Move to kill off company at centre of alleged fraud

by LESTER CROSS

As a two-year Police Scotland fraud investigation continues into allegations levelled at bankrupt businessman Martin Frost, Companies House has announced its intention to dissolve a family firm said to have been used to divert hundreds of thousands of pounds of Avocet shareholders' cash for his personal benefit.

Mr Frost was the sole director of Loch Lomond Heritage (LLH) Ltd. between November 2017 and July 2019 when insolvency experts claim more than 70 separate transfers of money totalling over £220,000 were made from his Director's Loan Account [DLA] at Avocet to an account bearing the name Scottish Academic Press.

In a set of annual accounts for LLH up to June 2019 which were signed off by Mr Frost in 2021 he states: "The assets of Scottish Academic Press [SAP] were slowly incorporated which coincided with a gradual switch of assets out of Scotland into Yorkshire. Such incorporation led to a significant reduction in Martin Frost's indebtedness".

A ledger of the DLA records, submitted as evidence in a civil action raised against Mr Frost and his wife in a Leeds court last year, showed the account was overdrawn by £850,747 when it was closed in late 2019. The promoters of the action wrote: "It is considered that this figure underestimates the extent of your indebtedness to the Company (Omega)".

But, according to Mr Frost's evidence in the case brought by the joint liquidators of Avocet Infinite PLC (now called Omega Infinite) the DLA document had been 'fabricated'. He has repeatedly denied the Avocet 'wonder fuel additive' venture was a Ponzi scheme, and has refuted claims by investors of fraud and embezzlement. 

The Leeds action sought possession of two Scarborough flats purchased by Mr Frost for £425,000, again allegedly using company funds.

A Statement of Claim which was sent to Mr Frost by the liquidators' lawyer seeking repayment of £222,872 in transfers made to LLH from the DLA asserted those payments were preferences - payments by an insolvent company to a particular creditor, putting that creditor into a more favourable financial position.

"We consider that as well as being preferences, the payments to LLH were made in breach of your duties as a director of the Company".

The liquidators' representative also wrote in the letter to Mr Frost: "Notwithstanding the claimed transfer of the business and brand of SAP, our clients believe that payments by the Company to SAP recorded in the DLA ledger were payments which were made to you personally.

"Our clients consider that each of the payments to SAP recorded in the ledger of your DLA have been correctly debited from your DLA as they are payments to you personally and for your personal benefit."

A notice to be officially published tomorrow (Tuesday) by the Companies Registrar, indicates that the regulator will strike off and dissolve Loch Lomond Heritage Ltd. 'unless cause is shown to the contrary'. 

No reason is publicly cited for the action, but under the rules all of the company's assets will belong to the Crown. The last published accounts for LLH showed total assets less current liabilities of £263,995. 

Not Just Sheep & Rugby has been told there could be objections lodged against the dissolution of LLH by 'interested parties'.

Meanwhile, we contacted Police Scotland and requested a statement regarding their investigation into the complaints of alleged fraud which were first lodged in March 2022. We asked what stage had the investigation reached, and when it was likely to be concluded. 

A Police Scotland spokesperson told us: "“Police Scotland received information in relation to an allegation of fraud and enquiries into the matter are ongoing.”