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Ash
Ash, Solicitor
Category: Law
Satisfied Customers: 10916
Experience:  Solicitor with 5+ years experience
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We have discovered that a company we work for, and are in a

Resolved Question:

We have discovered that a company we work for, and are in a payment dispute with, has almost certainly been operating fraudulently.
They operate a hotel booking franchise, and charge around £15K for the exclusive right to operate in any given territory.
Due to the dispute we have looked into the returns these franchises are getting (we are web developers and have access to the database as an intrinsic and normal part of the development process) and found that fewer than 10% are making anywhere near enough to ever recoup their initial investment (data from the last 5 years). The parent company only makes a very small amount from booking commissions, which means it is pretty much entirely funded by new franchise sales, and seems to be operating very much like a ponzi scheme.
We don't know what their sales pitch has been to sell to these franchises, but strongly suspect there have been significant misrepresentations.
Would it be legitimate for us to contact any of the franchises with our concerns (their contact information is publicly available on the site)?
Is the above enough grounds to report the company, and if so, to whom?
Many Thanks,
Stefan
Submitted: 1 year ago.
Category: Law
Expert:  Ash replied 1 year ago.
Hello my name is ***** ***** I will help you with this.
What is it you want to achieve please?
Customer: replied 1 year ago.

Essentially we would rather that our software not be used to commit fraud, particularly as the client in question is refusing to pay for it (we are using a money claim online to try and get payment, but doubt it will be successful as his dual Aus. citizenship means he can just leave the country).

Additionally he has made misrepresentations to us and is now trying to strong-arm us into doing more work whilst trying to deny or significantly reduce payment.

There is slight benefit to us in that we have an IPR agreement with him that prevents us developing similar works, and we have a lot of know-how invested in the given development area, but primarily it is because we feel that we too have been defrauded and would prefer he not continue to benefit from it.

Many Thanks,

Stefan

Expert:  Ash replied 1 year ago.
What does the IPR agreement say about termination? Are you sure he is using it for fraudulent purposes?
Customer: replied 1 year ago.

The restriction on creating similar works survives termination of the agreement, however occurring.

We don't know that it is deliberate fraud, so much as greed, overselling, and trying to trade out of insolvency. He must, however, be aware of the failure rate, and that at least 90% of the sales he makes will fail to recover their investment.

Additionally we informed him a couple of months back that due to the lack of essential maintenance and server software updates we no longer considered the site secure or fit for purpose (it isn't). This is of concern as it does process hotel bookings, including personal and credit card details. There was no attempt to address this, and he has continued to make sales.

Expert:  Ash replied 1 year ago.
Ok, so you just want him to stop using it? Had you had a Solicitor write and ask?
Customer: replied 1 year ago.

No, would that be purely because we believe the system is insecure, or because it is unpaid?

Expert:  Ash replied 1 year ago.
Ok, so again what is it you want to be able to do?
Customer: replied 1 year ago.

Ideally, of course, we would like to be paid for the work done.

However, we consider it unlikely that we are going to have much luck with that. We do believe that the directors have the personal assets to cover the debts, and there is a large overdrawn director's loan making them liable. Unfortunately we also strongly suspect that they are in the process of selling up in order to move to Australia, where they have dual citizenship.

That being the case we would rather that the large profits they have made selling software services they haven't paid for, to people who aren't going to benefit or recover their investment, not be entirely without repercussions.

We do realise that trying to pursue moral or ethical (rather than purely financial) matters via the legal system isn't likely to meet with any success, and that it may in fact scupper what little chance there is of us getting compensated. It is an option we would like to know the viability of, rather than a course of action we are fixated on.

If we send a solicitor's letter based on the site being insecure / not fit for purpose it seems they could just ignore it by cutting our access to the server and claiming that they had had someone else deal with the issues (regardless of whether they had or not).

Thanks again!

Stefan

Expert:  Ash replied 1 year ago.
You need to write and set out your losses and request a payment within 14 days or say you will go to Court within 14 days. You should make sure you send this signed delivery and keep a copy.
If they do not pay you then you can issue proceedings in the County Court. You can either do this online at: www.moneyclaim.gov.uk or by completing form N1 http://hmctsformfinder.justice.gov.uk/courtfinder/forms/n001-eng.pdf and take it to your local County Court.
The Court will then issue a claim which a copy will be sent to the Defendant who will have a limited time to defend it, if not you can enter Judgment and enforce.
If the claim is for £10,000 or less it will be a small claim so you will not need legal representation. Over this value you would need representation for trial.
Can I clarify anything for you about this today please?
Ash, Solicitor
Category: Law
Satisfied Customers: 10916
Experience: Solicitor with 5+ years experience
Ash and other Law Specialists are ready to help you
Expert:  Ash replied 1 year ago.
Hi

I am just following up to see if there is anything else I can help with?

If you have not done so already might I ask you to rate my answer before you go today please, the button should be at the bottom of the screen.

If you need more help please click reply.

Alex

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