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Company wound up for corporate abuse in bogus advertising scam

February 19 2013

Following a recent investigation by Company Investigations of The Insolvency Service, Moth Communications Ltd, a Blackburn based telecommunications company has been wound-up on grounds of public interest by the High Court, Manchester District Service.

One of the main drivers of The Service’s enforcement regime is to clamp down on corporate abuse, regardless of whether this has been done by directors involved in companies which have become insolvent or by companies which are still trading. In this regard, they have the power to investigate limited companies where information received suggests serious misconduct, fraud, scams or sharp practice in the way the company operates.

Small business owners were contacted by the company demanding payment for overdue internet advertising fees that had not been incurred. The demands included threats that County Court judgements had been obtained and bailiffs were instructed to recover these debts.

The business owners who made payment for these alleged overdue invoices later discovered that they had no liability for the debt demanded by the company and in fact no County Court judgements had been entered against them. Moreover, when the company was challenged to send documentation evidencing the alleged debt, the company provided falsified invoices which pre-dated the existence of the company and contained terms and conditions copied from a legitimate company’s website.

During the course of the investigation it was found that amounts in excess of £370,000 were received by the company between December 2011 and October 2012, of which £338,000 had been withdrawn in cash immediately after receipt. No accounting records were provided by the company to explain these transactions. Subsequently, the court successfully applied for a winding up petition against the company and has stopped trading.

The Insolvency Service has stated that they will take firm action against companies and their directors who operate in this way, and have urged any small business owners who encounter similar tactics to seek immediate advice if not satisfied that the debt is genuine.

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