Members of the business community are often understandably focused on day-to-day management and leave bookkeeping to others. However, one case in which an entrepreneur was ripped off for hundreds of thousands of pounds by a man who claimed to be a qualified accountant shows how careful you need to be.
Having started out as a van driver, the entrepreneur had established a newspaper delivery business which turned over £7 million a year. However, his time was short and he paid a man £30,000 a year to manage the books. Over a five-year period, the man, who claimed to be an accountant, siphoned off large sums of money from the business into a bank account controlled by him.
The entrepreneur had believed that his business was only just about breaking even and the truth about the missing money only emerged when its accounts were forensically analysed during his divorce. Despite the man’s denial of any wrongdoing, the Court found him a deeply unsatisfactory witness who had taken far more from the business than he was contractually entitled to.
In abusing his control of the business’s bank account, he had violated his fiduciary duty and fraudulently misappropriated the missing funds. He had received those sums as a constructive trustee for the entrepreneur. In the circumstances, he was ordered to pay the entrepreneur a total of almost £730,000.