Updated 07.07.22 @16:00
Today at Southwark Crown Court, July 7th 2022, sentencing of the disgraced ex-chartered accountant, Michael Stainer (pictured below) has taken place, and he has received three years. He received 3 years on each count and has been disqualified as a director of any company.
There were two counts of fraud of the public purse, and one of misrepresentation. He was found guilty on all counts. The three years will run concurrently.
Stainer had been convicted of cheating his employees and the taxman out of £473,097.07 while running The Grand, specifically between the years 2011-2015, although the offences clearly commenced as early as 2005 and possibly continued after 2015.
Judge Gregory Perins told Stainer: ‘Many, if not all, of your employees were on low or minimum wage and you were ultimately responsible for paying these wages and deducting PAYE and National Insurance. However, you took the calculated decision not to do that and, although you deducted the amount of PAYE and National Insurance, you did not pass that money on and instead kept it. You ensured your employees were given misleading payslips.
The fact you committed fraud against your own employees is an aggravating factor in this case.
This [fraud] made it significantly cheaper to employ staff…and it also allowed you to keep the money for yourself and to use it as you saw fit. Just over £473,000 is, in any view, a significant amount of money. You sought to argue there was nothing dishonest about what you did and that the motive was essentially good and that you were trying to ensure people did not lose their jobs.
The jury at trial plainly rejected this argument.’
Judge Perins went onto say
‘I have no doubt that this was a deliberate and dishonest ruse on your part to keep revenue at bay for as long as possible… ‘You knew that The Grand was in poor shape financially, and you kept doing all you could to keep revenue at arm’s length instead of accepting the reality of your situation.’
However, now we can tell the whole story of gross mismanagement and possible fraud that led to conviction, imprisonment and the loss of his debt-fuelled ‘empire’ that too many thought, and some still think, was a jewel in Folkestone’s crown.
There were two key elements in Stainer’s tangled web of debt:
The holiday flat business in which 18 flats were rented out in total violation of the leases of those flats. These flats were owned jointly or individually by the Stainers, and by his own submission to the High Court in December 2020, grossed around £400,000 per annum income. In 2019 the combined mortgage debt stood at £2.4 million
The restaurant and bar business, run by former General Manager Robert Richardson, based in the Palm Court and Keppels which hosted events such as weddings, Conservative Party AGMs and dinners etc. This business was run through a bewildering tangle of six companies (plus one long dissolved one) and the partnership of the Stainers who were also the director and or company secretary of each of the six companies. In each year over 50 employees worked at the Grand, all of 30 of their employment contracts were in the name of ‘The Grand’ and did not stipulate which of the six companies operating at the Grand or the partnership they were employed by. As far back as 2016, in an earlier case bought by HMRC, the Court was particularly critical in its assessment of Stainer, arguing that he was an accountant and “should have been familiar with the PAYE process”. The judge agreed, stating: “Failing to account for PAYE and NI and make returns for someone in Mr Stainer’s position was careless”.
As we have written before, these were all mortgaged to a motley crew of lenders, clearly blind to the fact that (a) they were holiday lets (b) such usage was clearly prohibited and (c) in one case, wasn’t even a flat!!! Total forced sale realisations total to date around £570,000. Of the remaining seven flats, four were deemed uninhabitable by the Private Sector Housing Team from FHDC. So, the lenders stand to lose at least £1.5 million.
Equally blind were the VAT authorities. Government guidance states:
If you supply holiday accommodation, or a site for such accommodation, you must account for VAT at either the standard rate (or the temporary reduced rate) on any charges that you make regardless of the length of occupation or description of the charges.
The VAT registration threshold would apply if annual total VAT taxable turnover exceeds £85,000, something any accountant would know…….. careless again?
So HMRC were being cheated — again.
But we have also now seen debt evasion on an almost industrial scale, with various debt collection agencies acting on behalf of various utility companies, as various Stainer companies rose, accumulated debt, and then fell, leaving suppliers helpless.
For example, in July 2009, the electricity bill for the Edinburgh Suite was £9,525.13 and as late as August 25 2010, EDF were still chasing Heritage Hotels UK Ltd, even though this company was dissolved on 9 January 2007. Numerous emails see Stainer clearly giving the impression that Heritage Hotels Ltd was liable, and therefore this bill, was nothing to do with him. The following Companies House Entry gives that the lie:
For an even better example let’s move to the Exeter Suite. In March 2016, Stainer is writing to EDF as follows:
“The large but highly questionable account, principally from bills generated from 21st November 2010 to 4th March 2011 arose during the time Heritage Hotels was in occupation.”
He again writes as if Heritage Hotels had nothing to do with him:
“…I do not and never did have its tenancy agreement, and in any event as previously reported, tenancies are assumed to be assured shorthold tenancies unless agreed to the contrary.”
In a separate email to a debt collecting agency action for EDF in January 2016, he writes:
“ Heritage Hotels UK Ltd took up occupation about ten years ago and sublet the flat for residential and holiday lets; it vacated all its premises on 10th December 2011 when it ceased operations.”
As of 8th September 2015, the debt on this flat stood at £25,060.19 having come before Margate Magistrates Court on 22nd October 2014, As early as November 2011, Marston Bailiffs were attending on behalf of EDF to collect payment.
Let’s end up in the Dorchester Suite, once occupied by Stainer’s late mother. By-the-by, this flat went into auction in 2020 following its repossession and sold at auction along with the Edinburgh Suite for £220,000 —– to guess who? Michael Stainer. However, he couldn’t raise the balance and lost his deposit. How do we know? He tried to tap up two local businesspeople to concoct a deal whereby they lent him the money in return for…… who knows what!!! When the flat was sold, the service charge debt was £45,000!! In June 2014 he owed EDF £25,499 in electricity charges, according to EDF’s bailiffs, Buchanan Clark and Wells. In December 2011 the bill was £24,840.13, so what was happening in the meantime? How come a prepayment meter wasn’t installed as happens to normal people. Imagine that review in TripAdvisor….. great location but ran out of 50p pieces.
A similar saga is to be found in his dealings with Southern Water who in April 2014 were owed £16,356.41. As recently as June 2021, bailiffs from Castle Water attended to disconnect the water supply to the commercial areas, and therefore some seven flats as well, being owed over £28,000.
Back in 2009, we again found a deliberate attempt to confuse the company by claiming Heritage Hotels was responsible for unpaid bills. This email is from 24th November 2009.
“Although of course the current operators have no obligations to pay their predecessors bills……… they will pay a premium of 50% over and above the future sewage bills when setting them until the arrears are paid off on condition there is no petition for the Grand Folkestone’s winding up.”
We have seen numerous other files relating to other Stainer-owned flats where the same cycle of obfuscation and evasion can be found.
The Restaurant and Bar Business
This was the scene of the crime that saw Stainer convicted, but alongside the civil cases brought by HMRC, here too we see a saga of unpaid bills to mainly local suppliers. We at the Vox had to intervene on behalf of two local suppliers of fresh produce owed, not tens of thousands admittedly, but amounts that could destroy a small business.
So what was going on inside this man’s head all these years that saw hours of time spent not paying bills, ducking and diving like Del Boy Trotter on steroids. A flourishing holiday-let business, a premier hospitality location with amazing spaces for major event – a recipe for sure fire success – but with Stainer & his general manager Robert Richardson in charge.
Maybe they’ll let Stainer run the kitchens at whatever HMG prison he ends up in.
The Shepway Vox Team
Reporting on this tradegy for seven years