Debt management directors disqualified for taking client funds

The Insolvency Service found that the directors drew significant sums from the client accounts. At one stage there was deficiency of client funds of £5,943,939.

The investigation reports that the Whitehursts withdrew money from the company in breach of the regulations and treated it as directors’ drawings. They then set off their liability for the amounts they owed the company by selling their shares in both a speculative overseas property development and the company itself at prices that could not be explained and to their own advantage.

Additionally, funds taken from client accounts were loaned to companies owned and controlled by family members which had limited trading histories and minimal assets, resulting in the sum of £678,816 outstanding and unrecoverable when First Step went into administration.

Following the resignation of Christine Whitehurst, the former finance manager Darren Newton acquired the company and became its sole director. He has also been disqualified for 3 years and 6 months for allowing First Step to utilise company funds totalling £302,500 and for allowing First Step to purchase shares for the benefit of another company of which he was a director.

Robert Clarke, Investigations Group Leader at The Insolvency Service, said: "Customers who are forced to use debt management companies are particularly vulnerable individuals which is why the sector is subject to stringent regulation.

"The actions of Mr and Mrs Whitehurst in deliberately misrepresenting the basis on which funds were held and then taking these monies to fund their lavish lifestyle are reprehensible and therefore disqualifications towards the top period allowed by law are entirely appropriate. The Insolvency Service will work with partner agencies to pursue such individuals to the full extent of the law."