Fake college boss Michael Smallman must repay cash

[cerberusalert]

A man who conned the government and thousands of Teesside students out of more than £16m has been told to pay back £209,000.

 

Michael Smallman, from Northallerton, North Yorkshire, ran the National Distance Learning College (NDLC) in Middlesbrough which collapsed in 2001.

 

Of the 80,000 students who signed up for his home study courses only 18 received genuine diplomas.

 

In 2008 he was convicted of fraudulent trading and jailed for seven years.

 

The court heard that his company offered inadequate training, refused to refund students who chose not to go ahead with the course and wrongly claimed its qualifications were accredited by the City and Guilds of London Institute.

 

When it collapsed, it owed £3.5m to creditors.

 

The hearing also heard that millions made from it had been spent on horse-racing and property renovation.

http://www.bbc.co.uk/news/uk-england-tees-18272215

[MaxxPower]

In these cases does any of the money actually make it back into the hands of the people it's owed to? If he owes £3.5m to creditors then don't they normally (and wrongly in my opinion) take precedent over regular consumers?