Mohammed Rashidzadeh applied for the Bounce Back Loan in June 2020 for his online bed retailer business Cozy Bed, which was established in March 2019.
Rashidzadeh was the company’s sole director, and the firm had a turnover of £203,000.
Two days after the money was provided, Rashidzadeh appointed solicitors to handle the purchase of a three-bed semi-detached house for £116,000.
He transferred the entire loan amount from the company account into his personal bank account before the end of that month.
The £50,000 was then transferred to the solicitors to buy the home at the end of July.
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Just eight days after receiving the loan, Rashidzadeh began the process of dissolving his company and having it struck off the Companies House register to avoid repaying the loan.
This legal process requires companies to notify all creditors including lenders, but Rashidzadeh failed to inform the bank of his application.
Cozy Bed was struck off in October 2020, and no Bounce Back Loan repayments were made.
Rashidzadeh then sold the house in August 2021.
Rashidzadeh was found guilty of offences under the Fraud Act and Companies Act following a four-day trial at Leeds Crown Court earlier this year. He was sentenced to 18 months in prison on 25 September.
The Insolvency Service is seeking to recover the fraudulently obtained funds under the Proceeds of Crime Act 2002.
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 who 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.”
