London businessman given prison sentence for bounce back loan fraud
A London businessman has been sentenced to six months in prison, suspended for 18 months, for abusing the bounce back loan (BBL) scheme.
Rajesh Dhirajlal Vaghela, 46, from Stanmore, received a £25,000 loan before closing his business to avoid repaying the government-backed loan.
Vaghela was a director of RKV Consultancy, which had traded as a consulting firm in Stanmore since March 2019. He applied for a BBL from his bank in May 2020.
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The BBL scheme was introduced by the government in May 2020 to support microbusinesses struggling during the pandemic with loans of up to £50,000. Unlike other state-backed support schemes, BBLs were fully underwritten by the government to encourage lenders to get money out quickly.
Within a week of receiving the money, Vaghela filed paperwork with Companies House to have the business dissolved, and later transferred all the loan money to personal bank accounts.
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He was caught through new powers granted to the Insolvency Service in December 2021, which allow it to investigate directors of dissolved companies who are suspected of closing their business to avoid repaying Covid-19 support loans.
Vaghela failed to notify his bank of his application to dissolve his business, which was a breach of the law, the Insolvency Service said.
“Directors who abused the Covid-19 financial support schemes, which were provided by the government to support genuine businesses in need of help during the pandemic, have exploited taxpayers,” said Peter Fulham, chief investigator of the Insolvency Service’s criminal investigation team.
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“This sentence reflects the thoroughly dishonest conduct of Rajesh Vaghela and should serve as a warning to others who engaged in this behaviour that they are at risk of criminal prosecutions and could potentially end up in prison.”
Vaghela was ordered to pay £2,150 in court costs. He had repaid the loan in full before being sentenced.
The sentence follows six other criminal prosecutions of company directors for Covid loan abuse by the Insolvency Service in the last year, all of which resulted in convictions, including one immediate imprisonment.