DJM - Statement of Affairs released

[dpgibbons]

A lengthy discussion in the Crowdfunding thread strongly suggested that crowdfunding payments were not legally distinct from normal consumer transactions, so there would be no basis for setting them off against project costs. Even if there was such a basis, they would still have to be recorded initially as liabilities.  

 

If DJM were taking payments though DJ's personal accounts then both the company and DJ personally may be at risk: 

 

http://www.brighton-accountants.com/blog/company-bank-account/

Edited June 26, 2019 by dpgibbons

[truffy]

Surely, if DJ had access to a real, bona fide accountant, that wouldn't be allowed to happen? At least not repeatedly.

 

If my accountant allowed me to get away with potentially illegal accounting practices, at least without warning me of the dangers, I would be a very sad truffy.

[truffy]

6 hours ago, ian said:

The first payment was to fund the scanning and research - that happened so those funders have got their money's worth and are no longer creditors.

The second payment would have been to fund tooling - that was never requested and there is no tooling.

The other payments were to produce the models - ditto.

I have idly mused that myself. And wondered who really owns that 30 grand's worth of CAD that DJM claims as a company asset.

[Pete 75C]

What a mess. No disrespect to outfits other than DJM that use crowdfunding as a means to produce a model, but I now wouldn't touch crowdfunding with a bargepole. That is purely a personal opinion, but I can't be the only one to think like that. So yeah - I can imagine this whole sorry saga having a knock-on effect to a certain extent. Much has been mentioned of folk losing disposable income and writing it off as, well, disposable, obviously. Fair enough.  I feel most sorry for those who have lost money they could ill afford in the first place. Model trains, amongst other hobbies, can foster a "must-have" attitude, where financial caution is thrown to the wind in the pursuit of the latest shiny toy. Bad luck indeed.

[Legend]

Crowd funding is being tarnished by this . But actually the issue is not Crowdfunding but DJ and his shambolic approach to admin/ running a company .  Other crowdfunding companies,who have a track record of delivery should not suffer through this . I certainly wouldn't be put off if Revolution offered me a Class 303 in OO.   The issue here really is DJ. 

[ThaneofFife]

tbh i'm shocked at the level of (and still ongoing) scrutiny some quarters have taken with this whole affair when all we really want to do is play trains at the end of the day but to rip the accounts and statements apart for every last scrap of detail seems such a waste of your energy levels.   its why ive only bothered to skim read half the comments here...……..

[Legend]

8 hours ago, Persephone said:

Before I retired I worked as a senior investigator tasked to investigate serious internal and contractual fraud within Central Government. I've got a degree in financial and economic crime. DJM as a business ticked enough boxes in the indicators that would trigger a formal investigation. What's been revealed in these statements would only reinforce the decision to investigate. 

 

I agree .  Certainly at the very minimum he has failed to keep proper books and records . But what would trigger such an investigation off , the Liquidator? 

[tomparryharry]

13 hours ago, Phil Parker said:

 

In the garden railway world, there are many modellers who promise they will only buy a single steam locomotive and after a few years, own several.  I guess they believe in reincarnation and are bagging those "once in a lifetime" models for all their lives. Or perhaps they are cats...

 

The modelling world is made up of many 'once in a lifetime' moments. That's just about covering each & every one of us, me included.  I love Merchant Navies, but not all 30 of them.* To do justice to them all requires knocking down all of the houses in my street, and having a building larger than my personal imagination. That's probably why we place such emphasis on our own 'once in a lifetime' moments.

 

* Just awaiting that (very big) big lottery ticket.... 

 

Ian

[AY Mod]

10 minutes ago, ThaneofFife said:

tbh i'm shocked at the level of (and still ongoing) scrutiny some quarters have taken with this whole affair when all we really want to do is play trains at the end of the day but to rip the accounts and statements apart for every last scrap of detail seems such a waste of your energy levels.   its why ive only bothered to skim read half the comments here...……..

 

Others may say the same about the level of 'rivet-counting' on some models; I note you get involved with those topics. The content in these topics serves to assist people who have lost money. If it's not of interest you know what to do. Or I can do it for you.

