Director who masterminded pay scam loses £1m High Court case

    Director who masterminded pay scam loses £1m High Court case

    A nursing employment agency has won £1million in a High Court case after a former Director masterminded a payroll scam and set up a rival firm.

    Keystone Healthcare, a recruitment firm that provides nurses to the NHS, discovered that former Director and shareholder Colin Parr profited out of a bogus account where he deposited a percentage of agency workers’ income to benefit him and former consultant, Mark Reynard.

    More than £128,000 was in the bogus account, funds which had been accumulating since April 2014 - the same year Parr voluntarily left Keystone after receiving a £1.2million payout, the High Court in Manchester found.

    Following his resignation, Parr then set up a competing company – Medipro Recruitment - which broke his restrictive covenants agreement.

    Keystone argued that Parr breached his fiduciary duties by using the funds that he allegedly stole from them to set up a rival firm.  

    Last month, the case was heard at the High Court in Manchester, who ruled that Parr was liable for the sum of £650,612.04, with costs, interest and damages to be assessed. The total is likely to reach £1million.

    Robina Hussein, a Partner at Frontrow Legal said: “The case examines the line between setting up in competition after resigning as a director and the situation where liability will be incurred.

    "In this case, it was crystal clear that the competing business had been set up in a way that clearly breached the restrictive covenants, signed by Mr Parr. It’s extremely rare for a case like this to go all the way to the High Court."

    "A lot of time and work could have been avoided had Mr Parr co-operated at the start and throughout the process.”

    Martin Budworth, a Commercial Barrister at Kings Chambers added that Keystone was successful in proving that the director resigned with a view to “diverting the benefit of Keystone’s existing business contacts.

    “The case demonstrates that directors can have an ongoing duty to their company continuing long after termination, because if the director’s exit from a business was influenced by a desire to exploit business opportunities, then the director can be found liable for the company’s arguable losses,” he said.

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