Deeside magazine company ‘wound up’ in High Court following investigation by the Insolvency Service
A Deeside based company which produced four magazines with military-related content: ‘Red Alert’, ‘In Force’, ‘The Informer’ and ‘Engage’ has been wound up in the High Court following an investigation by the Insolvency Service.
Spencer Farley Ltd who traded from the Old Marsh Farm Barns Welsh Road, Deeside, was found to have made misleading and unfounded statements to induce businesses to place advertisements in its magazines.
The magazines were funded by the sale of advertising space to small businesses and were distributed free of charge.
The investigation found that the company made misleading statements to customers by stating or implying that the company was affiliated to the armed forces when, in fact, there was no such relationship.
A petition to wind-up Spencer Farley Ltd was presented on 27 September 2016.
The company was wound up on 22 November 2016 and the Official Receiver has been appointed as liquidator.
Information provided by customers during the investigation demonstrated that the company’s telesales staff had falsely stated or implied that:
> the company was calling on behalf of the military
> the company produced the armed forces magazine
> all company personnel were ex-army and affiliated to the Ministry of Defence when, in fact, the company’s staff had no military connections
> the magazines were distributed to all army units and Ministry of Defence sites when, in fact, the magazines were sent unsolicited to a limited number of military bases and to other organisations such as tourist information offices, shopping centres and airports
> the company was raising monies for military charities and / or helping ex-serviceman and the families of armed forces personnel.
In addition numerous customers complained that they had been pressed for payment for advertisements that they had not agreed to.
[miptheme_quote author=”Colin Cronin, Investigation Supervisor with the Insolvency Service” style=”text-left”]In its telesales calls and on its website Spencer Farley Ltd used terminology such as ‘campaign’, ‘raise awareness’ and ‘support’ to mislead customers into believing that it was raising funds on behalf of or in support of the armed forces.
In fact, the overwhelming majority of funds raised were paid directly to the company’s directors and telesales staff instead of being applied to any good cause.
The Insolvency Service will take firm action against companies which prey on the charitable nature of small businesses in this way.
I would urge any business which is contacted by cold-call and asked to support the military to make full enquiry into the service being offered before agreeing to advertise.[/miptheme_quote]
Financial statements filed by the company show it to have received an income in excess of £1.1m from the sale of advertisements during the period 1 October 2013 to 31 January 2016.
The overwhelming majority of this was applied to the benefit of the company’s directors and personnel and relatively little was spent on production and distribution of the magazines.
The company was unable to produce records to verify cash payments of £116,582 to two sales representatives who were said to have left the company almost immediately after the investigation began.
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