A Liverpool business owner undertook a “cynical, deliberate and prolonged effort” to hide account documents, a court has heard.
Lee Spencer, 42, of Kingsthorne Park, Hunts Cross, who was once associated with a group of property companies, was initially charged with six offences, but after a trial was only found guilty of two. He was found guilty of failing to preserve company accounting records, and misconduct in the course of winding up, by failing to deliver all books and papers belonging to the company to the liquidator.
Spencer was found not guilty of one count of failing to keep proper accounting records in accordance with S386 of the Companies Act, one count of being an officer making a gift or transfer of charge on a property in liquidation. He was also found not guilty of two counts of fraudulently removing property from a company before it was wound up.
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James Rae, prosecuting, detailed that the offences arose out of the winding up of Spencer’s company, UK Marketing Survey Services Limited, which had been active in the Claims Management business. It was incorporated by Spencer in November 2011, and he was the only shareholder and appointed himself as the only Director until June 30, 2013, when he resigned.
Mr Rae said: “On 1 July 2013, a Mr Robert Bilsborough, who the Crown described as the Patsy from Pansy Street, from his address at 22 Pansy Street, in Kirkdale was registered as being both the owner of the shares and the new Director of the company although, very significantly the prosecution say, he never became a signatory for the company’s bank account, which was closed on 14 October 2013 with no money in it.”
The winding up of the company had been initiated by HMRC in respect of an outstanding debt of £127,149.92 of unpaid income tax. Mr Rae also detailed that Spencer admitted when giving evidence that he remained as the shadow director, and engaged the services of Mr Bilsborough again to pursue an application to stay as director.
However this was not pursued further after the District Judge requested evidence of accounting records and payment of £273,644.57. Mr Rae said: “While the defendant may regard himself as hard done by and express self pity about the ultimate cost of the liquidation proceedings, he brought upon himself the liquidators costs and expenses by failing to resolve matters at that time.”
Mr Rae also reminded the court that Spencer ran his own accountancy business for many years, and was trained to do so. Mr Rae detailed that Spencer claimed he had given the documents to Mr Bilsborough to pass along, and said they were accurate records, but did not offer any evidence of those to the court.
He referenced the “hapless Mr Bilsborough” and said Spencer claimed to have delivered the company’s books to “some woman he took to be his mother”. Mr Rae described the hiding of documents as “deliberate acts designed to frustrate the protections” offered by the Companies Act.
Mr Rae said: “In the Crown’s submission the disregard of these provisions should not be considered as a disregard of inconvenient administrative requirements but rather deliberate acts to frustrate those protections.” He explained that Spencer was banned from being a company director for nine years in 2016, by a disqualification order made in September 2016.
After trial, Spencer was found not guilty of one count of failing to keep proper accounting records in accordance with S386 of the Companies Act, one count of being an officer making a gift or transfer of charge on a property in liquidation. He was also found not guilty of two counts of fraudulently removing property from a company before it was wound up.
Steven Ball, defending, said he hoped that the court would view this misconduct in comparison with the good work he did to try and rectify his mistakes. He said: “I want to make clear that there is no suggestion that my client feels he has been hard done by.
“He couldn’t raise the money to meet the court order and all of this has come at a large financial cost to the defendant.” Mr Ball said these offences took place when the defendant was younger in a “manic period where he took on too much and tried to spin too many plates”.
Judge Garrett Byrne detailed that there is a statutory requirement to keep records for three years, and that Spencer failed to do this. He said: “When the company was being wound up you did not deliver the books, you said you did all you could to give them to Mr Bilsborough.
“I am satisfied that you did not hand any documents to him at all.” The Judge described a “cynical, deliberate and prolonged effort to keep the documents away from any scrutiny”.
Judge Byrne said Mr Bilsborough was “nothing but a man of straw”, adding that “he was just your cover”, as Spencer stayed in charge as a shadow director. He said: “You never intended for the liquidator to see any of your records.
“I am satisfied that you knew perfectly well what you were doing and you deliberately set out to frustrate the process.” Spencer was sentenced to 24 months imprisonment, suspended for two years, and ordered to complete 180 hours of unpaid work in the community.
He was further disqualified from being the director of any company for eight years, which will take effect 21 days from today and was ordered to pay £8,000 in prosecution costs.
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