Bounce Back Loan fraud is a form of corporate fraud. It arose during the Covid-19 pandemic as the government introduced emergency measures to support businesses impacted by the crisis. Along with furlough fraud, Bounce Back Loan fraud arose from both opportunistic and organised sources.
In this article, we’re taking a look at Bounce Back Loan fraud investigations and sentencing
What Was the Bounce Back Loan Scheme?
The Bounce Back Loan Scheme was announced on 27th April 2020 and formally launched one week later; over the course of 15 months, the scheme paid out £47bn to 1.6 million recipients. While banks would usually employ stringent credit checks, they were prohibited from doing these credit checks as the priority was getting the money into the economy.
There were some criteria for eligibility – borrowers had to confirm that they were:
- Based in the UK
- Affected by the Covid-19 crisis
- In business as of 1st March 2020
- Not insolvent as of 1st December 2019
However, it was down to the borrower to certify that they met these criteria. Speed was prioritised over caution. This left the scheme very open to Bounce Back Loan fraud, and both individual and organised fraudsters did target it.
Why Am I Being Investigated for Bounce Back Loan Fraud?
If you or your business are accused, the investigation into Bounce Back Loan fraud will centre around whether you claimed the money legitimately and whether or not the funds were used appropriately.
Some of the reasons you may be investigated for Bounce Back Loan fraud include:
- Applying for a loan through false representation, such as creating a fake business for the purpose of applying or impersonating a legitimate claimant.
- Making a false application by falsifying information to claim more money.
- Applying to several different lenders for a Bounce Back Loan.
- Inappropriate use of funds – some Bounce Back Loan fraud investigations have targeted fraudsters who used the funds for luxury cars, engagement rings and flying lessons. Some also funnelled ‘redundancy pay’ to friends and family who were not employed by the business.
Given the urgency with which the scheme was ushered in, there is also a very real possibility of businesses simply making mistakes with no malicious intent. As such, Bounce Back Loan fraud investigators will also consider any mitigating factors, such as whether the individual or business returned (or attempted to return) any overpayment, how much was fraudulently claimed and if there has been significant dishonesty.
Bounce Back Loan Fraud Cases
As more cases come to light, the true scope of Bounce Back Loan fraud remains to be seen. From the Insolvency Service’s register of disqualified directors, there are cases of Bounce Back Loan sentences including disqualifications of 12 years or more, from overstated turnovers to applying from ineligible businesses.
One ex-counsellor from Wolverhampton used his professional experience of implementing the Bounce Back Loan system in order to cheat it, applying for £10,000 for a non-existent pizza restaurant.
Bounce Back Loan Scheme Sentences
The sentences for Bounce Back Loan fraud may involve:
- Orders to pay back the borrowed sum
- Disqualification for directors
- Civil penalties
While the government does not expect to be able to recover all of the misappropriated funding, it is conducting investigations into Bounce Back Loan fraud where it is reported or spotted. With this in mind, the government has created a Taxpayer Protection Taskforce (TPT) to recover any fraudulent payments from the Covid-19 loan schemes. You can learn more about the TPT and furlough fraud on our blog.
How Can St Pauls Chambers Help?
If you or your client has been accused of Bounce Back Loan fraud or is currently under investigation for Bounce Back Loan fraud, St Pauls Chambers’ highly-qualified fraud team can help. Our fraud barristers are renowned and experienced for their work in defending and prosecuting many different types of fraud cases, including allegations of serious fraud and financial misconduct. Please get in touch today for more information.