Tag Archives: Money laundering

Were the Court of Appeal right? A s22 POCA variation case

Scales of justiceA recent Court of Appeal decision on a s22 PoCA 2002 variation gives some food for thought.
The nub of the case presented to the Court concerned the Crown Court judge’s interventions in the cross-examination of a defence witness.  On appeal it was suggested that the judge had gone too far and had effectively become a second prosecution counsel.

But for me the more interesting issues lay elsewhere.

The defendant’s history

The defendant’s history was not in dispute. He had twice been the subject of a confiscation order under PoCA 2002.

On 24 August 2007 Carl O’Flaherty and another person were in a vehicle stopped by police.  The vehicle was searched and 20 small bags and one large bag of cannabis were found.  Mr O’Flaherty’s home was searched and cash contaminated with cannabis was found there.  The defendant pleaded guilty to possession of the cannabis in the vehicle with intent to supply.

On 1 November 2010 a confiscation order was made.  The benefit figure was £30,350.20 and the defendant’s available amount at that time was found to be £5,135.00.  He was ordered to pay £5,135.00.  This was paid in full.

Subsequently in February 2011 it was discovered that Mr O’Flaherty and others had loaded cash onto a Thomas Cook Cash Passport Account throughout 2010 and 2011 in order to launder money.  On 18 January 2013 he was convicted of conspiracy to convert, transfer and remove from England and Wales criminal property.

On 20 December 2013 Mr O’Flaherty was made the subject of a confiscation order comprising benefit of £27,556.06 and available amount of £871.51. This led to a confiscation order for £871.51.  This was paid in part.  At the time of the s22 hearing £120.00 remained outstanding.

In 2016 the Crown identified a residential property held in Mr O’Flaherty’s name.  A restraint order was obtained and an application was made for variation under s22 PoCA 2002.

The s22 hearing

At a hearing on 5 December 2016 the Crown argued that Mr O’Flaherty held a 100% equitable interest in the residential property, which had an agreed value of £65,000, and sought variation of both confiscation orders to require payment of additional amounts and provide new default sentences.

Mr O’Flaherty’s case was that he owed money to his employer, Mr Usta, which should be deducted from the equity in the property in arriving at his available amount.  Mr O’Flaherty had intended to purchase the property for £43,000 with a mortgage from Santander, but Santander pulled out after their surveyor had inspected the property.

Mr O’Flaherty then approached his employer who lent him £30,000 on the understanding that he would be repaid £40,000 after six months (when Mr O’Flaherty expected to have sold the property for £65,000).  There was no written loan agreement or legal charge document.

In the event the property sale did not go through as planned after the restraint order had been obtained.

Mr Usta and Mr O’Flaherty both provided written witness statements and gave oral evidence at the s22 hearing.

It appears that no documentary evidence was put before the Crown Court to confirm the original involvement of Santander, the payment of £30,000 from Mr Usta to the defendant, or the defendant’s employment with Mr Usta (of which apparently HMRC had no record).  Nothing had been filed at the Land Registry concerning Mr Usta’s interest in the property.

The Crown Court judge accepted the prosecution’s submissions, rejected the evidence of the defendant and Mr Usta, and varied both confiscation orders as requested by the Crown.

Mr O’Flaherty appealed, R v O’Flaherty [2018] EWCA Crim 2828.

The issue raised in the appeal

The issue raised at the appeal concerned the judge’s treatment of Mr Usta at the hearing.

When examined in chief Mr Usta had simply confirmed his written statement, setting out that he had lent the defendant £30,000 and expected £40,000 in return, to be true.

The Crown indicated it had no questions for Mr Usta in cross-examination.

Unusually, the judge then asked Mr Usta a series of questions.  The judge was polite, but sceptical.  He asked for clarification of the terms of the loan, why there had been no agreement in writing and no involvement of a solicitor.  The judge also enquired about the lack of evidence of the defendant being employed by Mr Usta and the extent to which Mr Usta was aware of the defendant’s criminal record.

On appeal it was submitted that the judge had acted improperly in challenging the witness on issues which could have been raised by the Crown in cross examination but had not.

The decision on the appeal

The Court of Appeal dismissed Mr O’Flaherty’s appeal (except to the extent that the s22 order was amended to correct a figure which both sides agreed to have been incorrect in the original order).

The Crown Court judge was entitled to efficiently and courteously seek clarification of the defendant’s case and to raise matters with Mr Usta which cried out for challenge.

The Court of Appeal found that the Crown Court judge had exercised considerable self-restraint and simply obtained from Mr Usta confirmation as to what his case was.

The judge’s questions related to matters referred to by Mr Usta in his witness statement.  Had Mr Usta been properly questioned by the prosecution no intervention would have been needed from the judge.  At the end of the judge’s questions he asked counsel for the defendant whether he had questions by way of re-examination and counsel did so.  There was therefore no apparent or real unfairness or bias in the proceedings.

A couple of obvious points

Let’s deal with a couple of obvious points first.

