Box-breaking company loses £1.2m case

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Premium number scheme on locked handsets closed down by the networks

Premier Mobile Phones has instructed bailiffs to recover a £1.2 million debt against the owner of Cash My Fone after it won an acrimonious High Court case.

The claim was brought by the wholesaler’s director Richard Howard (pictured left) against the mobile phone recycler’s managing director Sathiharan Balsingam (pictured right) after a box-breaking scheme went wrong.

The claim was made against two of the latter’s companies, Momobile Worldwide and Xpress Telecom.

Howard had loaned his former friend a total of £500,000 between 2009 and 2011 in exchange for interest payments of around £5,000 per month.
Balsingam returned two payments of £100,000 in December 2012 and January 2013.

While Howard said the cash was a loan to purchase secondhand handsets, Balsingam claimed that it was an investment in a 50/50 business and that Howard was fully aware the funds were going to be used buying locked-to-network handsets, also known as “box-breaking”. However, he didn’t appeal an order by the High Court to pay £1.2 million for the original loan, costs and interest payments by an October 15 deadline.

Premium rate
Cash My Fone had been buying the handsets, which were preloaded with between £10-£20 worth of credit and shipped abroad. In order to realise a return on the credit, premium rate numbers had been set-up by Cash My Fone which were used to get a return of around £7 in every £10. The scheme collapsed when Vodafone and O2 got wise to the practice and refused to pay out the cash for the premium rate calls and texts.

Both companies have applied to be struck off at Companies House with the registered addresses being changed to an accountancy firm’s office.

Howard, who accepts he may never see his money, said he will be contacting police to make a complaint of criminal fraud against Balsingam and wants him struck off as a director. “It’s all about how thorough the receiver or liquidator is in finding the rabbit holes of cash. My money somehow went down a black hole. I loaned him the money to buy and sell phones and he took it and put it in some stupid investment. I think that’s criminal fraud.”

‘Ridiculous’ claim
Balsingam had previously told Mobile News the claim was “ridiculous”, saying he was going to apply to have it struck off prior to the deadline. He said: “We don’t owe him anything. He decided to invest but unfortunately there was a withhold from the networks. We are not going to take responsibility for something which he was fully aware of.”

At the time Balsingam accepted he may have to declare his businesses insolvent, adding: “We may have to close, it’s a lot of money.” He has not responded to requests for comment since the judgement.

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