A Birmingham man has been handed a suspended prison sentence after falsely claiming government-backed COVID-19 financial support for a company that investigators say never carried out any genuine business activity.
Authorities found that the money, intended to help struggling businesses survive the pandemic, was instead diverted to settle his personal financial obligations.
The Insolvency Service is now taking steps to recover the fraudulently obtained funds.
False Business Claims Led to Government Loan Approval
Faruk Chowdhury secured financial assistance through the UK’s Bounce Back Loan Scheme by claiming his company, Learn & Earn Ltd, generated an annual turnover of £150,000.
Based on that declaration, he received an initial £35,000 loan in December 2020 before successfully applying for an additional £2,500 top-up two months later.
Investigators later established that the company had no evidence of legitimate trading either before or after the funding was approved, making the claims used to obtain the loans entirely false.
Loan Money Quickly Moved Into Personal Accounts
Financial records revealed that shortly after receiving the government-backed loan, Chowdhury transferred the majority of the money into his personal bank account.
Around £25,000 was moved within days, while the remaining £10,000 followed shortly afterward.
The additional £2,500 top-up loan was also transferred to his personal account almost immediately after it was paid out.
Authorities concluded that the funds were not used to support business operations as required under the scheme but instead went toward clearing his personal debts.
Court Hands Down Suspended Prison Sentence
Appearing before Birmingham Crown Court on 28 July, the 45-year-old was sentenced to 22 months in prison, suspended for two years.
In addition to the suspended sentence, the court ordered him to complete 250 hours of unpaid community work.
The conviction follows an investigation by the Insolvency Service into misuse of taxpayer-funded pandemic support.
Insolvency Service Condemns Abuse of Pandemic Support
David Snasdell, Chief Investigator at the Insolvency Service, said Chowdhury deliberately exploited a financial support program created to help genuine businesses survive the economic impact of COVID-19.
He said the defendant knowingly made false declarations about his company’s financial position and intended use of the funds, while planning to use the money to resolve personal financial problems instead of supporting legitimate commercial activity.
Snasdell added that fraud against emergency government support schemes damages public confidence and reaffirmed the agency’s commitment to pursuing offenders and recovering stolen public money.
Investigation Found No Evidence of Genuine Trading
Learn & Earn Ltd was incorporated in February 2020, shortly before the COVID-19 pandemic disrupted businesses across the UK. The company was registered as operating in computer and peripheral equipment repair.
During interviews, Chowdhury claimed the business had earned income, purchased computer equipment, and employed him as its sole worker.
He also argued that the pandemic had affected the company and that he required the funding to secure business premises while also consolidating personal debts.
However, investigators found no banking activity indicating genuine trading, no payments to computer suppliers, and no company accounts or tax returns had ever been submitted.
Company Was Liquidated and Director Banned
Learn & Earn Ltd entered liquidation in April 2021 after failing to establish legitimate operations.
As a result of his misconduct, Chowdhury was disqualified from serving as a company director for nine years in January 2022.
The Insolvency Service has confirmed it is pursuing confiscation proceedings under the Proceeds of Crime Act 2002 to recover the money obtained through the fraudulent loan applications.
Authorities Continue Crackdown on COVID Loan Fraud
The case forms part of ongoing efforts by UK authorities to investigate abuse of pandemic financial support schemes introduced during the COVID-19 crisis.
Officials have repeatedly warned that businesses and individuals who fraudulently accessed emergency funding will continue to face criminal prosecution, director disqualifications, and attempts to recover taxpayer money through the courts.
