A Derby-based businessman has been jailed after illegally obtaining £80,000 in Covid support funding through the Bounce Back Loan Scheme and misusing the funds for personal share trading.
Temidola Ojelabi, 43, of Glossop Street, Derby, made two separate Bounce Back Loan applications for Platinum Gates Limited in 2020, despite the scheme strictly permitting only one loan per business, capped at a maximum of 25% of annual turnover.
In May 2020, Ojelabi secured a £35,000 loan after declaring a company turnover of £150,000. Within one week, £34,000 of the funds were transferred to his personal bank account, with £29,800 later moved to an online share dealing platform.
The following month, he made a second application for £45,000, claiming turnover of £180,000. All funds were transferred to his personal account within days.
The loan monies were not used to support the business during the pandemic, as required under the scheme, but were instead spent on online trading platforms.
Platinum Gates Limited, incorporated in October 2018 with Ojelabi as sole director, entered liquidation in May 2021 with both loans unpaid.
Ojelabi was sentenced to two years and four months’ imprisonment at Derby Crown Court on 10 December and has been disqualified as a company director for eight years. Recovery action is being pursued under the Proceeds of Crime Act 2002.
NPD Comment
This case highlights how poorly designed and inadequately controlled large parts of the COVID business rescue schemes were.
Bounce Back Loans were issued based on self-declared turnover, with no requirement for even basic verification. Requesting three months’ bank statements would have provided a reasonable indication of trading activity, yet this elementary safeguard was not applied.
The absence of any central loan registration mechanism meant there was no effective way to prevent multiple applications being made to different lenders — a flaw that was both foreseeable and avoidable.
Whilst we understand that the Government’s priority was to release funds quickly, these basic checks would have prevented a significant proportion of abuse without materially delaying support to legitimate businesses.
At last, it would appear enforcement is now accelerating, with unpaid COVID support loans increasingly subject to investigation. Further analysis will follow.
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