Swindon bankrupt,
John Edward Morgan, has been sentenced to 20 months imprisonment
by Swindon Crown Court after pleading guilty to three charges,
following an investigation by The Insolvency Service and
prosecution by the Department for Business Innovation and Skills
(BIS).
Mr Morgan, who has been made bankrupt three times and has
remained undischarged since October 1997, was convicted of acting
as a director while bankrupt, obtaining credit without declaring
his bankruptcy and failing to account for the loss of a
substantial part of his property in the year before bankruptcy,
The court heard that despite being disqualified from acting as a
company director as he was a bankrupt, he acted as the sole
director and decision maker of his company, RM Services Limited,
for four years (from 2005-2009).
The court also heard the finance side of the business described
as 'a complete mess', and that Mr Morgan would
often act completely against the advice of his managers and his
solicitor. The company was dissolved in February 2009 owing £210,
874 to creditors.
The court heard that in January 2007, during his second
bankruptcy, Mr Morgan obtained a mortgage of £406,000 jointly with
his wife, without notifying the mortgage company of his bankrupt
status. After 14 months, the mortgage was £10,000 in arrears.
In December 2007, Mr Morgan was made bankrupt for a third time.
Investigations into his bank accounts showed that in the year
prior to this bankruptcy there had been cash withdrawals totalling
£210,192.70.
Mr Morgan was interviewed by the Official Receiver and asked to
account for the money. He stated that the accounts were used for
business expenses and payment of his wages as director. He was
subsequently required to complete a receipts and payments account
setting out particulars of the use of the money but failed to
comply with these requests.
Deputy Chief Investigating Officer Liam Mannall from the
Department for Business Innovation and Skills said:
"This case is a clear indication of how seriously the
courts take the actions of those who abuse the bankruptcy regime
and should be a warning to others tempted to break the law."
Ends
______________________________________________________________
Notes to Editors
1. John Edward Morgan’s address is Corner House, Witts Lane,
Purton, Swindon, Wiltshire.
2. The three offences are as follows:
ss. 11 and 13 Company Directors Disqualification Act make it an
offence for someone who is an undischarged bankrupt to act as a
director of, or in the management of, a limited company. The
rationale for the offence being that someone who is unable to pay
their own debts should not be allowed to incur debts on behalf of
a separate legal entity.
s. 360 Insolvency Act makes it an offence for an undischarged
bankrupt to obtain credit over £500 from another without informing
that other of their bankrupt status. The rationale being that the
public should be protected from lending money to bankrupts without
knowing the full extent of the risk they are undertaking.
s. 354 Insolvency Act makes it an offence for a bankrupt to fail
to account for the loss of a substantial part of their property in
the year before bankruptcy. The rationale being that, as the state
effectively cancels the bankrupts debts, the bankrupt must give a
full account of his or her affairs so that it can be established
that their has been no fraud or other misconduct.
4. Chronology:
10/07/1995 First bankruptcy order15/10/1997 Second bankruptcy
order11/02/2005 J and R M Services Ltd Incorporated - JM
director12/01/2007 Mortgage application24/08/2007 Petition
presented04/12/2007 Third bankruptcy order07/02/2008 Interviewed
by OR (Official Receiver)17/04/2008 Discharge suspended30/04/2008
Interviewed by OR (Official Receiver)05/06/2008 Required to
complete receipts and payments account18/02/2009 J and RM Services
Ltd wound up01/04/2009 automatic discharge from second
bankruptcy03/06/2010 5 year director’s disqualification
undertaking given
5. Offences:
John Edward MORGAN between 11/02/2005 and 18/02/2009, being an
undischarged bankrupt acted as a director of a company, namely J
and RM Services Limited without the leave of the Court., contrary
to sections 11 and 13 of the Company Directors Disqualification
Act 1986.
John Edward MORGAN, on or about 21 June 2007, being a bankrupt,
obtained credit in the sum of £406,000 from Swift 1st Limited
without informing the said company that he was an undischarged
bankrupt, contrary to section 360(1)(a) Insolvency Act 1986.
John Edward MORGAN between 5 June 2008 and 22 March 2011, being
a bankrupt and having been required to do so by the Official
receiver failed, without reasonable excuse to account for the loss
of a substantial part of his property, namely cash withdrawals
from Halifax account number 01719177 and Lloyds TSB account number
02262951 totalling £210,192.70, that was incurred in the 12 months
before the presentation of the bankruptcy petition contrary to
Sections 354(3) and 350(6) Insolvency Act 1986.
7. Further details of sentences:
For acting as a company director whilst an undischarged bankrupt
(ss. 11 and 13 of the Company Directors Disqualification Act
1986), Mr Morgan was sentenced to 4 months imprisonment
For obtaining credit without informing the creditor of his
status as an undischarged bankrupt (s. 360 Insolvency Act 1986),
Mr Morgan was sentenced to 12 months imprisonment, concurrent with
the first chargeFor failing to account for loss of a substantial
part of his property (s. 354 Insolvency Act 1986), Mr Morgan was
sentenced to 8 months imprisonment, consecutive to the other
charges.
8. 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
9. BIS’ mission is to build a Dynamic and Competitive UK economy,
in particular by creating the conditions for business success and
promoting an open global economy. The Criminal Investigations and
Prosecutions team contributes to this aim by taking action to
deter fraud and to regulate the market. We investigate and
prosecute a range of offences, primarily relating to personal or
company insolvencies. Further information about the work of the
Criminal Investigations and Prosecutions team is available at http://www.bis.gov.uk/policies/business-law/criminal-investigations
10. Media Enquiries should be directed to:
Kathryn
Montague, Media Relations Manager on 020 7674 6910 or Ade Daramy,
Press Officer on 020 7596 6187
Ins12/Coms/034
Contacts:
Ade Daramy
Phone: 020 7596 6187
ade.daramy@insolvency.gsi.gov.uk