DJM - Statement of Affairs released

[RedgateModels]

1 minute ago, grahame said:

 

I suspect that the money raised by DJM (be it deposits, crowdfunding payments, loans, etc) has been spent on more than just CAD, and includes directors salary/withdrawals, travel costs (trips to China), advertising (in magazines and forums), website development, loan interest repayments and generally running the company. And I guess it's all gone - hence liquidation of the company and any assets it might have (not that they are worth anything).

 

G 

 

Don't forget class 17 refunds ......

[Richard E]

A couple of interesting points that seem to have been overlooked:

 

1. If the APT etc were invitations to invest then he was potentially running a collective investment scheme without the necessary authority and regulation. That is potentially an unlimited fine and disbarrment from any post of authority in the investment world.

 

2. Funding Circle is outside the scope of FCA regulation. He borrowed from a lender that is lightly regulated if at all and therefore one has to question what level of due diligence was carried out by FC (apologies if this has been said before but I'm not in the mood to reread all of the thread).

[Dr Gerbil-Fritters]

4 minutes ago, Richard E said:

A couple of interesting points that seem to have been overlooked:

 

1. If the APT etc were invitations to invest then he was potentially running a collective investment scheme without the necessary authority and regulation. That is potentially an unlimited fine and disbarrment from any post of authority in the investment world.

 

 

I'd posted this screen grab from the DJM website earlier, but it seems particularly apposite at this moment.  Judge for yourselves if there is any if in the APT funding...

 

DJMs lack of precision extends not only to dimensions of models but to the use of contractual language.

 

[Joseph_Pestell]

50 minutes ago, DavidH said:

 

"But in April, the company's shares took a hit after it announced plans to wind down a fund that financed a number of small business loans." (from the BBC article)

Coincidence? It might have set in motion a train of events, or it may not.

 

But Funding Circle has been advertising a lot recently. So still looking for more business opportunities.

[The Stationmaster]

3 hours ago, GWR-fan said:

Makes you wonder if all the crowdfunded projects were refundable deposits would any of them have actually proceeded even to the CAD stage,  let alone "imminent tooling".    Due diligence and duty of care are uppermost in my thoughts.  

 

If the deposits were non-refundable "investments" in his projects then perhaps this may partially explain his eagerness to progress projects beyond the expression of interest phase, apparently with insufficient numbers needed for production.  Hopefully,  in the fullness of time,  all will be made clear but I would not be waiting on a definitive finding from the liquidators as they seem more interested in just settling known creditor accounts and not an in depth  investigation into the funding method used.

We'll never find out the truth - be it that way or any other way.  The liquidators won't waste their time and money going beyond their fiduciary duty (which I think only extends to checking whether or not he was trading while insolvent).  I doubt any sort of fraud office or the police would be interested as it is probably a relatively minor things in their scheme of things and it would involve a disproportionate amount of work to find out one way or the other.  Maybe HMRC will take an interest (as they apparently often do when companies end in these sort of circumstances) but if they do and whether or not they will find anything to warrant prosecution we'll never know unless they find something to cause them to bring a case to court.

 

So we'll never know where the money went but judging by the deal he had with a certain factory in China I doubt if any of it went on their work on some of the recent CADs  (so I understand in the case of the 'King', and maybe other recent items) as that particular factory backloads its charges and raises them at a per unit rate across the tooling and production stages having charged nothing up to that point.  But I would be amazed if he wasn't charging for his time, such as it was, on the CADs plus no doubt overheads and as he said on the website the money was also being used to pay for advertising and there was a scanning charge for the APT which would have taken care of several thousand £s.  

 

Basically I reckon the crowdfunding money folk were giving him was in reality nothing more or less than a totally unsecured interest free loan.   And as he - in his own words - regarded it as 'investment' in his business it was his to do with exactly what he wished.  So he did.

