Healthcare business embroiled in major scam wins £1m High Court battle

A Huddersfield employment agency has won a £1m High Court battle after unravelling a tangle of fraud, lies and deception by a former director.

Keystone Healthcare Ltd, which provides nursing recruitment to the NHS across the UK, discovered that former director and shareholder Colin Parr had masterminded a scam to deposit a percentage of agency workers’ income into a bogus account to benefit himself and former IT consultant Mark Reynard.

Keystone appointed Leeds-based FrontRow Legal when the payroll fraud was discovered.

The scam had been running since April 2014, when Parr voluntarily left Keystone in September 2014, after receiving a £1.2m payout.

It emerged that more than £128,000 had been amassed in the bogus account.

Following the discovery, FrontRow Legal succeeded with a summary judgment application for £128,000 against Parr, in February 2017.

It later emerged that Parr went on to set up Medipro Recruitment Ltd in order to compete with Keystone, breaking his restrictive covenants agreement following his voluntary departure in 2014.

FrontRow Legal successfully argued that Parr had breached his fiduciary duties using money stolen from Keystone to set up and operate the rival business.

The case was heard over ten days at Manchester High Court where Parr was found liable to the sum of more than £650,000 in June 2018, with costs, interest and damages to be assessed.

Richard Cramer, partner at FrontRow Legal, said: “We are extremely happy with the result for Keystone Healthcare which has been a culmination of two years’ hard work to uphold the reputation it has worked incredibly hard to achieve.

“As the trial progressed, more and more evidence was uncovered including fraudulent expenses, invoices and database infringement. The settlement awarded by the Judge reflects the serious nature of the fraud and deception against Keystone and we’re delighted with the result. We look forward to putting an end to the matter when further damages are awarded in the summer.”

Robina Hussein, partner at FrontRow Legal, said: “The case examines the line between setting up in competition after resigning as a director and the situation where liability will be incurred. In this case, it was crystal clear that the competing business had been set up in a way that clearly breached the restrictive covenants, signed by Mr Parr.

“It’s extremely rare for a case like this to go all the way to the High Court. A lot of time and work could have been avoided had Mr Parr cooperated at the start and throughout the process.”

“Martin Budworth, commercial barrister at Kings Chambers acted for Keystone on the case throughout.

He said: “Our client was successful in proving that the director resigned with a view to diverting the benefit of Keystone’s existing business contacts. The case demonstrates that directors can have an ongoing duty to their company continuing long after termination, because if the director’s exit from a business was influenced by a desire to exploit business opportunities, then the director can be found liable for the company’s arguable losses.”