than £500;
who carry on business in a different name from the name in which they were made bankrupt, they must disclose to those they wish to do business with the name (or trading style) under which they were made bankrupt;
may not act as the director of a company nor take part in its promotion, formation or management unless they have a court’s permission to do so;
may not act as an insolvency practitioner, or as the receiver or manager of the property of a company on behalf of debenture holders;
may not be a Member of Parliament in England or Wales.
4. What are Bankruptcy Restrictions Orders and Bankruptcy Restrictions Undertakings? If the Official Receiver considers that the conduct of a bankrupt has been dishonest or blameworthy in some other way, he (or she) will report the facts to court and ask for a Bankruptcy Restrictions Order (BRO) to be made. The court will consider this report and any other evidence put before it, and will decide whether it should make a BRO. If it does, the bankrupt will be subject to certain restrictions for the period stated in the order. This can be from 2 to 15 years.
The bankrupt may instead agree to a Bankruptcy Restrictions Undertaking (BRU) which has the same effect as an order, but will mean that the matter does not go to court.
5. 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 http://www.insolvency.gov.uk
6. Further information about the work of The Insolvency Service is available fromhttp://www.insolvency.gov.uk
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