Criminal lifestyle in confiscation

image 75Frequently a convicted defendant will be shocked by reading that he has a ‘criminal lifestyle’. The assertion may be found in a prosecutor’s s16 statement in confiscation proceedings under the Proceeds of Crime Act 2002 in England and Wales.  The defendant may think he is being accused of being a career criminal – or even a gangster like Al Capone.  The reality is rather different.

But who has a ‘criminal lifestyle’? What are the implications of a ‘criminal lifestyle’?

 

Who has a ‘criminal lifestyle’?

A defendant has a ‘criminal lifestyle’ for confiscation purposes if at least one of the three alternative criteria of s75 PoCA 2002 are met.  But he does not have a ‘criminal lifestyle’ if none of the criteria are met.  So what are these three criteria – or alternative routes to a finding that he has a ‘criminal lifestyle’?

Route 1

The first is that the defendant has been convicted of one (or more) of the offences listed in schedule 2 PoCA 2002. Many of these offences are undeniably serious, such as arms trafficking and directing terrorism.  It should come as no surprise that drug trafficking offences are also listed (although the scope of these offences may be wider than is sometimes appreciated – the defendant who has a friend’s cannabis in his pocket may be convicted of possession of a controlled drug with intent to supply).

The scheduled offences also include some offences which are less self-evidently serious

The scheduled offences also include some offences which are less self-evidently serious.  A person convicted of selling fake ‘Levi’ jeans at a car boot sale, for example, may not be severely punished for that in the Magistrates’ Court but will have a ‘criminal lifestyle’ in confiscation proceedings as his offence features in schedule 2.  (Note that Schedule 2 has been subject to various amendments since PoCA 2002 was enacted.)

In relation to the schedule 2 offences just one conviction, however small the amount involved, is sufficient to establish that the defendant has a ‘criminal lifestyle’.

Route 2

this route is intended to deal with a person who has committed a number of offences

The second route involves multiple offences of any type or types providing that the total relevant benefit obtained by the defendant from the offences (including any offences ‘taken into consideration’ in sentencing for any of the relevant offences) is at least £5,000 and either he has been convicted in the same court proceedings of at least four offences from which he has obtained a benefit, or in the six years prior to being charged with the offence currently before the court he has been convicted on at least two separate occasions of offences from which he has obtained a benefit.

So this route is intended to deal with a person who has committed a number of offences – for example a person who has been convicted of multiple thefts.

Route 3

covers a person who has been convicted of an offence carried out over a period of at least six months

The third route covers a person who has been convicted of an offence of any type carried out over a period of at least six months from which he has obtained a benefit of at least £5,000 (including any benefit from other offences ‘taken into consideration’ in sentencing for the relevant offence).

So, for example, a person convicted of receiving state benefits to which he is not entitled over a period of at least six months who obtains at least £5,000 as a result of failing to notify the authorities of a change in his circumstances will have a ‘criminal lifestyle’ – even though he will have been convicted of only a single offence.

 

In some cases the Magistrates’ Court will deal with the offence itself – but confiscation proceedings are always conducted in the Crown Court and the Magistrates will send the matter on to the Crown Court to deal with that aspect of sentencing.

 

(This article deals with the law in England and Wales.  Similar rules apply in Scotland and Northern Ireland but with some important differences.)

 

What are the implications of a ‘criminal lifestyle’?

In the confiscation proceedings perhaps the most important effect of a ‘criminal lifestyle’ is that the statutory assumptions of s10 PoCA 2002 are triggered.  When assessing the defendant’s ‘benefit’ for confiscation purposes in a ‘criminal lifestyle’ case the prosecutor will typically investigate money and assets which have passed through the defendant’s hands or come under his control since the ‘relevant day’.  The ‘relevant day’ is normally the day six years before the day on which the defendant was charged with the offence of which he has been convicted.

