27/01/2012 15:13

Insolvency Service

Bankrupt jailed for six months for asset disposal

Mohammed Modhu, a bankrupt, has been sentenced to six months in prison by Luton Crown Court for removing £23,000 from his estate while undergoing bankruptcy proceedings, and failing to account for the same.

The case follows an investigation by The Insolvency Service and a criminal investigation and prosecution by the Department for Business Innovation and Skills (BIS).

Mr Modhu pleaded guilty to removing £23,000 from his account, which was part of the proceeds from the sale of a property to his brother, and for failing to account for the same. He was sentenced to six months' imprisonment for the removal and three months' imprisonment for the failure to account, to run concurrently. He was also ordered to pay £1,000 towards the costs of the prosecution.

Deputy Chief Investigations Officer Ian West from BIS said:

"This case is a clear indication of how seriously the courts take the actions of those who try to defraud their creditors and should be a warning to others."

Ins12/Coms/006

Notes
1. Mr Modhu of Luton was made bankrupt on 02 December 2008 upon the petition of Luton Borough Council for £7,140.65 for unpaid council tax.

2. As a bankrupt Mr Gordon was required by section 291 of the Insolvency Act 1986 to give the official receiver such inventory of his estate and such other information, and to attend on the official receiver at such times as the Official Receiver may reasonably require. This includes a duty to explain to the Official Receiver how pre-bankruptcy losses were incurred. It is a criminal offence to fail to provide a satisfactory explanation for losses to the Official Receiver. It is also an offence to remove property from your estate between the bankruptcy petition and the bankruptcy order, subject to the defence of having no intention to defraud or conceal

3. In sentencing Mr Modhu the judge, HHJ Kay QC, commented that Mr Modhu was someone who recognised the need to pay off debts owed, but preferred to pay friends rather than the council, showing a complete indifference to the bankruptcy petition.

4. The judge said that Mr Modhu had engaged in a persistent course of conduct that was thoroughly dishonest. He rejected the suggestion that the defendant's gambling addiction was such that he didn't recognise the need to pay off his debts, rather, the defendant had chosen not to pay, hidden his money, and lied for a long period about what he had done. He also said that the defendant's behaviour struck at the heart of bankruptcy proceedings.

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