[DavidH]

10 minutes ago, ThaneofFife said:

tbh i'm shocked at the level of (and still ongoing) scrutiny some quarters have taken with this whole affair when all we really want to do is play trains at the end of the day but to rip the accounts and statements apart for every last scrap of detail seems such a waste of your energy levels.   its why ive only bothered to skim read half the comments here...……..

 

If discussion about Dave's finances and plans had not been overwhelmed by this sort of attitude before it dug down deep enough to reveal what is now coming out ... just maybe Dave would have listened.

It's never just playing trains when hundreds of thousands of pounds are involved.

[JSpencer]

13 hours ago, Phil Parker said:

 

With shorter runs and a "buy it or miss out" mentality, I'm not sure the idea that there is a specific size cake that can be divided up still holds. If the right product (a Deltic perhaps) appears, then the cake might get a bit bigger that year. If there is nothing that grabs modellers, then the cake will be smaller.

 

I agree the APT was a big lolly pop model even for me. But the "buy it or miss it" attitude along with other hoops we had to jump through personally put me off. I could easily have aforded one without affecting the remaining modeling budget.

The Deltic is another lolly pop model and there is none of this BS about once in a lifetime opportunity, buy it or miss it nonsense and the said company (Accurascale) has given me customer service way above my expectations.

 

I had intended to limit my cake this year to 10 locos (to keep spending on a hobby reasonable), this later increased to 15 and now - thanks to a bargin -16. So the cake can indeed grow or shrink depending on what lolly pops are offered.

 

At the same time, how much modelers money was tied up in the DJ crowdfunding schemes? I doubt it went past 100K and this over a 2-3 year period. The market seems to be several hundred times greater than that for one year alone.  

 

 

 

 

[GWR-fan]

While the degree of interest in Dave's finances may not interest those who simply want to "play trains",  I feel that an autopsy into why DJM failed is of interest to many.  A thorough investigation of the accounts is a start.  I will be interested in any legal investigation should it be seen necessary.  DJM went into voluntary liquidation and was apparently not forced, therefore he knew that he was insolvent.   In hindsight,  perhaps that realisation should have occurred much earlier as the continual failure to bring projects to fruition seemed hampered by the constant lack of funds with Dave several times asking people to pay in full to speed up the delivery of product.  Alas, those projects are stillborn.

 

The APT seems now more like a personal ego milestone project for the company to bolster Dave's standing in the hobby and in reality had little chance of success, being an overly ambitious endeavour and underfunded.

[GWRtrainman]

10 hours ago, AY Mod said:

 

All totalling a nice round number, a bit like the cash at bank + petty cash tin.

As the Directors Loan was not on the last annual accounts, it is definitely not start up finding or evidence of remortgaging a house at the early part of the business.

 

However, many years ago when starting a business - our accountant said if you can't afford to pay yourself a salary, make a paper payment and add the debt to the Directors Loan, then you can withdraw it later on without paying further tax (or tax at a higher rate). So in theory I think Andy is right - this sudden increase in Directors Loan is quite possibly someone loading all the costs into the pot so the creditors debts are expanded.  Presumably any distribution means he would get a larger share, plus if he hadn't gone into Liquidation, then this is a nice tax free lump sum for when the company makes a profit.

 

 

 

[Richard E]

5 hours ago, maico said:

 

Without the DJM vat number on it ?

 

If so, it's pretty clear these payments weren't going through the business accounts but into what might be perilously close to a matrix scheme

https://en.wikipedia.org/wiki/Matrix_scheme

 

 

No VAT number but the Company name was on the foot of the invoice. Payment was by credit card direct with the DJM merchant account, not through his paypal account.

[Colin_McLeod]

6 minutes ago, GWRtrainman said:

Presumably any distribution means he would get a larger share, plus if he hadn't gone into Liquidation, then this is a nice tax free lump sum for when the company makes a profit.

 

 

 

If it was banked over the years as "salary" then it would be taxable.

