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Developer jailed after siphoning off customer cash

19 November 2020

A banned developer-constructor has been sentenced to 27 months in prison after diverting £91,000 of customer payments to his personal account.

Vijay Madhaparia, of Stanmore, north west London, was sentenced to 27 months in prison at Harrow Crown Court on 11 November after falsifying documents from the tax authorities. He was also banned from running limited companies for 10 years.

The court heard that Vijay Madhaparia was director of Laxmi Development Limited, a building development company incorporated in 2010 based in North-West London.

Laxmi Development, however, was placed into compulsory liquidation in 2015 after the company failed to pay the tax authorities a debt of £124,000, which was later revised to £4.4m.

The Official Receiver was initially appointed as liquidator and further investigations uncovered several instances of misconduct by Vijay Madhaparia.

In 2012, Vijay Madhaparia was disqualified by the court for three years after committing health and safety offences.

Despite being disqualified, he continued to act as a director and took on various construction and development projects until Laxmi Development was dissolved in September 2013 after the company had failed to file company records.

To get Laxmi Development reinstated, Vijay Madhaparia submitted company accounts in breach of his disqualification, which he falsely claimed had been audited and prepared by regulated accountants. This allowed the building development company to be restored to the Companies Register and receive VAT repayments from the tax authorities.

Further enquiries uncovered that Vijay Madhaparia had taken on two renovation contracts in 2015 despite Laxmi Development having been wound-up, and he did so without informing the Official Receiver. Vijay Madhaparia then proceeded to siphon £91,000 worth of payments for the renovation works into his personal account which he had spent on holidays and gambling.

Also in breach of his disqualification, Vijay Madhaparia incorporated Classy Junction Ltd in February 2014. Just over a year later, in September 2015, the company dissolved and Vijay Madhaparia failed to file any documents relating to Classy Junction Ltd.

In court, his conduct was described as “a sustained, deliberate and repeated pattern of calculated deliberate deceit and dishonesty committed over a number of years” by the judge.

Ian West, chief investigator for the Insolvency Service, said: “Vijay Madhaparia has been jailed for a significant amount of time after the court recognised the severity of his numerous misconduct offences.

“His sentence should serve as a stark warning to other directors that you could be criminally prosecuted for offences against insolvency and company director law.”

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