The UK’s Insolvency Service has banned Lee Skinner and Karen Ferreira for 10 and seven years, respectively, from acting as directors or being indirectly involved in the promotion, formation or management of a company without a court permission.
The pair were directors of an affiliate online marketing company called Our Price Records, which was dormant until 2014 when they tried to raise funds through the sales of shares in the firm.
Our Price Records entered administration in April 2017 and was then referred to the Insolvency Service.
Investigator discovered that Ferreira and Skinner sold shares to 260 investors and raised nearly £3.5m ($4.7m, €3.8m).
But the investments were secured “under false pretences and breached financial regulation”, the Insolvency Service said.
A web of companies
The Insolvency Service said this was because the duo created promotional material that made shareholders believe the brand was well-known.
The shares were sold through a third-party but neither the company nor the third-party firm had the authority to engage in investment activities.
Our Price Records also failed to tell investors that it agreed to pay 50% of all the funds raised to the third-parties involved in the sale of its shares, totalling to at least £1.58m.
Then, the Insolvency Service found out that Ferreira was a director of two other firms which entered into general service agreements with Our Price Records, however investors were not made aware of this.
One of the companies received a payment of £750,000 from the marketing firm.
Additionally, one of the two firms, where Ferreira was a director, entered into a commercial loan agreement with Skinner and granted a loan of up to £1m on the basis that he would pay Our Price Record’s administration and marketing costs.
More than £760,000 was given to Skinner and no repayments have been made, the Insolvency Service added.
‘Significant financial losses’
The Financial Conduct Authority (FCA) secured a restitution order in the high court in May 2020.
Robert Clarke, chief investigator at the Insolvency Service, said: “Using an agent, Karen Ferreira and Lee Skinner made false and misleading promises to prospective investors when they were trying to entice them to invest into Our Price Records.
“Not only did this breach financial regulations but investors were totally unaware of other agreements Our Price Records made, which saw millions of pounds being handed over to third parties.
“Unfortunately, investors have suffered significant financial losses. However, these bans should serve as a warning to other directors tempted to raise funds by illegitimate means that we will investigate and remove them from the business environment.”
