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Torex directors jailed for fraud 21 February 2011

Edwin Dayan and Christopher Ford were given prison terms for defrauding the shareholders of Torex, a retail software business now in liquidation, by creating more than £1.65m profits to be published in the company’s accounts.

The pair were found guilty on January 19 of conspiracy to defraud following a trial at Oxford Crown Court.

Dayan, 58, was sentenced to 12 months imprisonment and disqualified from acting as a company director for four years. He was ordered to pay prosecution costs of £75,000.

Ford, 47, was sentenced to six months imprisonment, suspended for two years and given a community service order of 200 hours. He was disqualified from acting as a company director for two years and ordered to pay prosecution costs of £2,000.

The SFO began investigation in January 2007 after whistleblowers from Torex raised the alarm about accounting irregularities. The investigation was carried out with the
City of London Police.

The directors, who worked for Torex subsidiary XN Checkout (XNC) caused an invoice to be created purporting to show that £756,000 was owed to XNC from a client – Mitchells and Butlers (MAB).

The defendants also created other documentation to give the illusion that MAB had an agreement with XNC to pay the debt and provided this documentation to Torex’s auditors, BDO Stoy Hayward.

In reality, this money was not owed by MAB.

In passing sentence, Judge Eccles QC said: “Unless directors recognise they will go to prison, the temptation to manipulate accounts in hard times will be harder to resist”.

He added that “such sentences may seem harsh on a personal level, but a strong deterrent is needed”.

The judge also said he accepted it was not the prosecution case, that the dishonest actions of the two defendants caused the collapse of Torex Retail.

The SFO investigation into the conduct of other individuals is ongoing. Investigations continue into the wider collapse of Torex Retail, which is now in liquidation.

 

 

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