Twelve convicted over £2.4m Covid grant fraud

Twelve members of an organised crime group have been convicted of fraudulently claiming more than £2.4 million of Covid-19 support money, following an investigation by Birmingham City Council.

The group, from Birmingham, Walsall and Yorkshire, used companies that were not trading and stolen identities to make hundreds of fraudulent claims for Covid grants, Bounce Back Loans and HM Revenue and Customs support payments.

Two trials

The men appeared at Birmingham Crown Court in two trials, split because of the number of defendants. Each either pleaded guilty or was convicted after trial of offences including conspiracy to defraud and money laundering. They will be sentenced at a later date.

How the fraud worked

The court heard that the group became directors of companies that were not trading, or used stolen identities, to make fraudulent applications. They opened multiple bank accounts and paid other people to use theirs, before laundering the money through many accounts and moving it out of the country through accounts in the Netherlands and the United Arab Emirates.

They made fraudulent applications for at least 53 Small Business Grant Fund payments worth more than £530,000, from five different councils. They obtained more than £530,000 through HMRC self-assessment and Eat Out to Help Out payments, and at least 26 Bounce Back Loans totalling more than £1.3 million from seven banks.

In all, the group used more than 50 companies and over 100 bank accounts.

"A sophisticated and sustained attack"

Prosecuting for the council, Mark Jackson and Lucinda Wilmott-Lascelles said the group was responsible for "a very well-planned, sophisticated and sustained attack upon the financial support measures put in place by the UK government to try to support businesses and individuals struggling during and as a result of the Covid 19 pandemic".

A long investigation

The council's Trading Standards service began investigating in 2020, initially into the organised obtaining of Small Business Grant Fund payments. As the investigation went on, evidence emerged that the defendants were working as part of an organised crime group. The police supported the investigation.

"Wicked crimes"

Councillor Sam Forsyth, chair of the council's licensing and public protection committee, said: "These were wicked crimes during a national emergency. Across the country people were suffering during the pandemic but most people were determined to help each other. However, these men saw an opportunity to fraudulently make money, taking funds from the public purse."

"These convictions should make absolutely clear that if you behave like this you will be caught and face the consequences of your actions."

Council leader John Cotton said: "To attempt to defraud the taxpayer, and potentially deprive others of vital funds, during a global pandemic is an abhorrent crime."

Pandemic support

During the pandemic, the government set up a range of schemes to help businesses survive, many of them paid out quickly with limited checks so that money could reach firms before they went under. Councils paid out billions of pounds in grants on the government's behalf, and Birmingham alone processed hundreds of millions of pounds in payments.

Fraud against the schemes has since been estimated to have cost the public purse billions nationally, and councils and other agencies continue to pursue those who took advantage.