[Legend]

It seems that  folk are quite accepting that crowdfunding money was used to fund CADS that are now worthless . This may well be true , but do we know the scale of crowdfunding money received versus what was paid on CADS . It could be 10%, 50%, 100% no one knows .   And here I comeback to my original book keeping problem . If the CADS are shown as an asset in the company  (at this stage it doesn't matter they were later written down), why is the money received from crowdfunders not shown as a liability ?  Again I come back to my basic point that there should be a list of crowdfunders shown as a credit in the accounts regardless of whether they are "investors" or creditors .  If the asset of CADS was there where is the matching liability?   Funded by the Directors Loan?  But then where is all the money the crowdfunders sent him - is it even in the company or has DJ got it in a bank account somewhere , or has he spent it ?

 

There are just so many questions that are unresolved here , and somewhat disappointingly it doesn't seem like there is much hope that the Liquidators might do it .   I really think they have a duty to investigate.

 

To me the major points are

1. How much money was raised in Deposits etc for 92s , APTs etc ? We really have no idea of the scale of this but its likely to be significant

2. Where was the money paid, how was it used - is it in the company at all?

3. Why are there no crowdfunders listed in creditors?

 

Businesses can fail , but there is a basic requirement to keep proper books and records . That is the law.  It just doesn't seem to have happened here but so far it seems the liquidators are not engaged , and as enthusiasts we seem accepting that we will just write off the money . Its true I don't think anyone will get any money back  , so you may say why bother , whats the point?  There's just this overwhelming feeling that DJs getting away with it .   If there was a sensible list of monies received and spent it might explain a lot . But it doesn't look like we are anywhere close or likely to be in the future

[DavidH]

6 minutes ago, Legend said:

If the CADS are shown as an asset in the company  (at this stage it doesn't matter they were later written down), why is the money received from crowdfunders not shown as a liability ?

 

Possibly, because in Dave's interpretation of bookkeeping, this was simply income that is now spent?

 

Regardless of the right and wrong way of doing it, if you're treating the deposits as income for the company then presumably you won't list it as a liability once it's gone (regardless of statements made on here that the money was for a particular model [he did say the money was ring-fenced, didn't he? Or was that another collective assumption, like the re-mortage?]).

 

10 minutes ago, Legend said:

so far it seems the liquidators are not engaged

 

I think that's an assumption based on reports from possibly two or three people here, and your reading of their interpretation of the response they got from the liquidator.

 

The person with DJM on their desk will have other work, and they'll do a bit at a time as information comes in. It's early days. Who knows what they turn up in time - or, they'll do the statutory minimum because there aren't enough assets to pay for their time to do any more?

 

16 minutes ago, Legend said:

as enthusiasts we seem accepting that we will just write off the money

 

Quite a lot of RMWebbers said exactly that when they were signing up for APTs and were being warned about the lax documentation or other issues.

 

22 minutes ago, Legend said:

Its true I don't think anyone will get any money back

 

Other than the people who have already said they've got it back or are getting it back?

 

[Mike Harvey]

19 minutes ago, DavidH said:

 

Possibly, because in Dave's interpretation of bookkeeping, this was simply income that is now spent?

 

Regardless of the right and wrong way of doing it, if you're treating the deposits as income for the company then presumably you won't list it as a liability once it's gone (regardless of statements made on here that the money was for a particular model [he did say the money was ring-fenced, didn't he? Or was that another collective assumption, like the re-mortage?]).

 

 

Somebody did write on here that Dave wouldn't provide a refund because DJM had already paid the VAT on the money. He would need to keep a comprehensive record of receipts to account for the VAT to be passed over to HMRC.  If he did not.....then HMRC may take an interest. A close acquaintance of mine ended up bankrupt because he had kept the records but not passed all the VAT due to HMRC, until they came for it and took just about all his realisable assets to cover the shortfall, in lieu of prosecution.

[Phil Parker]

56 minutes ago, Legend said:

There are just so many questions that are unresolved here , and somewhat disappointingly it doesn't seem like there is much hope that the Liquidators might do it .   I really think they have a duty to investigate.

