Ex-golf course bosses banned

TWO directors of a West Lancashire-based company have been disqualified from being directors for a combined total of 19 years for duping investors in a golf course and hotel development in Portugal.

Christopher Smullen, 44, and Sam Keating, 54, bosses of Ormskirk company Worldwide Sports Investments Ltd, were barred for 13 years and six years respectively after 11 individuals made payments to it totalling £275,000 and administration fees of £2,145.

The disqualifications follow and investigation by the Official Receiver’s Public Interest Unit (North), part of the Insolvency Service.

It was proved in court that between July 23 2010 and February 4 2013, that Smullen caused WSI to mislead individuals over their investments into a hotel and golf course and caused the company to dissipate the funds which meant no investor received any benefit.

WSI used advertising and promotion literature claiming the project was endorsed by a prominent professional golfer which was untrue and for which it had no permission from the golfer or his agent.

The company’s marketing literature said that investors could expect fixed returns of 200% and WSI advertised that the investments were totally secure when in fact there was no security held by the company.

It indicated to potential investors that the investment opportunity was almost fully subscribed, when in fact only 11 of the 100 shares were apparently applied for, pressurising them into making a swift decision.

There was no evidence that investors received any benefit from their investment or that any investment was made on their behalf by WSI  or that the company had any agreement in place with the hotel and golf course to which its marketing literature referred.

Bank statement analysis indicated that Smullen caused investment monies to be used for his own personal expenses a total of £194,914 was used for gambling, resulting in net losses of £11,629 to WSI.

He failed to keep adequate accounting records as he was required to, meaning that it has not been possible to ascertain the full details of each of the investors who put money into WSI, determine whether any payments were due to HMRC for PAYE/NIC, or the reason for cash withdrawals totalling £51,777 from the account between May 20 2011 and April 23 2012.

It was also impossible to find out the reasons for sums paid from the bank account for items that do not appear to relate to legitimate business expenses, estimated to amount to at least £43,900, or if amounts paid by cheque totalling £72,856 were for legitimate business expenses.Keating gave an undertaking to the Secretary of State for Business, Innovation and Skills not to promote, manage, or be a director of a limited company for six years, from  September 17 2014.

He did not dispute that he abrogated his duties in relation to WSI by facilitating the dissipation of investment funds totalling at least £94,091 and not overseeing the use of the bank account to which he was the sole signatory to ensure money removed from it were for legitimate company expenditure and did not come from funds held on trust.

Keating signed at least seven blank cheques and passed them over to another director without determining what they would be used for.

The company was wound up by the court on February 4 2013 owing creditors and shareholders at least 278,201, following a petition by an investor owed £25,195.

Official Receiver Ken Beasley said: “Mr Smullen caused significant loss to people by causing Worldwide Sports Ltd to induce them to invest in a scheme which was not legitimate.

“It used images without consent; made claims as to assets held and the security of the investments which were not founded; and used the funds raised not for investments, but seemingly for his personal expenditure. In doing so, his conduct fell far below that expected of directors of a limited company.

“In failing to pay proper regard to the company’s affairs, Mr Keating, as a formally appointed director and the sole signatory to the bank account, failed to discharge his responsibilities to the company and its creditors.

“The Insolvency Service has strong enforcement powers and we will not hesitate to use them to remove dishonest or reckless directors from the business environment as shown in this case.”