Prison sentence for husband and wife directors who diverted company funds

The former directors, who are husband and wife, of two West Midlands businesses have been handed a prison sentence for diverting company funds to themselves.

Rodney Wallace, a former director of Avalon Personnel, which had its registered office in Smethwick, was sentenced to 27 months imprisonment on July 18 at Birmingham Crown Court, while his wife Pauline Wallace, former director of Curio Bridal Boutique, also based in Smethwick, received a sentence of ten months suspended for two years after pleading guilty on the first day of their trial in October 2016.

Their case had been adjourned for a Newton Hearing in order to determine the extent of self enrichment from the fraud committed by Rodney Wallace.

Both defendants had accepted that they had made false representations to the High Court in order to secure a validation order enabling them to access funds in a frozen company bank account.

Thereafter, Rodney Wallace committed fraud in anticipation of the winding up of the same company by diverting £111,000 to a phoenix company. He also accepted that he and his family had received at least £42,000 of those diverted funds arising from his dishonest scheme.

His diversion fraud attracted a consecutive sentence. Rodney Wallace had also failed to deliver up the books of the company.

The convictions follow an investigation and prosecution by the Insolvency Service, an executive agency of the Department for Business Energy & Industrial Strategy (BEIS).

Rodney Wallace had already been disqualified from acting as a director in February 2014 for nine years.

Deputy chief investigation officer Glenn Wicks, the officer in charge of the investigation, said: “This couple made a false representation to the High Court and also created a phoenix company to continue trading. Their actions showed a total disregard to not only the judicial process but to their creditors. The sentence imposed on the two shows that anyone who is prepared to break the law during the liquidation of a company will be dealt with seriously.”

Avalon Personnel was placed into voluntary liquidation in July 2011 and Curio Bridal Boutique in November 2012.