 

To me the major points are

1. How much money was raised in Deposits etc for 92s , APTs etc ? We really have no idea of the scale of this but its likely to be significant

2. Where was the money paid, how was it used - is it in the company at all?

3. Why are there no crowdfunders listed in creditors?

 

Businesses can fail , but there is a basic requirement to keep proper books and records . That is the law.  It just doesn't seem to have happened here but so far it seems the liquidators are not engaged , and as enthusiasts we seem accepting that we will just write off the money . Its true I don't think anyone will get any money back  , so you may say why bother , whats the point?  There's just this overwhelming feeling that DJs getting away with it .   If there was a sensible list of monies received and spent it might explain a lot . But it doesn't look like we are anywhere close or likely to be in the future

 

The liquidators' job involves staying in business themselves by not spending more on an investigation than they will get back in fees. That might not suit people on here, but it is the reality of the situation. If something illegal has gone on, then it's up to the statutory authorities to investigate, but I doubt this case is big enough to trouble them much. Even if they did, as others have said, the only way we will find out about it would be if it went to court. It's not the Police/SFO/HMRC's job to provide us with entertainment.

 

Even if we had a full account of every penny spent, it still wouldn't satisfy people - the first argument would be if Dave should have been paid for project management, with many claiming he should have done it for nothing as a hobby. Then there would be the "experts" pile in and claim tiny amounts could have been saved here and there. End result - lots of noise and no change to the situation.

[hayfield]

1 hour ago, Joseph_Pestell said:

 

But Funding Circle has been advertising a lot recently. So still looking for more business opportunities.

 

How is it that some companies can continue to trade quite happily making losses, when others like DJM have to cease trading ?

[TheQ]

2 minutes ago, hayfield said:

 

How is it that some companies can continue to trade quite happily making losses, when others like DJM have to cease trading ?

He didn't convince hundreds of investors to believe in unicorns..

[hayfield]

20 minutes ago, Mike Harvey said:

 

Somebody did write on here that Dave wouldn't provide a refund because DJM had already paid the VAT on the money. He would need to keep a comprehensive record of receipts to account for the VAT to be passed over to HMRC.  If he did not.....then HMRC may take an interest. A close acquaintance of mine ended up bankrupt because he had kept the records but not passed all the VAT due to HMRC, until they came for it and took just about all his realisable assets to cover the shortfall, in lieu of prosecution.

 

May have been stated before but I though VAT was payable on sales ? no item has been made, so as nothing has been sold how can VAT have been paid?

[norman]

Trading losses can be incurred and accepted providing there are reserves i.e. money in the bank.  It's not unusual for start-ups to have initial trading losses while they build up the business.

Norman

[Mike Harvey]

7 minutes ago, hayfield said:

 

May have been stated before but I though VAT was payable on sales ? no item has been made, so as nothing has been sold how can VAT have been paid?

 

DJModels issued sales invoices which included VAT. So it collected the VAT and was not entitled to keep it for itself. The deposit/instalment was an advance/part payment for the final item and therefore VAT was due. How else would you account for the VAT element? 

[Vistisen]

2 hours ago, DavidH said:

 

"But in April, the company's shares took a hit after it announced plans to wind down a fund that financed a number of small business loans." (from the BBC article)

Coincidence? It might have set in motion a train of events, or it may not.

Then he did produce a train after all

[PenrithBeacon]

57 minutes ago, Mike Harvey said:

 

Somebody did write on here that Dave wouldn't provide a refund because DJM had already paid the VAT on the money. He would need to keep a comprehensive record of receipts to account for the VAT to be passed over to HMRC.  If he did not.....then HMRC may take an interest. A close acquaintance of mine ended up bankrupt because he had kept the records but not passed all the VAT due to HMRC, until they came for it and took just about all his realisable assets to cover the shortfall, in lieu of prosecution.

