Partners in a failed home hot tub firm that went down with debts of £2.7 million took more than a million pounds out of the business for themselves, fraud trial jurors heard.
An expert accountant called by the prosecution to assess Staffordshire-based Spaserve’s three and a half years of trading concluded that the partners were having money the business could not afford.
Two of the partners, principal shareholder Simon Foster and Stuart Cox are on trial accused of fraudulent trading and conspiracy to defraud. With them in the dock is general manager Johnathon Husselbee. They all deny the charges.
Stafford crown court has heard that only one year’s accounts were compiled for Spaserve, it’s first year in business, when it made a trading loss of £60,000 and by the end of the 12 months had liabilities totalling over £450,000.
Accountant Mr Alan Hodson told the jury there was no proper paperwork except bank statements to work out what happened after the first year.
Including payments that could not be accounted for, Mr Hodson estimated that Foster and his wife Katie, a fellow partner in Spaserve who is NOT on trial, could have had £2 million. It had been agreed that the minimum amount of money they had was £903,000.
“It was far more than the partnership could afford,” said Mr Hodson. “Even if that one million had been repaid, it would still leave £1.7 million deficiency over the partnership’s trading life.”
The figure for Cox’s drawings was put at £309,000, but Husselbee, as a paid employee was in a different category. Over the life of the firm, he received £110,000 in wages after tax.
Spaserve’s bank account revealed that over £700,000 worth of cheques were written out to unknown recipients.
Mr Hodson also examined expenditure claimed as “advertising” in Spaserve’s first year of trading. It included payments on an American Express card in Mrs Foster’s name to Seaworld, Disneyworld, Supercenter, Timberland and a gas (petrol) company, all in Florida, USA. “They don’t appear to be spent on advertising,” he told the jury.
Errors in Spaserve’s accounting methods revealed £330,000 underpayments of VAT over the life of the partnership.
Mr Adrian Keeling QC, prosecuting, asked Mr Hodson: “Are you able to say whether, in any given trading year, the partnership traded at a profit?”
“It is highly unlikely it was trading at a profit at any time,” the accountant replied.
The prosecution at Stafford crown court alleges the defendants used the company as a “cash cow” to feather their own nests, spending money on themselves, with lavish lifestyles, expensive cars and holidays instead of fulfilling all their orders. It’s also claimed that customers were misled in to believing they were buying American-made hot tubs when they were manufactured in Asia.
Simon Foster, aged 48, of Sandfield Meadow, Lichfield; Cox, aged 49, of Oak Way, Sutton Coldfield and Husselbee aged 36, of High Street, Dosthill, Tamworth deny all charges.
The trial is continuing.
A former soldier who had both legs blown off in Afghanistan told fraud trial jurors how he lost £7,000 ordering a hot tub from a company which went bust.
Wheelchair-bound Tyler Christopher (correct) and another injured colleague had been told that a hot-tub would help their rehabilitation.
Mr Christopher ordered one over the internet, paying a £3,500 half-share and was promised that the product would be installed in time for the 2010 World Cup.
He said a representative from the company told him “the sooner you pay the next part, the sooner you would get delivery.”
His injured colleague was unable to fund the other half immediately, so Mr Christopher paid it on his behalf.
“I paid the rest of the money. I was told [the hot tub] was either at the docks or sitting in a container – I had a few excuses,” Mr Christopher told Stafford crown court.
But the World Cup came and went and the hot tub failed to arrive. He contacted the company at least five or six times. “The last time I spoke to them, they said it was going to be another eight weeks – it’s on its way, it’s sitting in a container, it’s travelling from somewhere else before it gets over here.”In October 2010 he found out the company had gone bankrupt.
Mr Adrian Keeling QC, prosecuting, asked him: “You realised you weren’t going to get your hot tub or your money from the business?” “That’s right,” he replied, however he added that the Help for Heroes charity had stepped in to provide him with a hot tub.
The 27 year-old lance corporal with the The Rifles was injured by an improvised bomb in Afghanistan in 2009. As a result, he had both legs amputated above the knee, as well as nearly losing his arm and suffering abdominal injuries.
Mr Christopher was giving evidence in the trial of three bosses of Staffordshire-based Spaserve, who are accused of fraudulent trading and conspiracy to defraud.
The prosecution alleges they used the company as a “cash cow” to feather their own nests, demanding payment up front from customers for hot tubs. But instead of using the cash to fulfil all their orders, the bosses spent money on themselves, with lavish lifestyles, expensive cars and holidays. It’s claimed that customers were misled in to believing they were buying American-made hot tubs when they were manufactured in Asia and there was a clause in the purchase contracts giving an open-ended date for delivery.
Principal shareholder Simon Foster, aged 48, of Sandfield Meadow, Lichfield, Stuart Cox, aged 49, of Oak Way, Sutton Coldfield, a partner in the business and office manager Johnathan Husselbee aged 36, of High Street, Dosthill, Tamworth all deny both charges.
The trial is continuing.