Ise.co.uk which falsely purported to be made by customers and which contained fabricated content.
Pilley’s sister Michelle Davidson and two associates are also starting jail terms. Davidson, 49, of Thornton-Cleveleys, was found guilty of fraudulent trading; and being concerned in an arrangement which facilitates the acquisition, retention, use or control of criminal property by another. She was jailed for six years.
Lee Andrew Qualter, 52, also of Thornton- Cleveleys, was found guilty of fraudulent trading and jailed for seven years. Joel Chapman, 37, of Willerby, Yorkshire, was found guilty of fraud by false representation and given an eight-month jail sentence.
The fraud worked through a telesales operation run by companies that appeared to be independent, with Qualter as the sole director, but were actually controlled by Pilley and his sister Davidson, who were the directors of the BES energy supply companies.
The sales companies targeted small businesses and charities – including guest houses, children’s charities and companies providing support services for disabled people – as they moved into new premises or when their energy contracts were up for renewal.
In the initial ‘front end’ part of the call, the sales representative would lie about the contracts to persuade business owners to sign-up. The fraudulent mis-selling included false or misleading statements about the length and price of the contract as well as competitor rates.
Business owners were then transferred to a different sales representative who would run through terms and conditions and confirm the agreement.
This was a binding verbal contract and, because it was a business-to-business sale, there was no cooling-off period. The fraud worked because the vast majority of customers didn’t realise they had been misled at the point of entering into the verbal contract.
Evidence shows that the majority of energy contracts sold by the telesales companies went to Pilley and Davidson’s BES companies.
By 2014, the volume of business which was being placed with BES was 76 per cent, rising to 86 per cent in 2015 – with longer and more valuable contracts going to BES and the less valuable contracts going to other suppliers.
Between 2010 and 2015 annual turnover in the two BES companies grew from around £15m to £75m. By 2019 turnover was
over £100m and combined profits were between £2m and £12m.
The successful prosecution followed an investigation by the National Trading Standards Regional Investigation Team (North West).
The criminal investigation followed previous warnings and investigations from enforcement bodies, including Blackpool trading standards and Ofgem, before the current trading standards case began as a mis-selling investigation started by Lancashire trading standards as long ago as December 2013.
Lord Michael Bichard, chair of National Trading Standards, said: “Small business owners were deliberately deceived and locked in to contracts that were long-term and expensive, leaving many businesses struggling to pay the bills and sadly driving some business owners into making the difficult decision to cease trading.
“This is not a victimless crime – small business owners have lost vast sums of money to this fraud and many businesses have gone under.
“Legitimate businesses in the energy market have also lost out by missing out on energy contracts which were diverted to the BES companies.”
In a statement to the BBC after the case a representative of BES Utilities said it was important to stress that the convictions in the case related solely to individuals and not to any company.
They added: “Mr Pilley is no longer employed by any of the companies, and they will continue to trade as normal.”
Pilley, who had been League One Fleetwood Town’s chairman for 21 years, stood down from the role and as a club director soon after the guilty verdicts.
In a statement announcing his departure, the club said it had entered discussions with the EFL in relation to requirements surrounding a change of ownership and control.
His business career began when he was in his mid-20s on a market stall in Fleetwood selling sportswear. He later progressed to a shop in the town.
He started his energy business, operating from a spare bedroom, when he became a victim of the Enron collapse, losing his job with a Manchester utility firm.
In an interview with Lancashire Business View in 2015 he put the growth of his business empire down to “that personal touch” , adding: “You have got to treat the customer well so they are happy to stay with you.”
LANCASHIREBUSINES SV
IEW.CO.UK
Darran Harris Director & co-founder
/checkedsafeapp /checkedsafe
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