John Rowe, of Nantwich Close, Hemlington, Middlesbrough, ran an online retail site, Sethcodoorstore, which was described as successful and delivered hundreds of orders.
But after the “catastrophic” failure of a third-party company Rowe was involved with wiped out his working capital, he could not fulfil orders which continued to be placed with the business as he had no funds to pay suppliers.
However, he failed to advise customers of the circumstances he was in, triggering more than 30 separate complaints with trading standards from people who paid for items which were not fulfilled and then sought refunds.
Judge Nathan Adams, sitting at Teesside Crown Court, handed Rowe, who previously admitted a charge of carrying on a business or company with intent to defraud creditors between May 1, 2022 and October 31, 2023, an eight month jail sentence, suspended for 18 months.
He said that had the matter gone to trial and Rowe had been convicted, he could have faced an immediate 12 month jail sentence, but he was able to take into account his early guilty plea and previous good character.
Prosecutor Josh Normanton said 44-year-old Rowe had made “false excuses” and “promises and promises and promises”.
He said an aggravated feature was a failure to respond to warnings from trading standards who had told him to cease his conduct.
Mr Normanton said: “The defendant appears to have given the impression to trading standards that everything was in order and he was sorting things out, when the evidence suggested a different position.”
Rowe’s legal representative Sarah Lish said that of 34 customers who complained they had lost money, he had refunded 27 in full to date and had made every effort to pay creditors who were out of pocket.
The advocate solicitor said Rowe fully accepted he made false representations to customers about the whereabouts of products that had been ordered and refunds that were asked for.
She said the company – registered in 2017 – remained active with Rowe as a director, but it was his intention to shut it down once any remaining individuals had been paid.
He was also now in paid employment elsewhere.
Ms Lish said: “This wasn’t someone who just took people’s money and spent it on himself and didn’t provide any service whatsoever.
“He was attempting to operate the business and keep his head above water, and there had been a vast number of orders made and completed.”
Ms Lish said when he was contacted by trading standards he “buried his head in the sand [as] everything was becoming quite unmanageable”, adding: “Mr Rowe can’t apologise enough for his fall from grace.
“He had a very successful business and was doing excellent trading.”
Sentencing the defendant, Judge Adams said he lied to a number of customers about the progress of orders and the possibility of refunds, keeping the money for the business to be applied in other ways.
He said among the complainants, 22 customers had paid £16,000, which was not returned to them at the time, and there was a “large number of victims” with the activity conducted over a sustained period.
Judge Adams said he concurred with a Probation Service assessment which said Rowe was at low risk of re-offending and the suspended sentence was the best course of action moving forward.
He also ordered him to undertake 140 hours of unpaid work in the community.
Meanwhile, a further court hearing later this year was scheduled as part of confiscation proceedings which could seize remaining assets from Rowe.
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