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Leicester Fraudster sentenced to four years in prison and company fined more than £900k

A businessman from Leicester who was last year found guilty of selling fraudulent franchise licences to victims across the UK and who went on the run before the trial, has been sentenced to four years in prison and banned from being a company director for 15 years. 

Nazir Abdul Rashid Daud, formerly of Landseer Road, Leicester, was previously found guilty on three counts under the Fraud Act 2006 in relation to false representations made between 2015 and 2018 and a further charge of fraudulent trading under the Companies Act 2006, and was convicted in his absence at Leicester Crown Court on 2 December 2022. 

Leicester Time: Leicester Fraudster sentenced to four years in prison and company fined more than £900k
Picture: Trading Standards

He had gone on the run before the trial, and was arrested on 25 October 2023 and remanded to prison to await sentencing. 

He appeared at Leicester Crown Court last Wednesday (31 January), where Judge Ebrahim Mooncey imposed the four-year prison sentence as well as ordering Mr Daud to pay prosecution costs of £30,046.

His company, Payrolls Direct Ltd, was fined £973,000. 

The prosecution was brought following an investigation by Leicestershire County Council Trading Standards Service, which received statements from 18 victims.

The court heard that Mr Daud was the sole director of Payrolls Direct Limited, which he set up in 2014. Mr Daud had advertised franchise licences for a new cloud-based payrolls system, which he was selling for between £5,995 and £9,995.

Franchisees would sign up clients, process payroll for each employee of the company they signed up, and Payrolls Direct would take 20 per cent of the fee, with the franchisee keeping the rest

Mr Daud claimed that buying a franchise licence would allow people to earn between £250 and £2,000 per month, depending on how much time they put into the business and how many clients they signed up. Advertising for Payrolls Direct also promised franchisees initial training, ongoing unlimited support, marketing materials and networking opportunities with successful franchisees.

But the court heard that statements from 18 franchisees who spoke to Trading Standards during the investigation revealed that only one was able to sign up any clients, and as the promised unlimited help, support and training was never provided, the franchisees were unable to use the payrolls system, leading to the contract with the clients being terminated.

In all, the cash value of the fraud was put at more than £320,000, with witnesses describing further ‘out of pocket’ losses, including thousands of pounds spent on advertising and months of work spent fruitlessly working to gain clients.

Harpreet Giani, representing Mr Daud, said that Payrolls Direct was originally conceived as a legitimate company, but it spiralled out of control.

He said: “Mr Daud wants to come clean now. He understands he’s probably going to receive a long prison sentence.”

Passing sentence, the judge said: “A lot of people had dreams of making it work. They invested a lot of time and made decisions that affected their families. It wasn’t just a monetary value.”

Mr Daud’s co-defendant Anthony Raybould was previously sentenced to 22 months imprisonment, suspended for two years, after he pleaded guilty to the offences when he appeared at Leicester Crown Court in December 2022.

Following the sentencing, Head of Leicestershire County Council Trading Standards Service, Gary Connors, said: “This form of fraud provides a quick financial return for the perpetrators, leaving the victims in financial and emotional turmoil. 

“The franchise sector is heavily reliant on trust rather than regulatory controls and by nature potential new entrepreneurs must be persuaded to make a significant ‘down payment’ for the promise of financial success.

“These are often complex and resource intensive investigations, but the legitimate UK franchise industry is a major contributor to the UK economy and must not be undermined by this form of fraud operating within the sector.”

Leicester Time: Leicester Fraudster sentenced to four years in prison and company fined more than £900k