[queensquare]

14 hours ago, John M Upton said:

I have just ordered a couple of the rapidly decreasing stock of Mermaids from Hattons. I think there are only two or three of two variations left now so if anyone still wants one of the exquisite little wagons, get in quick.  I don't there will ever be any more made.

 

I dont think in all honesty any more should be made unless they are re-tooled, they aren't very good. Dave asked me to review these for the 2mm Association. If you put proper size wheels in them rather than the grossly undersize ones fitted it soon becomes clear that something is very wrong - they sit way too tall. This error was obviously spotted late in production and the decision taken to fit undersize wheels to get them to ride at somewhere near the correct height. This was a shame as, otherwise, they were very nicely done and contained some interesting design features.

 

I decided in the end not to review it as it would serve little purpose, 2mm Association members who wanted a mermaid already had the excellent Stephen Harris kit.

 

I realise this post has little to do with the statement of affairs thread which I've just skim read but thought a picture of some trains might lighten a rather depressing theme. The mermaids are Stephen Harris kits, the Shark the excellent N gauge society kit on a 2mm Association chassis.

 

 

Jerry

[woodenhead]

47 minutes ago, queensquare said:

 

I dont think in all honesty any more should be made unless they are re-tooled, they aren't very good. Dave asked me to review these for the 2mm Association. If you put proper size wheels in them rather than the grossly undersize ones fitted it soon becomes clear that something is very wrong - they sit way too tall. This error was obviously spotted late in production and the decision taken to fit undersize wheels to get them to ride at somewhere near the correct height. This was a shame as, otherwise, they were very nicely done and contained some interesting design features.

 

I decided in the end not to review it as it would serve little purpose, 2mm Association members who wanted a mermaid already had the excellent Stephen Harris kit.

 

I realise this post has little to do with the statement of affairs thread which I've just skim read but thought a picture of some trains might lighten a rather depressing theme. The mermaids are Stephen Harris kits, the Shark the excellent N gauge society kit on a 2mm Association chassis.

 

 

Jerry

On 1970s TV this was what was known as an interlude, lovely shot.

[The Stationmaster]

3 hours ago, truffy said:

Surely, if DJ had access to a real, bona fide accountant, that wouldn't be allowed to happen? At least not repeatedly.

 

If my accountant allowed me to get away with potentially illegal accounting practices, at least without warning me of the dangers, I would be a very sad truffy.

I have often wondered if his 'accountant' was a bloke he met down the pub or possibly on Wikipedia.  Perhaps his IP advisor was also a regular in that pub - must be quite a useful place with all those 'experts' drinking there.

 

3 hours ago, truffy said:

I have idly mused that myself. And wondered who really owns that 30 grand's worth of CAD that DJM claims as a company asset.

They must be some incredible CADs if they're worth that much.  As near as I can work it out there is one (possibly three) N gauge wagon(s), the J94, the Class 71, the N gauge 'King', the Class 92, two unfinished APT vehicle CADs, and possibly the N gauge Class 17.  That's 8 CADs, possibly 10 - those for the APT are effectively worthless because they're unfinished; the J94 and Class 71 are quite old and no doubt cost a lot less than current prices.   So I can't for the life of me see how they would average c.£3,000 each in value although a few might possibly have cost more than that.

 

In some cases the 'ownership' is clearly involved in the factory dispute (the J94 and Class71) so they are really out of the calculation anyway.  The more recent ones sit in a sort of no man's land where the key question has to be whether or not the factory has been paid (or paid in full?) for the work they have done on them and in my view the jury is more than likely to still be out on that question.  If it includes the IP'd designs then somebody has clearly decided they are worthless as there is no realisable value shown and they were clearly registered by DJModels Ltd so can't be in dispute as part of the company's 'assets'.

[5944]

1 hour ago, queensquare said:

 

I dont think in all honesty any more should be made unless they are re-tooled, they aren't very good. Dave asked me to review these for the 2mm Association. If you put proper size wheels in them rather than the grossly undersize ones fitted it soon becomes clear that something is very wrong - they sit way too tall. This error was obviously spotted late in production and the decision taken to fit undersize wheels to get them to ride at somewhere near the correct height. This was a shame as, otherwise, they were very nicely done and contained some interesting design features.