When I ran my own business I had an accountant to do all that for me. I just passed on all the receipts to them and they did it all. They would also offer do's and don'ts advice!

I would hope that DJ had the sense to do the same, I fear I would have got into a right mess without them.

 

Regards

[Oldddudders]

3 minutes ago, PenrithBeacon said:

When I ran my own business I had an accountant to do all that for me. I just passed on all the receipts to them and they did it all. They would also offer do's and don'ts advice!

I would hope that DJ had the sense to do the same, I fear I would have got into a right mess without them.

 

Regards

No-one has unearthed a qualified accountant by name as part of DJ's setup. Someone mentioned Donald Rumsfeld on here. When you have a huge pile of unknown unknowns as DJ seems to have had, you have no idea how bad things are. 

[wasabi]

Could it be that DJ thought that by referring to what I (and others) see as sales by instalments as crowd-funding he could avoid having to charge VAT and thus, in effect, be undercutting competitors?  That sort of thinking might attract interest from HMRC.  Buying shares in a company through crowd funding (the main use of it, at least as far as I have seen) is one thing because there is no VAT anyway and future rewards are indeterminate.  But trying to translate the same methodology to straightforward retail sales strikes me as rather different.

[AY Mod]

18 minutes ago, wasabi said:

Could it be that DJ thought that by referring to what I (and others) see as sales by instalments as crowd-funding he could avoid having to charge VAT and thus, in effect, be undercutting competitors?

 

Some users have quoted receipts itemising VAT on the deposit, which is as would be required.

 

All mentions of 'investments' are red herrings; people were paying, by instalments, for a specific product and, as such, the Consumer Rights Act applies to all sales. Depositors did not buy shares or interests in the business/product and neither was the money any form of gift or donation.

[AY Mod]

21 hours ago, PMP said:

Caribbean? That’s so 2017...

https://davejonesphotography.zenfolio.com/f176577296

 

Have you tried the 2018 Jigsaw Puzzle yet? There's some pieces missing and there's some cloudy bits that you can't quite tell where they go but if you screw your eyes up and look at it there's no mistaking what it is.

[Colin_McLeod]

1 hour ago, AY Mod said:

 

Some users have quoted receipts itemising VAT on the deposit, which is as would be required.

 

All mentions of 'investments' are red herrings; people were paying, by instalments, for a specific product and, as such, the Consumer Rights Act applies to all sales. Depositors did not buy shares or interests in the business/product and neither was the money any form of gift or donation.

 

Therefore those that paid should appear as creditors unless they have already been supplied with the model.

[The Stationmaster]

54 minutes ago, Oldddudders said:

No-one has unearthed a qualified accountant by name as part of DJ's setup. Someone mentioned Donald Rumsfeld on here. When you have a huge pile of unknown unknowns as DJ seems to have had, you have no idea how bad things are. 

I think his first initial is 'W' - you can guess the others

[stewartingram]

5 hours ago, DavidH said:

 

"But in April, the company's shares took a hit after it announced plans to wind down a fund that financed a number of small business loans." (from the BBC article)

Coincidence? It might have set in motion a train of events, or it may not.

Ahh - but were the CADs for the train completed? Or indeed, were they crowdfunded?

 

Stewart

[truffy]

2 hours ago, Colin_McLeod said:

 

Therefore those that paid should appear as creditors unless they have already been supplied with the model.

Unless they've purchased the research/CAD as the first stage of the production process.

Further payments to deliver a model were not taken, so no model could have been supplied, but that doesn't mean that money hasn't been used to produce something tangible (albeit valueless according to the SoA).

1 hour ago, The Stationmaster said:

I think his first initial is 'W' - you can guess the others

-ally? Or -aldo if you're in the US.

[melmoth]

 

1 hour ago, The Stationmaster said:

I think his first initial is 'W' - you can guess the others

 

15 minutes ago, truffy said:

-ally? Or -aldo if you're in the US.

 

I was thinking of something altogether more nautical...