Troops lose £1.2m in letting agent cash fiasco

Frontline soldiers in Afghanistan are among hundreds of servicemen who lost £1.2 million when a specialist armed forces letting agency collapsed.

Now, the Insolvency Service has banned disgraced letting agent Paul Smith from running a company as a director for nine years for his part in the fiasco.

Smith, 47, of Hornchurch, Essex, was the director of Blue Force, which went in to liquidation in March 2011 with a £11.2 million deficit in the accounts.

Smith has given an undertaking not to act as a director until at least March 2022.

His company traded from offices at Colchester, Essex and as the letting agency was exclusively for armed forces personnel, even had a Ministry of Defence phone number so anyone on a tour of duty overseas could easily keep in contact.

The business arranged mortgages and managed lettings of around 300 service men and women,  while they were stationed abroad.

This included collecting rents and deposits which should have been safeguarded in separate bank accounts.

The Insolvency Service allege Smith and his staff told soldiers that any extra funds they paid in would be deposited in a secure account. However, the cash went in to one account from which thousands of property-related payments were made.

The company then moved funds from this account in to a business trading account and to an associated company. When the firm went into liquidation, the soldiers lost their money.

David Brooks, a chief examiner for the Insolvency Service, said: “Many of the people who lost out as a result of this company’s demise were stationed overseas and had no choice but to trust Blue Force to look after their affairs on their behalf.

“This trust was broken and the money – money that many of them had risked their lives to earn – was lost.

“Directors who seek to gain an unfair advantage over their competitors by using clients’ funds to prop up their own accounts will be investigated. This behaviour is unfair to those who play by the rules and protect their clients’ funds and, most of all, it is unfair to the clients who risk losing their money.”

An appeal to try to persuade the MoD to refund the money was rejected.

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