Business fraudsters who used a loophole in company credit checks to con £1.4 million worth of goods from nationwide firms have been jailed.
The conspirators filed false accounts to give their business an aura of legitimacy allowing them to order a diverse range goods on credit. But once the shipments were delivered to the gang’s phoney business front at an industrial unit in Tyseley, Birmingham, they disappeared.
Over a four-month period from February 2005 they ordered goods such as mobile phones, luxury cars, alcohol and steel totalling £1.4 million from well-known firms and small businesses, in a so-called ‘long firm fraud’. Credit reference agencies became suspicious and alerted police. West Midlands Police Economic Crime Unit officers swooped on a warehouse in Leicester and recovered £300,000 of property.
Karamjit Sagoo, formerly of Mount Pleasant, Kings Heath, Birmingham, now of Shepton Mallet, Somerset, Wasim Rajput, of Brook Lane, Billesley, Birmingham, Mitesh Sanghani, of Wakerley Road, Evington, Leicestershire, and Michael Fields, of Charlotte Street, Brighton, were last week convicted of conspiracy to defraud following a trial at Birmingham Crown Court. Sagoo, 45, Sanghani, 32, and Fields, 30, were jailed for five years and banned from being a company director for ten years for their part in the conspiracy.
Police have launched an investigation into the mens’ finances.
Rajput, 33, was jailed for two-and-a-half years and disqualified from directorship for five years.
Sentencing the men, His Honour Judge Peter Carr said: “This case struck at the very heart of the way business operates and it undermines the whole system of trust that must exist between those ordering and those supplying.
“Without credit, business cannot operate. It is even more important these days with the economic climate becoming exceeding difficult and many peoples’ jobs depending on their company’s ability to survive the current economic downturn.”
The fraudsters used an off-the shelf business originally purchased by Kenyan-born businessmen Sagoo, a married father of two, in 1999 and operated legitimately until 2004 as a front for the fraud.
They exploited a loophole in the system to file false accounts for the new firm Mercury Distribution Ltd showing a five-fold growth and assets worth £1 million.
The false accounts meant they were given “glowing reports” when suppliers they wanted to order from checked their credit status through reference agencies.
As a result they ordered tens of thousands of pounds of goods on credit. As well as taking part in £150,000 of fraud, Rajput had agreed to use his wholesale business to provide false references for the gang.
More than 40 companies supplied Mercury - Orange were left with a £190,000 debt and Vodafone lost £172,000.
The fraudsters also got their hands on seven luxury cars, including four Mercedes, one worth £75,000, and a £42,000 Porsche Cayenne, leaving the leasing company out of pocket by £200,000.Another firm supplying snacks lost £30,000 and had to lay off two sales reps. Derek Fern, Birmingham-based national accounts manager for fruit juice makers and distributors Multiple Marketing Ltd, said they lost £6,000 on an order the fraudsters placed at a food and drink exhibition. He said: “As a company you do the best you possibly can to check these people out. They were determined to defraud as many companies as possible.”
Francis Sheriden, defending dad-of-two Rajput, said he had closed his own “valuable and successful” firm because his parents would not allow him to sell it.
Det Chief Insp Simon Wallis, from the Economic Crime Unit said: “This is far from a victimless crime and without our intervention and recovery of property, a number of firms could have gone out of business.
“The gang were organised and sophisticated, and the verdict demonstrates our ability to tackle serious and organised crime.”