'I'm not sorry for wanting to be a businessman' says fraudster Mike Smallman as he is jailed for five years

Mike Smallman was convicted after a trial of fraudulently operating APM Clothing Developments, based in Newton Aycliffe, County Durham, and using his ex-girlfriend’s identity to take out pay-day loans in her name.

Smallman, who hoped to strike a deal with Manchester United to produce their football strips, was said by prosecutor Liam O’Brien to have given “sob stories” to customers about the failures to produce clothing orders and also made threats of libel actions in relation to negative posts about the business on social media.

Sentencing Smallman at Teesside Crown Court, Judge Tony Briggs said there was evidence of many thousands of pounds going to gambling accounts, money that was abstracted from his company.

He said it was a high culpability matter with a large number of victims.

About £175,000 was taken from customers with Judge Briggs declaring that more than £100,000 was as a result of fraud, committed between July 1, 2012 and November 30 2013.

Mike Smallman

One investor handed over his life savings of £19,000 and a young man who used an inheritance from his grandfather was said to have seen his dreams of moving into the clothing industry “crushed”.

The venture did not pay any tax returns and failed to pay its own staff, while some of the items that were produced were described in the trial as “tat”.

Smallman also accepted several thousand pounds from one customer even after he had been reported to police, while only a handful of refunds were paid.

The Northern Echo played its part in helping to secure Smallman’s conviction by identifying many of his victims and sharing information with the police.

The 52-year-old was previously jailed in 2008 for a massive education fraud which duped thousands of students, before being released half way through a seven year jail sentence and has convictions dating back to the late 1980s for obtaining property by deception.

He is still subject to a ten year ban from holding a directorship was also said to have a “vast amount” of money unpaid from a previous six figure proceeds of crime order imposed on him.

A probation report described him as having a thinking skills deficit and said he continued to express his innocence over his latest crimes.

Smallman, who was allowed to address the judge from the dock, said he wished he could turn the clock back and he had come out of prison with the genuine intent to run a business and make a success of it.

He said: “I cannot say I am sorry for wanting to be a businessman, but I do deeply regret that individuals lost money.

“It was never my intent to deprive them of anything and it was always my intent to fulfil the orders.

“I have a great passion to be a success and realise I lost focus on reality at some point.

“I have the will, intelligence and the want to do something good. I want to address my debt to these people, put the past behind me and make it right.”

The defendant spoke about his 40 year-old gambling habit and said he had sought help for his addiction, which had resulted in a £60,000 loss to Ladbrokes.

Mike Smallman outside the premises in Newton Aycliffe

Smallman’s barrister William Byrne said it had been a non-fraudulent enterprise originally and some items were produced for customers to a satisfactory standard.

He said: “He was not seeking explicitly to harm his customers and was trying as best as he could to move things forward.”

Judge Briggs described Smallman, whose last address was Castle Hill, Richmond, North Yorkshire, as an intelligent and articulate man with a very plausible manner and said his energy if channelled correctly would make him a legitimate success.

He said: “This has had a considerable financial impact and has caused a lot of worry, upset and disruption.

“It is plain that this business was not going to succeed - the alarm bells were well and truly ringing - and you should not have been taking further money as you went on to do.

"The very serious aspect was that you were doing it after your release from prison and while you were still on prison licence."

Detective Sergeant Jonathan Rowland, of North Yorkshire Police, said Smallman’s “overwhelming desire” to gamble was the reason for his criminality and he did not know when to stop.

He said: “It is a very good sentence and while it will not give the victims any comfort it will protect the public from Mike Smallman and his fraudulent trading."

A FORMER business partner of Mike Smallman’s has described him as a “complete conman”.

Michael Coates said Smallman had “muscled in” on his tailoring business and left him with approximately £80,000 worth of debts.

The 43-year-old was about to walk away from his Northallerton-based venture ‘Tailored by Michael Coates’ and had advertised the lease on his shop when Smallman approached him and suggested they could work together.

He said: “I had been there for a few years and it wasn’t working. He told me he had all these contacts in Thailand and created a very easy manufacturing base for me.

Tailor Michael Coates

“It grew very quickly and we then got a shop in Harrogate.

“He did the first few garments really well and I thought this was someone I can work with and we became a partnership.”

But after a successful start the business – which by now had changed its name to ‘Coates Couture’ – eventually ran into difficulties.

He said: “The greed took over, he [Smallman] began cutting corners, went to the worst tailors and was trying to bring in as many clients as he could and do it as cheaply as he could. The garments weren’t brilliantly made.

“Eventually he called it a day, the business was wound-up and I was left with a lot of debt.”

Mr Coates, from Nunthorpe, Middlesbrough, who took out a bank loan and re-mortgaged his house to finance the business, said he was pursued by bailiffs over the money owed.

He said: “It just infuriates me. I eventually rectified the debts over 11 years, but it caused me to go without a car and have to live in a bed-sit.

“Looking back I was quite naïve. It was like a whirlwind, a lot happened in a short space of time. "We went to Vietnam and Thailand looking for tailors and he [Smallman] was also sourcing garments from Bulgaria.

“I thought it was a great business model, but I didn’t know who I was working with.”

Mr Coates, who now runs a successful online business, The Sewing Guru, and is also expanding into crafting courses, added: “The guy [Smallman] is in denial, he always puts the blame on others and it is someone else’s fault.

“What he does is a disgrace. He is a complete conman.”