The former owner of a failed fast-food pizza takeaway has been jailed over a £20,000 Covid-19 loan fraud. The Insolvency Service said the case of Abdulrazag Zagroba, 54, from Old Trafford, was the first successful criminal prosecution of a ‘bounce back’ loan fraudster in the country.
The Government’s Bounce Back Loan Scheme was launched to enable smaller businesses to access finance more quickly during the coronavirus pandemic. It closed to new applications and top-up applications in March last year.
Zagroba, of Rosslyn Road, Old Trafford, applied for a £20,000 loan two weeks after his application to dissolve his company, Stretford-based Amigo Pizza (Manchester) Ltd, was signed, a court heard.
Speaking after the case, the Insolvency Service said Zagroba did not disclose to the bank that the company was already in the process of being dissolved and signed the loan declaration stating the company would be able to make repayments. By the time the loan was due to be repaid, in June 2021, the company had already been dissolved.
The terms of the loan were clear that funds ‘could only be used for business purposes and not personal use’, added the Insolvency Service. But bosses said that when interviewed under caution by investigators, Zagroba admitted to having ‘no intention’ of using the payment for the business.
They said he claimed he arranged for friends to travel with around £14,000 in cash to give to his family abroad and used the remaining £6,000 to buy and insure a car.
Julie Barnes, Chief Investigator at the Insolvency Service said: “Covid loans were designed to support viable businesses during the pandemic. Abdulrazag Zagroba, however, cynically sought to exploit the covid loan scheme and by dissolving his company, he intended to frustrate any attempt by the lender from taking action to recover the outstanding loan.
“This sentence should serve as a warning to others who engaged in this behaviour, and they should come clean and repay the money before it is too late.”
Zagroba was sentenced by Judge Recorder Abigail Hudson last Friday. He pleaded guilty at an earlier hearing to charges of fraudulently claiming Covid-19 financial support to which he was not entitled contrary to the Companies Act 2006 and the Fraud Act 2006 and was jailed for two years.
The Insolvency Service said in a statement: “This was the first successful criminal prosecution of a bounce back loan fraudster for the Insolvency Service, which also saw Abdulrazag Zagroba disqualified from acting as a director for seven years.
“The court heard that Zagroba was sole director of Amigo Pizza (Manchester) Ltd, incorporated in January 2020. The company operated a pizza takeaway business in the Stretford area of Manchester until it was dissolved in October the same year. Zagroba’s application to dissolve the company was originally signed on 17 June 2020 but less than two weeks later, he applied for a Bounce Back Loan of £20,000.
“Zagroba did not disclose to the bank that the company was already in the process of being dissolved and he signed the loan declaration stating the company would be able to make repayments. By the time the loan was due to be repaid in June 2021, the company had already been dissolved.”
Three loan-guarantee schemes for businesses were launched by the Government in response to the pandemic – the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS) and the Bounce Back Loan Scheme (BBLS).
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