Property developer banned after investigation into firm involved in Northampton Town failed £10m loan deal
A property developer whose firm received millions of pounds of the missing Northampton Town loan money has been banned from being a company director for 10 years.
And an investigation by the Insolvency Service has revealed that it is unable to determine where more than £5.6million of the loan money has gone, and whether £1.5million had been paid for the benefit of the developer, Howard Grossman, and his family.
Mr Grossman, aged 57, from Bushey, was appointed as the sole director of 1st Land Limited, which between December 2013 and July 2014 received at least £6million from Northampton Town Football Club to go towards the costs of redeveloping Sixfields Stadium.
The funds had been drawn down by the club from a £10.25million loan from Northampton Borough Council, before being passed onto 1st Land.
But by January 2015, 1st Land had entered into administration following the petition of a creditor, before entering into Creditors Voluntarily Liquidation in December 2015.
In co-operation with Northamptonshire Police, the Insolvency Service carried out an investigation into the collapse of the company and Howard Grossman’s conduct while he was a director, a spokesman for the insolvency service said.
And his disqualification means that if he attempts to act as a director of a company within the next decade, he risks receiving a prison sentence.
A spokesman for the Insolvency Service said: "Investigators discovered that Howard Grossman failed to ensure the company maintained adequate accounting records or deliver a sufficient amount of records to the administrators.
"As a result, it has been not possible to determine the exact nature of more than £5.6m worth of payments made to various parties from 1ST Land’s accounts," the spokesman said.
"One such payment concerns approximately £2.65m of transfers made to two separate third parties, whether they were made as loans, and under what terms.
"Another payment investigators were unable to establish was whether approximately £1.5m was paid to the benefit of Howard Grossman, his family and other connected parties and whether such payments were treated as dividends," the spokesman added.
Investigators found that Mr Grossman had also ‘failed to deliver a sufficient amount of records to the administrators’.
Sue MacLeod, chief Investigator for the Insolvency Service, said: “Howard Grossman, like all directors, had specific duties as a company director but he blatantly disregarded them.
“The company’s insufficiencies when it came to record keeping means that we are unable to determine the exact nature of payments worth millions of pounds of taxpayers’ money, who along with supporters of the football club are the real victims here.
“We have been able to secure a substantial ban for Howard Grossman and if he breaches his disqualification, he risks being sent to prison.”
The spokesman added: "On January 29 this year, the Secretary of State accepted a 10-year disqualification undertaking from Mr Grossman, after he did not dispute failing to ensure that 1st Land maintained and/or preserved adequate accounting records, or in the alternative, failed to ensure that such accounting records as were maintained were delivered up to the Joint Administrators."
Mr Grossman further did not dispute to having breached his fiduciary duties to 1st Land, the spokesman said. These failures, the Insolvency Service said, included not putting in place formal loan agreements to safeguard the interest of 1st Land and its assets in the £2.65million transaction to other third parties.
The Bushey businessman also breached his duties, the service said, by causing the £1.5m dividend payments to be made to himself and in some instances to his family members on his behalf. This caused 1st Land to be in a position where it could not meet its financial liabilities whilst the loans remained outstanding.
Northamptonshire Police is continuing its criminal investigation into the missing Northampton Borough Council loan money, and is working with other prosecuting authorities to recover the public funds. Police have prepared files on roughly 30 individuals as part of the operation.
Last month, former Cobblers directors Anthony and David Cardoza, and David’s wife Christina, lost a civil case brought against them by the borough council. Anthony was made to pay back £2.1million to the council, while David was ordered to compensate the authority for works carried out to his Cheriton home in Church Brampton.
The council's chief finance officer has admitted, however, that it is unlikely to recover all the funds from the civil case against the Cardoza’s.
A spokesman for Northampton Town Supporters Trust said: “The conduct of Howard Grossman as a director of 1st Land Ltd has had a lasting and detrimental effect on the town of Northampton, its council taxpayers, the football club and its supporters and we welcome the banning order brought about by the Insolvency Service.
“This news follows on from last week's High Court judgment in which Northampton Borough Council was successful in its action against David and Anthony Cardoza in respect of their actions while directors of Northampton Town Football Club.
"Although the judgment ordering the repayment to the council of very significant sums of money will not benefit the football club, we are delighted for the taxpayers of Northampton."