Investment director jailed after “misappropriating” £800,000
A Doncaster-based director has been jailed for 8.5 years and banned from holding a company directorship for 10 years after “misappropriating” £800,000 of a client’s money.
Stewart Mark Groves, 37, set up Rapid Finance in August 2013 to make investments on behalf of a single investor.
With an initial investment of £500,000, Groves of Bawtry, Doncaster, managed the company under a shareholder and loan agreement.
Following petitions from the sole investor, the Insolvency Service investigated and found that instead of making legitimate investments, Groves transferred a “significant” sum to his own accounts.
More than £700,000 of the £800,000 transferred to the “investment” company was later transferred to accounts belonging to Groves and connected parties. The investor remained unaware.
The Insolvency Service said that to cover his tracks, Groves delivered false reports to the investor.
They included falsified bank statements and accounts – hoodwinking the investor into thinking Groves was investing the money entrusted to him as agreed. A further £300,000 was then invested.
A court ordered the company to be wound up in September 2015.
A separate criminal investigation into Groves by the South Yorkshire Police found him guilty of fraud by misrepresentation. He received an 8.5 year prison term.
Groves was given a disqualification order by Deputy District Judge Cooper at a County Court in Lincoln in March 2018. As part of the order, he is banned from holding a directorship, or being involved in the promotion, formation or management of a company for 10 years from 17 April 2018.
Leonard Curtis were appointed as liquidators of the company following the winding up order. A report filed in January 2019 by the liquidators said that the investor, listed as an unsecured creditor, had a claim of £827,564.
They said they were “uncertain” as to whether the liquidation would release enough funds to cover this claim.
It also revealed that at a final court hearing on 18 May 2017, it was ordered that a judgement be made against the director’s wife for the total amount of payments she had received from the company, plus interest and the liquidators costs.
It said that no payments were made by the deadline, and so a charging order was made against his wife’s 11 properties. Five of the 11 properties were sold at auction.
Gerard O’Hare, chief investigator for the Insolvency Service, said: “Stewart Groves intentionally misled the company’s sole investor into believing his funds were being invested securely and the false reports supplied even lead to more money being provided.
“This behaviour will not be tolerated and this ban should serve as a warning to other directors tempted to act in a similar way that they have a duty to act in the best interests of the company – not themselves.”