December 12 2013 Latest news:
By Matthew Stott
Thursday, January 31, 2013
A MAN who lost £1.2million belonging to more than 300 British soldiers after his forces lettings agency went bankrupt has been disqualified for nine years.
Paul Smith, 47, of Manningtree, was director of Blue Force Property, a Hornchurch-based letting agency which helped members of the forces let out properties while serving.
But when his company went into liquidation in March 2011, there was a £1.2m gap in the books – all owed to Armed Forces personnel.
The Insolvency Service investigation found there was inadequate ring-fencing of the business accounts held by Mr Smith, who will not act as a director of a limited company until February 11, 2022.
David Brooks, a chief examiner for the Insolvency Service, said: “Many of the people who lost out as a result of this company’s demise were stationed overseas and had no choice but to trust Blue Force to look after their affairs on their behalf.
“This trust was broken and the money – money that many of them had risked their lives to earn – was lost.”
Blue Force Property was set up in 2004 exclusively for clients from the forces. It assisted them in buying residential properties and letting them out while they were serving overseas or living in Armed Forces accommodation.
The company managed these lettings, collecting rents and encouraging its customers to pay into property management accounts which were supposedly set up for each client individually, from where the mortgage, bills and expenses for their property would be paid.
Mr Smith and his staff repeatedly assured the soldiers that any surplus funds they paid in would be held securely in a ring-fenced account.
But in reality, all of the money went into one central client account from where thousands of property-related payments were made.
The company then moved funds from this client account into its own trading account and also to the accounts of an associated company.
These transactions meant that when the firm went into liquidation, the soldiers lost their money.
Mr Brooks added: “Directors who seek to gain an unfair advantage over their competitors by using clients’ funds to prop up their own accounts will be investigated.
“The Insolvency Service will seek to remove these people from the business environment.”