In effect anything the defendant has had at any time since the ‘relevant day’ is assumed to be proceeds of crime

The prosecutor may in effect assume that anything the defendant has had at any time since the ‘relevant day’ is proceeds of crime (sometimes referred to as the defendant’s benefit from his assumed general criminal conduct).  It is then for the defendant (and his legal team, possibly with the assistance of a forensic accountant such as myself) to satisfy the court that those monies or assets are in fact not proceeds of crime, for example by showing that money has come from legitimate earnings.

There are other implications of a finding of a ‘criminal lifestyle’, for example in relation to gifts made by the defendant since the ‘relevant day’, but there is not space in this article to go into further details.

Other articles on this blog deal with other aspects of confiscation in more detail.

David

15 thoughts on “Criminal lifestyle in confiscation”

  1. Would you expand on route 3 please?
    Suppose someone ‘obtains’ an amount of £2500 and say 4 years later ‘obtains’ another amount of £2500.
    Would this be considered as obtaining £5000 over a period of 6 months or more?

    1. Route 3 deals with a single offence which is continuing. It is difficult to think of an example in which property (i.e. money or another asset) would be obtained in that way from a single offence. It might more readily happen if there were two separate offences occurring (in this case) 4 years apart. The two separate offences would not then meet the criteria of route 3. But if it really was a single offence carried on over the period which resulted in two ‘instalments’ of benefit as you suggest then, yes, it would satisfy route 3.
      For example, suppose a person obtains (and retains) a contract (or obtains employment) by a (continuing) false and dishonest representation and, under that same contract obtains two payments as you suggest each of £2,500 four years apart. Then in my view that would satisfy the route 3 criteria.
      David

      1. Thanks David.

        What about two separate offences spaced apart by
        a. more than 6 months
        b. less than 6 months

        Separate could mean undeclared income from say,
        a. trading on Ebay, then later
        b. buying and selling a car for profit.

        Thanks!

        1. It really depends on what the defendant is charged with on the indictment. Two separate offences would not meet the criteria of route 3 (because neither of the offences continued for at least six months – you have to consider each offence separately) and would not meet the criteria of route 2 either (because two offences is not enough for route 2).

          But looking at the example you give of undeclared income if (a big IF) the individual was prosecuted for having income which was not declared for tax then the court would need to look at exactly what conduct constituted the offence, how long that conduct persisted, and how much tax liability arose which went unpaid as a result. If the conduct continued over at least six months (i.e. the income was eventually declared at least six months late, or was never declared at all) and the amount of tax was at least £5,000 then it could satisfy route 3.

          Have a look at my article ‘Calamitous consequence of a failure to notify HMRC‘.

          But usually HMRC do not normally prosecute people for undeclared income unless there are special circumstances (such as a history of previous failures to declare income or a suspicion of some other criminality going on as well).

          David

          1. Thanks David, you have made my original query much clearer.

            I saw the calamitous article some time ago, and use it to scare clients! It’s well written too.
            Because of this article, I no longer have CIS refunds paid to clients via my bank.

  2. I had an inheritance of £208,000 and was on benefit. I didn’t tell the local authority as I should have done because I was on benefit. The amount of overpayment was £11,986 accumulated over 12 months I offered to pay back and was refused.

    I am an OAP. on pension with no other income, I have been convicted of having a criminal lifestyle, how can this be if my only income is my pension and the inheritance which shows a paper trail.

    The money is now being Paid back

    1. Howard

      As the above article explains there are three routes to the court finding that you have a ‘criminal lifestyle’. Route 3 is relevant to your case – you committed an offence (of failing to notify a change of circumstances) over a period of at least six months & you obtained a benefit of at least £5,000 from your offence.

      You do not need to be a serious criminal or to have committed more than one offence in order for the court to find that you have a ‘criminal lifestyle’. This does not mean that the judge considers you to have been involved in a lifestyle of crime or that your standard of living has been dependent on proceeds of crime.

      However if you are able to fully repay the benefit to which you were not entitled (or stand ready to make full repayment), before any confiscation order is made against you then the Crown Court should not make a confiscation order against you, because it would be disproportionate to do so. I suggest you refer your solicitors to paragraphs [17] & [18] of the judgment of the UK Supreme Court in the case of R v Waya [2012] UKSC 51.

      David

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