Trading standards officers these days deal with a wide range of offences. Years ago trading standards work centred on checking that retailers were using correct weights and measures. That is still an element of the work, but trading standards officers today also deal with scams, frauds, dishonest overcharging, trade mark and intellectual property offences and transgressions of the Consumer Protection from Unfair Trading Regulations 2008 and other legislation.
The essence of trading standards work is the protection of consumers. So it is not surprising that in criminal prosecutions trading standards departments will focus on the loss to the consumer. That includes losses which the offender intended but failed, for one reason or another, to bring about.
For sentencing purposes it is unquestionably correct for the court to have regard to both the actual and the intended losses to consumers.
But a different approach is required in confiscation.
It should not be overlooked that the principal objective of confiscation is to deprive a wrongdoer of the financial benefit obtained by him from his criminal conduct. Self-evidently benefit which the convicted defendant had intended to obtain but did not, cannot be the subject of a confiscation order.
But equally importantly, the focus of a confiscation order is on the benefit obtained by the convicted defendant – not on the loss suffered by the consumer. As it was put succinctly in the case of R v Reynolds & Others  EWCA Crim 1455 at para [58(vi)] “the amount lost by the loser is generally irrelevant”.
But how is the benefit to be established for the purposes of the confiscation provisions of the Proceeds of Crime Act 2002?
The first step has to be the correct identification of the convicted defendant. This is particularly important where there is more than one defendant (where it is necessary to determine if each element of benefit was obtained singly by one defendant or jointly by more than one) and where a limited company is involved (where it may be necessary to consider whether the corporate veil should be pierced or to differentiate between benefit obtained by the company and benefit obtained by a director or employee).
This may involve careful consideration of matters of fact and issues of law.
Of course when there is more than one convicted defendant quite separate s16 statements are required for each defendant.
The next step is careful consideration of the precise offence(s) of which the defendant has been convicted and – if possible ‘criminal lifestyle’ is in issue – the period of time over which each offence occurred, and the number of offences of which this defendant has been convicted.
It is sometimes the case that a defendant will be prosecuted for a number of individual offences but the trading standards officers regard these specific charges as merely representative of a more widely operated illegal method of business.
In assessing the benefit of ‘particular criminal conduct’ the court will have regard only to matters which have been the subject of a charge which has resulted in conviction (and other offences taken into consideration in sentencing).
Where the offences do not appear in Schedule 2 PoCA 2002 and the aggregate benefit obtained by a convicted defendant is less than £5,000 (in England and Wales) then that defendant will not be deemed to have a ‘criminal lifestyle’ and the statutory assumptions of s10 cannot be employed.
When quantifying the benefit obtained by a convicted defendant it may, depending upon the circumstances, be appropriate to use the amount of the his profits (i.e. net proceeds), permitting him to deduct the expenses incurred in supplying the goods or services in question.
It may also be necessary to reduce the amount of benefit in respect of VAT charged to the consumers and any amounts refunded to them.
For all these reasons the benefit obtained by the convicted defendant may be very much less than the losses suffered by consumers as a result of the criminal conduct in which he engaged, or even the amount referred to by the judge when sentencing him.
So what are the key points to remember?
For the prosecution, great care needs to be taken at the charging stage regarding who to charge (and, for example, whether to charge a limited company as well as charging a director), what offence(s) to charge, and how many charges to bring.
For the defence, it is important to challenge the s16 statement appropriately having regard to applicable statute and case law and the relevant facts.
In many trading standards cases it will be useful for the defence to instruct a forensic accountant to critically review the prosecution s16 statement.
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(Note: This article applies to confiscation proceedings under the provisions of Part 2 of the Proceeds of Crime Act 2002 in England and Wales. There are a number of additional issues which could be relevant to a defendant’s confiscation proceedings in particular cases which it is not possible to deal with in a relatively short article such as this. Appropriate professional advice should be sought in each individual case.)