POCA based on Director Preference

POCA based on Director PreferenceThe Defendant was convicted of an offence relating to the Fraudulently Removing of Property from a company where he was the sole director. The sum withdrawn from the company was £230,000 which it is claimed was done within 12 months to the company being liquidated and to which he was not entitled.

He faced confiscation proceedings under the Proceeds of Crime Act 2002. The Prosecution set out the total benefits at £255,000 in their S16 statement which included an adjustment for the value of money of £25,000.

The team at Frenkels Forensics presented several alternative calculations of benefits on behalf of the Defendant in order to reduce the Prosecution’s figure.

We first of all pointed out that although the Defendant had withdrawn the amount of £230,000, he had not personally benefitted since he had used approximately £200,000 of it to meet outstanding staff wages and other creditors. He had only personally benefitted in the sum of £30,000.

We showed as an alternative that even had the Defendant not drawn out the £230,000, the company would have still needed to be wound up and assets distributed to its creditors (there were no preferential creditors) of which the Defendant was one where he was owed £90,000 on his director’s loan account. We argued that in these circumstances the Defendant would have received a sum in the liquidation as a creditor of the company in any event and allowance should be made for this in the calculation of benefit.

Finally, we pointed out that according to filing at Companies House, at the time the Defendant withdrew the money he was only a 50% shareholder in the company with another individual holding the other 50% of the shares in the company. This meant that since, the amounts were withdrawn mainly for company expenditure such as staff costs rather than for himself, any amount of benefit assessed should be shared between the two shareholders with the Defendant’s benefit assessed at a maximum of 50% of the amount withdrawn.

The case was settled in court via negotiation in which we took part. The benefit figure was agreed at a lower sum of £75,000 including the value of money adjustment.

Our client was delighted that he was able to retain the majority of his assets that were at risk had the Prosecution’s benefit figure been unchallenged.

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