Father and son investment brokers were disqualified for 12 years after personally benefitting from around £1.37m while ignoring a creditor, the Insolvency Service said on 22 September.
Craig Lummis (62) and his son, Lee Lummis (37), were each given six-year directorship disqualifications in Manchester's High Court on 27 August 2021.
From 17 September 2021, the duo cannot be involved in the promotion, formation or management of a company without the permission of the court.
The court heard that Avacade Limited was incorporated in January 2010 and traded as Avacade Investment Options.
The company provided unregulated investment brokering services, including free pension reviews and made clients aware of Self-Invested Personal Pensions schemes to invest through.
One of the investments was in Costa Rican forestry plantations through a company called Ethical Forestry Limited, whose directors were banned for 6 years in March and April 2019 after withdrawing millions using a tax planning scheme.
Avacade, however, entered into liquidation in November 2015 and this triggered an investigation by the Insolvency Service.
The Court ruled that from 1 August 2014 Avacade ceased trading and was, or soon would be, insolvent. Craig and Lee had a duty to act in the interests of Avacade's creditors but their conduct fell below the standards expected.
Father and son sold Avacade's client database to a connected company for more than £150,000 when they most likely knew the company was insolvent. Instead of the company receiving the payment for the database, just over £75,000 was deducted from Craig and Lee's loan accounts.
Investigators also discovered that between August 2014 and May 2015, Avacade collected commission worth more than £1.6m. Craig and Lee, however, received £647,000 each to reduce their director's loan accounts.
Further enquiries found that during these transactions, Craig and Lee were aware of the tax authorities' investigation in connection with a tax planning scheme that Avacade's directors caused the company to enter into. This was yet to be resolved at the time of the trial.
Rob Clarke, Chief Investigator of the Insolvency Service, said: "It's clear that directors must treat all creditors fairly when they know their company is insolvent. Craig and Lee Lummis totally disregarded their duties by ignoring the ongoing investigation into the tax planning scheme and ensuring they benefitted personally from Avacade's only assets.
This failing led to them each being banned from acting as a director for a significant period of time and should serve as a warning to other directors who follow a similar path."