A LOAN shark narrowly avoided jail after telling a judge the 55 per cent interest he charged was "fair" and that he provided a service in his cash-strapped community.

Prosecutors said Desmond Cross's assessment of his illegal trading showed the "cavalier attitude" he took towards the laws governing the lending of money.

When arrested in January last year, the 44-year-old told investigators: "I know I have broken the law... I think we have offered a very fair service."

He roped in his partner Jacqueline Atkinson, 45, and experienced cash collector, Belinda Hughes, 48, to help with his business, Teesside Crown Court heard.

Simon Mortimer, prosecuting, said the employment of Hughes – Cross had been a customer of hers in the past – was to give Door2Door Money "an air of legitimacy".

Cross and Atkinson were already partners in a successful business – County Durham plastics manufacturers Flexothene Ltd – and the loans venture was "a sideshow".

The businessman used £5,000 of his own money and £7,000 from his Shildon-based company to start lending – even though he knew he needed a licence and did not have one.

In six months, he lent £31,200 and received £18,000 in payments with £30,129 outstanding from 83 customers – mostly recruited by Hughes from her old employers.

His barrister, Shaun Dryden, said: "The interest rates of 55 per cent are much lower than those employed by other companies I could name of 1,300 and 1,500 per cent.

"He accepts it was his idea. He decided to try to operate a better service than the one that was being offered locally, by offering loans at a better rate.

"Mr Cross knew full well there should have been a licence in place before the business could operate legally. Efforts to obtain a licence were not pursued.

"We are dealing with what would have been a legitimate business in due course, and both defendants were foolish in not ensuring a licence had been applied for."

Despite his successful business and a "substantial" income, Cross had run up massive debts because of his heroin addiction, the barrister told the court.

Mr Dryden, who also represented Atkinson, said she "was very much carried along in Cross's work" and was responsible for paperwork and checking the repayments.

Jonathan Walker, for Hughes, said she had been with a proper loan company for 12 years and took with her a full customer book and "untarnished" work record.

"She accepts, with her experience, she didn't make all reasonable enquiries or exercise all due diligence," said Mr Walker. "She closed her eyes to the possibility."

All three admitted a charge of unlawfully engaging in activities of a consumer credit business without a licence between August 2013 and January last year.

Hughes, of Charlotte Terrace, Ferryhill, and Atkinson, of Central Drive, Spennymoor, were given nine-month suspended sentences with 80 hours' unpaid community work.

Cross, of Front Street, Tudhoe Colliery, also admitted possessing criminal property and was given an 18-month suspended jail term with a three-month night-time curfew.

The judge, Recorder Patrick Palmer, told the trio: "You must regard yourself as lucky. You particularly, Desmond Cross, came very close to serving that sentence."