A Hot Tub business supplying imported Chinesse hot tubs made up of three bosses who cheated customers and suppliers out of thousands of pounds are appearing in court 3 years after closing their doors.
Staffordshire-based Spaserve which was used as a “cash cow” by those running it, demanding payments up front for hot tubs, the prosecution at Stafford Crown Court alleged.
But instead of using the cash to fulfil all their orders, the bosses spent the money on themselves, with lavish lifestyles, expensive cars and holidays.
Three men, principal shareholder Simon Foster, Simon Cox and office manager Johnathan Husselbee are on trial accused of fraudulent trading and conspiracy to defraud.
Foster, aged 48, of Sandfield Meadow, Lichfield, Cox, 49-year old Cox of Oak Way, Sutton and Husselbee, aged 36, of High Street, Dosthill, Tamworth, all deny both charges.
Mr Adrian Keeling QC, prosecuting, told the jury: “It was not run as a proper and honest business, it was run, first and foremost, as a source of income for these defendants. It was run as a ‘cash cow’ and a cash cow to be milked.
“Their purpose wasn’t to trade responsibly, to give the customer what they ordered, on time and working properly. It was run with the simple aim of making these defendants money.
“Over that three and a half years period [of trading], Foster in particular, in his own words enjoyed a millionaire’s lifestyle and he did just that.
“Cox and Husselbee, on any view, received a lot of money.
“To run a business in such a way amounts to a crime called fraudulent trading,” alleged Mr Keeling.
He outlined how Spaserve had a website offering hot tubs at a cheap price.
A salesperson would visit anyone who responded and customers who signed up had to pay for their tub up front, long before any delivery.
That money was to pay for the hot tubs ordered from the Chinese supplier and there should have been enough.
In its three years or so of trading, Spaserve received £6.5 million pounds worth of business. In 2010 it went in to liquidation with debts of £2.7 million.
The defendants, dishonest in the way the business was run, realised that customers were unlikely to get their hot tubs and creditors unlikely to get the money owed to them.
“That’s exactly what happened – the business was first and foremost a cynical source of income.”
The charge of conspiracy to defraud was, said Mr Keeling, allied to the first charge.
“For all this to work, the business needed the public to pay the money and pay it up front.
“Some of it was spent buying people hot tubs, but not enough.
“That said, the more money coming in, the more people placing orders, the longer that fraudulent trading could be kept alive.”
Mr Keeling alleged customers were told lies to encourage them to sign on the dotted line or to stop them taking money out of the business by cancelled orders.
The “lies” included telling customers the hot tubs were American, rather than made in China; lies about what parts and extras came with the hot tubs; how long it would take to deliver and install.
The jury heard that Spaserve was not the first company Foster was involved with to go bankrupt.
He and his wife Katie were joint owners of a firm called Acara, which supplied hot tubs. In 2007 Acara went into liquidation with debts of £500,000 and assets of just £200.
At the time, the Insolvency Service was considering disqualifying Foster from being a company director, but in the end decided not to.
“It is the prosecution’s case that when aware of what had gone wrong with Acara, he then proceeded to set up this new company Spaserve, on a strikingly similar basis. “There was no effort at all to learn from the mistakes of the past as history repeated itself.
“Running it to destruction and at the same time paying yourself a small fortune is not the action of an honest business.”
Mr Keeling claimed that Spaserve’s customers were treated with contempt and those who did complain were treated in a particularly cynical way.
“Some people waited and waited and when they did complain, they were pointed to the small print.
“They were told they couldn’t cancel, they couldn’t get their money back.
“Those who instructed solicitors had to fight right the way to the doors of the county court before any money was handed back to them.
“You are going to hear from a selection of 28 customers, spread over the three years [of trading].
“The stories they tell you have a common theme of deception and dishonesty,” Mr Keeling told the jury.
Evidence would also come from former employees, one of whom sold a hot tub to a former soldier who had lost his legs.
Anxious to ensure the soldier got his hot tub as soon as possible, he was told there would be a delay of five months.
Spaserve went in to liquidation also owing money to credit card companies, shipping firms and for office rental in London.
The trial, which is expected to last around eight weeks, continues.
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