TWO fraudsters from Sheffield have been jailed for running a bogus loans firm which raked in more than £100,000 from people duped into buying franchises.
Russell Ross, aged 43, and 48-year-old Steven Halsey hoodwinked dozens of clients with the promise of healthy earnings after setting up their company, Direct Loans.
Sheffield Crown Court heard the conmen claimed their business could offer loans to people struggling to obtain credit and signed up more than 40 franchisees to sell loans around the country on behalf of the firm.
But the franchisees were left more than £50,000 out of pocket after managing to secure just six loans in a year’s trading.
The pair commissioned a brochure featuring claims about the company’s potential and posed as wealthy, successful businessmen.
They were brought to justice after clients complained to police about the poor performance of Direct Loans, which was based in Neepsend and, later, Woodseats.
Sentencing, Judge Roger Keen QC said Ross and Halsey told their franchisees ‘a pack of lies’.
He said: “If they all had been told the truth they would not have given you any money at all.”
Ian Goldsack, prosecuting, told the court the firm was set up in December 2008 and traded until January 2010.
Mr Goldsack said Ross and Halsey claimed they operated a ‘communications centre’ which handled responses to ‘extensive’ adverts in national and local media and boasted of an ‘underwriting department’ which assessed loan applications.
The fraudsters said loans would be met either by the company or referred to third party brokers.
Mr Goldsack said: “They expended considerable effort creating a plausible front projecting apparent - but illusory - personal success, and a thriving business, with a view to encouraging members of the public to give them money by way of purchasing franchises.
“Once initial interest had been secured, the defendants gave false information to potential franchisees.”
He said clients received suspicious mobile phone calls from people claiming to be franchise holders and speaking of their satisfaction with Direct Loans.
The company initially held offices in the Neepsend Triangle Business Centre on Burton Road, but later moved to the Acorn Business Centre in Woodseats, leaving unpaid rent totalling almost £7,000.
Direct Loans also owed thousands to Starprint, Abbeydale Road, which was not paid for the firm’s brochure.
Police raided the business premises in March 2010, when the pair were arrested.
Officers found two bags containing steroids belonging to Ross, who planned to sell the drugs to body builders.
In interview they denied being dishonest.
Mr Goldsack said: “They suggested it was a genuine attempt to establish a successful venture which failed.”
Danny Simpson, mitigating for Ross, said the former supermarket manager was inexperienced in the financial services sector.
Richard Fisher, representing Halsey, said the ex-insurance salesman started Direct Loans after a ‘turbulent period’ in his life, during which his father killed his mother.
The pair admitted fraudulent trading, and Ross also admitted possessing Class C drugs with intent to supply.
Halsey, of Moss Road, Totley, was jailed for 12 months, while Ross, of Tideswell Court, Firth Park, was jailed for 16 months.
By Richard Blackledge