Stephen Cavanagh, a 45-year-old father from Huyton, has been sentenced to 28 months in prison for his role in a sophisticated fraudulent debt collection operation. Cavanagh acted as the director of IDRE Ltd, a company that conned businesses by collecting debts but failing to pass the funds to its clients. He also received a 10-year ban from acting as a company director. His involvement, he claimed, stemmed from a £20,000 drug debt.
Key Takeaways
- Stephen Cavanagh, 45, was jailed for 28 months for fraudulent trading.
- He served as director of IDRE Ltd, a company that defrauded clients by withholding collected debts.
- The operation used a call centre to target vulnerable businesses.
- Cavanagh claimed he became involved due to a £20,000 drug debt.
- He is banned from acting as a company director for 10 years.
The Fraudulent Scheme Uncovered
Liverpool Crown Court heard details of the elaborate fraud on Wednesday. Stephen Cavanagh, residing on Blue Bell Lane in Huyton, was identified as the director of IDRE Ltd from February 7, 2020, to July 26, 2022. The company's business model involved offering to recover outstanding debts for other companies. However, once the debts were collected from the debtors, IDRE Ltd consistently failed to remit these funds to the original creditors.
Prosecutors described IDRE Ltd as a "wholly dishonest entity and highly sophisticated enterprise." The operation even included a dedicated call centre. This centre was used for cold-calling potential clients and identifying "vulnerable" targets. These targets were businesses already facing financial losses, making them susceptible to the company's offers.
Fraudulent Activity Statistics
- Duration: February 2020 to July 2022
- Estimated Gains: At least £109,300.83
- Complaints: 19 submitted to Action Fraud
- Victim Statements: 10 provided
Victims of the Operation
James Rae, prosecuting, detailed several instances of fraud. One Scottish business, Tam Shilliday Plant Hire and Groundworks Ltd, was contacted by IDRE Ltd. They were persuaded to pay a £31,000 fee to recover a £134,918.83 debt owed by Corryard Development Ltd. While IDRE Ltd successfully collected £212,224 from Corryard Development Ltd, these funds were never passed on to Tam Shilliday Plant Hire.
When Tam Shilliday inquired about the payment, they were informed that IDRE Ltd's director was "in hospital and couldn't authorise" the transfer. This was a false explanation designed to delay and ultimately prevent payment. Such tactics highlight the deceptive nature of the operation.
UK Double Glazing Repairs Ltd Case
Another victim, UK Double Glazing Repairs Ltd, hired IDRE Ltd to recover a £10,948.40 debt from Crestel Projects Ltd. They paid an upfront fee of £1,100. IDRE Ltd managed to secure a lower settlement of £6,151.60 from Crestel Projects Ltd. However, these collected funds were also never received by UK Double Glazing Repairs Ltd.
Sarah MacPherson, director of the double glazing firm, resorted to social media and contacted local councillors in an effort to retrieve her money. Her actions led to her being contacted by Tret Corp Ltd, a separate company with different directors and bank accounts. The caller from Tret Corp Ltd offered monthly payments of £1,000 if she would withdraw her complaints. She received the first payment, but no further funds were sent.
James Rae, prosecuting, stated: "The reality is that IDRE Ltd was a wholly dishonest entity and a highly sophisticated enterprise which involved the defendant recruiting others to make cold calls on his behalf."
Background on IDRE Ltd and Tret Corp Ltd
IDRE Ltd and Tret Corp Ltd were both involved in the fraudulent scheme. While IDRE Ltd was directly operated by Cavanagh, Tret Corp Ltd appears to have been used to deflect attention or offer partial repayments to victims who raised complaints. This dual-company structure suggests a deliberate strategy to obscure the true nature of the fraud and evade detection.
Cavanagh's Defense and Sentencing
Cavanagh admitted to one count of fraudulent trading. He claimed he accumulated a drug debt exceeding £20,000 and agreed to work off this debt by becoming a director of a company set up by an organised crime group. He also admitted to setting up multiple bank accounts to receive victim fees, as well as a personal account for his own financial gain.
Nicola Daley, defending, acknowledged the seriousness of the offense. She stated that Cavanagh accepted setting up the company and bank accounts. However, she argued that it was not his original fraudulent business model. "He was aware that this was the purpose of setting up that company," she said. "He was aware, because of the individuals that he was asked to do it for, of the fact that this was dishonest in its nature, but it was not his business model."
Personal Impact and Health Issues
Ms. Daley highlighted the personal consequences of Cavanagh's actions. His former partner ended their relationship, preventing him from seeing his daughter at the time. She added that Cavanagh has since "turned his life around" and now has contact with his daughter. He has also been diagnosed with multiple sclerosis since the period of the indictment.
Recorder Gavin McBride, during sentencing, acknowledged Cavanagh's previous good character and his health issues. However, he emphasized Cavanagh's direct role in enabling the fraud. "You were part of a fraudulent operation, cold calling people who were financially vulnerable during the Covid period, when people were particularly vulnerable," Recorder McBride said. "You opened the bank accounts which facilitated that to happen, and specific sums have been identified at £109,300."
- Cavanagh admitted to fraudulent trading.
- He claimed a £20,000 drug debt led to his involvement.
- Defense argued he did not create the business model.
- He has addressed personal issues and re-established contact with his daughter.
- Cavanagh has been diagnosed with multiple sclerosis.
The court heard that while Cavanagh may not have known the full extent of the activity, his role in setting up the bank accounts was crucial. "Without those bank accounts, there would not have been that operation," Recorder McBride noted. He sentenced Cavanagh to 28 months in prison and imposed a 10-year ban from acting as a company director.