 

I decided in the end not to review it as it would serve little purpose, 2mm Association members who wanted a mermaid already had the excellent Stephen Harris kit.

 

I realise this post has little to do with the statement of affairs thread which I've just skim read but thought a picture of some trains might lighten a rather depressing theme. The mermaids are Stephen Harris kits, the Shark the excellent N gauge society kit on a 2mm Association chassis.

 

 

Jerry

I didn't think the Mermaids looked right, that would explain it. At least they weren't as bad as the Ixion Manor! The images of the Shark never impressed me either. Maybe it was just the angle of the photos, but they never looked quite right. The step boards looked far too chunky for a start. 

[melmoth]

26 minutes ago, The Stationmaster said:

I have often wondered if his 'accountant' was a bloke he met down the pub or possibly on Wikipedia.  Perhaps his IP advisor was also a regular in that pub - must be quite a useful place with all those 'experts' drinking there.

 

 

Not to mention the web designer...

[GeoffAlan]

41 minutes ago, The Stationmaster said:

I have often wondered if his 'accountant' was a bloke he met down the pub or possibly on Wikipedia.  Perhaps his IP advisor was also a regular in that pub - must be quite a useful place with all those 'experts' drinking there.

 

They must be some incredible CADs if they're worth that much.  As near as I can work it out there is one (possibly three) N gauge wagon(s), the J94, the Class 71, the N gauge 'King', the Class 92, two unfinished APT vehicle CADs, and possibly the N gauge Class 17.  That's 8 CADs, possibly 10 - those for the APT are effectively worthless because they're unfinished; the J94 and Class 71 are quite old and no doubt cost a lot less than current prices.   So I can't for the life of me see how they would average c.£3,000 each in value although a few might possibly have cost more than that.

 

In some cases the 'ownership' is clearly involved in the factory dispute (the J94 and Class71) so they are really out of the calculation anyway.  The more recent ones sit in a sort of no man's land where the key question has to be whether or not the factory has been paid (or paid in full?) for the work they have done on them and in my view the jury is more than likely to still be out on that question.  If it includes the IP'd designs then somebody has clearly decided they are worthless as there is no realisable value shown and they were clearly registered by DJModels Ltd so can't be in dispute as part of the company's 'assets'.

I seem to remember the Class 17 mock ups on his stand a year or so ago. So presumably the CADs were done. Shortly after I saw this, he cancelled the Class 17.

[jjb1970]

18 minutes ago, melmoth said:

 

Not to mention the web designer...

 

Well, we are living in the post truth world now after all.

[John M Upton]

His legal advice on the 1st of May IP announcement had all the hallmarks of having  been advised by a 'Legal Advisor' who got their qualifications at the Man on the Clapham Omnibus School of Law...

[Dr Gerbil-Fritters]

58 minutes ago, 5944 said:

At least they weren't as bad as the Ixion Manor! 

 

Did Mr Jones 'design' the Ixion Manor?  I've often wondered...

[adb968008]

2 hours ago, The Stationmaster said:

 

They must be some incredible CADs if they're worth that much.  As near as I can work it out there is one (possibly three) N gauge wagon(s), the J94, the Class 71, the N gauge 'King', the Class 92, two unfinished APT vehicle CADs, and possibly the N gauge Class 17.  That's 8 CADs, possibly 10 - those for the APT are effectively worthless because they're unfinished; the J94 and Class 71 are quite old and no doubt cost a lot less than current prices.   So I can't for the life of me see how they would average c.£3,000 each in value although a few might possibly have cost more than that.

 

 

The liquidator didnt share that opinion either, they've set them to £0.

I wonder if that whole registering IP designs was a last hope of making something of value.

 

A bit like pretending the instructions card in a deck of the playing cards is an Ace when all you have left, is the instructions and an empty box.

 

Edited June 26, 2019 by adb968008