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Beware New Company Fraudster Tactics
 As
a small business owner, you are probably
aware of the increasing number of fraudsters
targeting SME’s. While you may be aware of
telephone and mail scams, you also need to
look out for a fraud tactic that you might
not be aware of.
Business advisors Grant Thornton are warning
of a growing number of fraudsters disguised
as white knights (An investor or company who
takes over a business in financial
difficulty with the aim of rebuilding it).
The fraudsters buy up a controlling stake of
a business in financial trouble; but instead
of rebuilding the business, they strip it of
assets and attract as much credit as
possible. Once they have a tidy profit they
disappear, leaving the business, creditors
and other shareholders with nothing.
One of the reasons behind the growth of this
type of fraud is that cases are rarely
investigated. Nick Wood of Grant Thornton
says "Once a company is stripped bare of its
assets there are no assets remaining to
allow an insolvency practitioner to
investigate and pursue the fraudsters. In
essence, creditors are usually reluctant to
fund insolvency practitioners in an
investigation to avoid throwing good money
after bad, leaving the Insolvency Service to
deal with the matter",
Another reason why you need to watch out for
this kind of fraud is that even if you sell
the business (or a large stake in it) in
good faith, you could still find yourself
legally responsible for the debt and conduct
of the company after you have left. In some
cases, the directors’ names are not changed,
and this would leave you legally responsible
for the business even if technically you
have nothing more to do with the company.
There are three ways that you can help to
ensure your business avoids this type of
fraud:
By regularly checking your company’s
listings on the Companies House website you
can discover any changes being made to the
structure or activities of the company.
Signing up to the ‘monitor’ service offered
by Companies House means that you are
notified by email of any documents being
filed for the company. This service is very
useful and currently costs less than a pound
per company per year.
The web filing service offered by Companies
House helps to prevent fraudulent filing of
documents. It means that a security code and
authorisation code are needed to make
changes to the company’s registered office
or director listings.
Although this type of scam can potentially
cause a lot of damage to your business, you
should remember that it is only a tiny
proportion of investors. By being sensible
and checking the history of someone looking
to buy into your business, you can hugely
reduce the risk of this type of fraud taking
place. By regularly checking and increasing
security on your details, you can make it
much harder for company fraud to take place
and prevent yourself from ending up legally
responsible if caught out.
Visit Companies House website here.
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