Fraudulent Trading

‘Winding up’ a company means that the company has begun selling off assets and paying off debts in preparation for liquidation. If a company continues with business as usual with the intent of defrauding its creditors, fraudulent trading occurs. Fraudulent trading is classed as serious fraud and is treated by the authorities as such. If you’re found guilty of fraudulent trading, you could be facing imprisonment, an unlimited fine, or both.

Different types of fraudulent trading include:

• Taking deposits for products, knowing the company will be unable to deliver.
• Long firm fraud: fraudsters start taking out small credit orders with wholesalers, and pay them back. Once they have gained a good credit rating, they purchase large orders. However, once they receive the goods they disappear and sell the goods on somewhere else.
• Short firm fraud: this is very similar to long firm fraud, but the business does not spend the time building up a credit history. Instead, they buy goods in bulk, on credit, and disappear after selling them on for cash.
• Phoenix company fraud: the directors of a bankrupt business start a different company that’s separate from the losses of the failed company. However, the fraud is committed when the directors illegally transfer the assets of the failing company for way below the market value. This means that the creditors are left without paying for anything they provided for the original company.

What should I do if I’ve been accused of fraudulent trading?

Due to fraudulent trading being seen as serious fraud, it’s vital that you seek professional legal advice if you’re accused of this crime, even if you’re innocent. The law when it comes to fraud is complex, so it’s essential that you hire a solicitor who has experience in handling these types of cases.

Here at DPT & Partners, our dedicated business services team works around the clock to ensure the best possible outcomes for our clients. For a confidential chat about your next steps, contact us today.