Court proceedings in an asset stripping fraud concluded today with a confiscation order of £60,000. This completes a number of hearings conducted throughout 2004 in which five defendants have been convicted. Sentenced in September at Sheffield Crown Court, four offenders received combined prison terms of 8 ¾ years for their parts in a fraud where companies were acquired with the sole intention of dishonestly extracting cash before they were put into receivership or liquidation.
The companies:
- Atoriana Ltd of Taunton, Somerset was a supplier of decorative lighting and seasonal gifts.
- Duckers Furniture Ltd of Rotherham, South Yorkshire made beds and bedroom furniture.
- Powermark Plc of Borehamwood, Herts was a computer hardware and software supplier.
The defendants were:
- Saleem Kiani (dob 29/01/62), purported to be a businessmen who could provide financial backing to rescue or rejuvenate small companies.
- Mohammed Ismail (dob 17/09/64) was a business partner of Kiani's, providing some of the money needed to buy shares in these companies.
- Christopher Brian Fox (dob 14/03/63) assisted Kiani by posing as an accountant/bookkeeper.
- William Gerald Lane (dob 25/01/43) also assisted Kiani, playing the part of a business and IT consultant.
- Rabnawaz Khan (dob 16/01/68) was involved in selling off for cash Duckers stock of furniture.
Background
Atoriana Ltd
In 1999 Atoriana was a successful small business with a turnover of around £800,000. The then owners wanted to take a less active role and were looking for a buyer. They were approached by Kiani, Fox and Ismail and in January 2000 the sale was agreed. The former owners stayed on to manage the day-to-day running for the sake of business continuity.
Kiani, who was based in Sheffield, directed that the company accounts and cheque book should be transferred to Sheffield. Financial control was therefore in his hands. Within three months of the take-over, Atoriana's suppliers were not being paid. Nor were the original owners being paid monthly payments (as part of the sale agreement) for their share of the business. Three months after the take-over, insolvency practitioners were called in and in due course the business was wound up.
When it was purchased, Atoriana had net assets of over £320,000. Its short term surplus of assets over liabilities of £70,000 reflected a healthy financial position. But within four months its liabilities had increased by £50,000 and nearly £230,000 was outstanding for supplies purchased three months earlier. There was no money to settle these bills. Over £236,000 had been removed from the company's account.
Powermark plc
Unlike Atoriana, Powermark was not in good financial health. Its turnover in 1999 was £14.5 million but its liabilities exceeded its assets by nearly £1.4 million, widening to almost £1.8 million in March 2000. Its cash flow difficulties affected its ability to meet orders and therefore get income to pay suppliers. It needed a cash injection to rescue it from being wound up. Kiani was introduced to the Powermark board through a firm of private equity advisors they had engaged. Fox participated in the meetings. The impression given to Powermark was that £ ½ million was available for immediate injection and that Kiani also had in the wings a potential backer (Ismail); a supposed property investor with £5 million assets. For this level of commitment and promise, in March 2000 Kiani, Ismail and Fox asked for and got control of Powermark, had seats on the board and authority as signatories on the company accounts with no limit on the amount. 60% of the shareholding was acquired by Kiani (through his company Blueview Investments Ltd) for £10 and a promise by him of a rolling overdraft facility for the company
Instead of the promised cash injection, creditors increased by over £500,000 and payments totalling nearly £160,000 were made by Powermark to Kiani controlled companies.
Duckers Furniture Ltd
Duckers was a subsidiary of The Airsprung Furniture Group Plc. Its principal product was luxury beds. It was generally considered to be well run. In 1997 its turnover was £10.5 million with a pre-tax profit of a quarter of a million pounds. But thereafter trading had become more difficult and in 2000 turnover was down to less than £7 million and the pre-tax profit had turned to a loss of some £1.2 million. Though the business was solvent, with net assets of £1.5 million, the parent company decided to close the site and transfer the more profitable products to a manufacturing plant in the south of England. However, sale of the site as a going concern became a possibility when Kiani, attracted by local press reports of the situation at Duckers, expressed an interest in buying the business. He entered into negotiations, once again giving the impression of being someone able to bring new capital to assist in the rejuvenation of the business. By September 2000, Duckers belonged to Kiani which he purchased through one of his companies. He ensured that the business retained its MD and its finance director who had the expertise to keep the business ticking.
Duckers continued to trade for only a few months. In May 2001 liquidators were appointed. The position at that stage was that the amounts owed to creditors had increased by around £300,000. About £313,000 had been paid to Kiani or his companies, another £12,500 to Khan and £476,000 was owed to the company's factors.
Proceedings
The SFO and the South Yorkshire Police commenced a joint investigation in February 2001.
The defendants were charged in September 2002 and the case transferred to Sheffield Crown Court. During April and June 2004, ahead of trial, Kiani, Fox, Lane and Khan entered guilty pleas. The trial of Ismail opened on 19 July. On 10 August the jury retired to consider their verdict and on the following day they returned a guilty verdict.
All five were sentenced on 14 September 2004, as follows:
Saleem Aktar Kiani - 2½ years' imprisonment in respect each of Atoriana and Powermark, to run concurrently; 15 months' imprisonment in respect of Duckers, to run consecutively. In addition he was disqualified from acting as a director for 8 years.
Mohammed Ismail - 2 years' imprisonment in respect each of Atoriana and Powermark, to run concurrently. In addition he was disqualified from acting as a director for 5 years. A confiscation order in the sum of £60,000 was made against him today. He has been given 18 months to pay and was ordered to serve 19 months' imprisonment in default of payment.
Christopher Brian Fox - 18 months' imprisonment in respect each of Atoriana and Powermark, to run concurrently; 6 months' imprisonment in respect of a VAT offence regarding Duckers, to run consecutively. In addition he was disqualified from acting as a director for 5 years. A confiscation order in the sum of £8,285 was made against him on the day of sentence. He was given 14 days to pay and was ordered to serve 6 months' imprisonment in default of payment.
William Gerald Lane - 3 months' imprisonment for acting as a director of Atoriana whilst an undischarged bankrupt; 12 months' imprisonment in respect of Duckers, to run consecutively. In addition he was disqualified from acting as a director for 4 years.
Rabnawaz Khan - 220 hours' community punishment.
In passing sentence HHJ Robertshaw said that the defendants were involved in "commercial fraud on quite a grand scale" and that they perpetrated a "cynical, deeply dishonest and sophisticated scheme over a period of 15 months".
Note:
Under the cross government initiative 'Payback', the tracing of and recovery of assets is seen as an important element in the delivery of justice, and sending out a strong deterrent message. Further information on 'Payback' can be found at www.acpo.police.uk/
Serious Fraud Office
Elm House, 10-16 Elm Street, London WC1X 0BJ
Press Office tel. 020 7239 7000/7001 Main tel. 020 7239 7272
