A man who used a government-backed Covid loan to buy a house has been jailed for fraud.
Mohammed Rashidzadeh, 34, secured a £50,000 Bounce Back Loan for his company, Cozy Bed Ltd, in June 2020.
But within days, he transferred the money into his personal account and used it for the purchase of a three-bedroom semi-detached house in the Almondbury area of Huddersfield.
Rashidzadeh, now of Caellepa, Bangor in North Wales, also attempted to close down his company just eight days after the funds were paid, applying to have it struck off the Companies House register without informing the bank that had provided the loan.
He was convicted of offences under the Fraud Act and Companies Act following a four-day trial at Leeds Crown Court earlier this year and sentenced to 18 months in prison on Thursday.
Mark Stephens, chief investigator at the Insolvency Service, said: “Mohammed Rashidzadeh’s offending was twofold and deeply cynical. He immediately misused the £50,000 Bounce Back Loan funds he obtained to buy himself a house instead of supporting his business through the pandemic.
“His second offence was equally calculated – attempting to dissolve his company without properly notifying his creditors, including the bank that had provided the loan. The strike-off process exists to protect creditors’ interests, and deliberately concealing such applications from lenders is a criminal offence that undermines the entire corporate framework.
“The Insolvency Service remains committed to taking robust action against Bounce Back Loan fraudsters. Government-backed schemes were a lifeline for legitimate businesses during an unprecedented crisis, and we will continue to pursue those who deliberately exploited this support at the taxpayers’ expense.”
Court documents showed Rashidzadeh incorporated Cozy Bed Ltd in March 2019 as an online bed retailer and was its sole director. When applying for the loan, he declared the company had an annual turnover of £203,000.
Two days after the loan arrived in June 2020, he contacted solicitors to begin the £116,000 purchase of a house in Morton Green. By the end of the month, the entire £50,000 had been moved out of the business account into his personal finances, and later transferred to solicitors as part of the property deal.
In October 2020, Cozy Bed Ltd was officially dissolved, with no repayments ever made on the loan. Rashidzadeh later sold the house in August 2021.
The Insolvency Service confirmed it is seeking to claw back the funds through the Proceeds of Crime Act 2002.
