A Yorkshire scaffolding director has been ordered to fully repay £100,000 in Covid loans plus more than £15,000 interest, or face 12 months in prison.
Mark Degnan had already paid back £55,608 before he appeared at Leeds Crown Court on Monday (15 September) but could face 12 months in jail if he fails to repay the remaining £59,578 within six months, according to the Insolvency Service.
Officials at the Insolvency Service said he had “cynically exploited” the Covid loan scheme meant to help small businesses during the pandemic.
The 56-year old, who is based in Yorkshire, overstated his firm’s turnover by more than 200 per cent to land two Covid bounceback loans of £50,000 each, according to the Insolvency Service.
It added that he also broke the rules by applying for two Covid loans for his company, MBL Scaffolding Services, from two separate banks, as it was only entitled to one loan.
Degnan initially claimed MBL Scaffolding Services had a turnover of £500,000, according to the Insolvency Service, which would have entitled him to the maximum loan of £50,000.
“These applications were made despite dormant company accounts being filed for 2019,” the Insolvency Service said. Despite this, its investigation found evidence the firm was not dormant and actually had turnover of almost £162,000.
The Covid loan scheme allowed businesses to borrow up to a quarter of their annual turnover, with a maximum loan of £50,000, meaning that Degnan was only eligible for a loan of around £40,000.
Degnan was also ordered to pay £15,000 worth of interest on his £100,000 loans.
In January, Degnan, of Wellhams Road, Pontefract, received a two-year suspended prison sentence in an appearance at Leeds Crown Court for the same offence. He was also disqualified as a company director for five years and ordered to complete 50 hours of unpaid work.
Companies House filings indicate that Degnan resigned as a director of MBL Scaffolding Services last December. He also resigned as director from another scaffolding firm – Berwick Scaffolding Ltd – last October, and was director of four additional firms, which were all dissolved between 2012 and 2023.
Insolvency Service head of asset recovery Alexander Grierson said Degnan had “cynically exploited a scheme designed to help small businesses during the pandemic”.
“The Insolvency Service remains committed to pursuing fraudsters who abused the Bounce Back Loan Scheme and will continue to use all available powers to ensure criminals do not financially benefit from their illegal activities,” he added.
In May, the Insolvency Service took over responsibility for Covid loan investigations from the National Investigation Service (NATIS), after a review into NATIS revealed it had only convicted 14 firms and individuals for covid loan fraud, despite fraudulent claims costing the taxpayer £38.5m.
More than 8,300 bounceback loans issued to the construction sector during the pandemic are suspected to have been fraudulent, according to data from the British Business Bank obtained by Construction News under the Freedom of Information Act.
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Joshua Stein