The defence case rested upon the assertion of certain facts, the most fundamental of which was that Mr Usta had lent £30,000 to the defendant – but not even the most basic documentary evidence (the bank statements of the defendant and Mr Usta showing the loan being made) were produced to the court.

A Crown Court deals every day with criminals who tell lies when it suits them.  So supporting evidence is vital.  All the more so when what is being asserted appears unusual.  Whatever relevant documents which could be found should have been produced to the court (in advance of the hearing).

Secondly, to be effective the defendant had to show that he had less than a 100% interest in the property because Mr Usta also had an interest in it.  But it seems that all that was being asserted was that the defendant owed a significant sum of money to Mr Usta.  That, on its own, would not have reduced the defendant’s ‘available amount’ for confiscation purposes (but the agreement of a loan secured on the property would have done).

The standard and burden of proof

It is settled law that at a confiscation hearing the burden is on the defendant to satisfy the court, on the balance of probabilities, that his available amount is less than his benefit.

But what is the position on an application for a variation under s22?

The Court of Appeal held that “The burden of proof was the balance of probabilities and lay with [Mr O’Flaherty]”.

But what does this mean?  I would suggest that what the Court of Appeal meant here was that the Crown had produced evidence sufficient to satisfy the court that the defendant now appeared to have an ‘available amount’ which exceeded the ‘relevant amount’ referred to in s22(8) – which in this case was the ‘available amount’ shown in the original confiscation order.  In that way the Crown had appeared to satisfy the ‘trigger condition’ of s22(4).

That having already been done, the burden of proof was then on the defendant to rebut that or to satisfy the court concerning the amount which it would be ‘just’ to order him to pay (which would normally be based on his current ‘available amount’) to enable the court to vary (or to decline to vary) the confiscation order.

The more interesting issue

The more interesting issue, to me at least, concerns the lack of attention to s8 PoCA 2002 by both the Crown Court (on more than one occasion) and the Court of Appeal.

Looking back at Mr O’Flaherty’s history we can see that the offences of which he was convicted in 2010 (possession of a controlled drug with intent to supply) and 2013 (conspiracy to convert, etc criminal property) were both Schedule 2 ‘criminal lifestyle’ offences.

Section 8 spells out how the court should deal with a defendant who is, for a second time, subject to ‘criminal lifestyle’ confiscation.

In effect the benefit found in the later confiscation order must include the benefit found in the earlier confiscation order, with a deduction for the amount which the defendant has previously been ordered to pay under that first confiscation order (to avoid double counting).

When making the new confiscation order the court also must not recognise any other alleged benefit obtained by the defendant prior to the date of the earlier confiscation order, see R v Chahal & Chahal [2014] EWCA Crim 101.

So in 2013 when making the new confiscation order the Crown Court should have proceeded in the following way.  Firstly, it should have identified all the benefit obtained by the defendant after 1 November 2010 (the date of the first confiscation order).

That would include both the benefit of his particular criminal conduct obtained after that day and the assumed benefit in relation to, for example, property transferred to the defendant after 1 November 2010.  In effect the ‘relevant day’ for the purposes of the s10 PoCA 2002 assumptions would be 1 November 2010, see s10(9).

In respect of benefit obtained by the defendant on or before 1 November 2010 the Crown Court would be obliged, when making the new order, to accept the benefit figure of £30,350.20 in the earlier order as being a correct statement of ALL the benefit obtained by this defendant from his criminal conduct up to that date.

This £30,350.20 should have been included as benefit within the second confiscation order, but subject to a deduction of £5,135.00 (which is the amount which the defendant had been ordered to pay under the original order).

So there would be £25,215.20 to include in Mr O’Flaherty’s benefit as his total benefit obtained up to 1 November 2010, and this should have been included in the benefit figure in the 2013 confiscation order.

The original order would then in effect cease to operate (except in respect of any action to enforce collection of the £5,135.00 previously ordered to be paid).

If subsequently the Crown wished to proceed under s22 it would do so only under the second confiscation order (as the unpaid benefit under the first order would be included within the benefit figure in the second order).

It seems clear that the Crown Court when making the second order in 2013 failed to do this.

When in 2016 the Crown Court considered the s22 application it could, in my view at least, have been argued that in consequence of s8 the 2013 order must be viewed as including ALL the benefit obtained by Mr O’Flaherty up to 20 December 2013.  On that basis it would not be open to the Crown Court to entertain any application under s22 in respect of the first confiscation order.

However there is nothing to suggest that this argument was put at that time or that the Crown Court’s attention was drawn to s8 on this occasion either.

Again when the s22 variation was appealed s8 could have been discussed.  But there is nothing in the Court of Appeal judgment to suggest that s8 was referred to in legal submissions or oral argument before the Court.

Perhaps if it had been the outcome would have been different.

As things have turned out it is difficult to conclude that Mr O’Flaherty has suffered any major injustice.  It might be more accurate to suggest that he has failed to gain the advantage of a peculiarity in confiscation law.

As an aside, it would have been open to the prosecution in 2013, before the second confiscation order was made, to have made an application to the Crown Court under s21 PoCA 2002 to have the benefit figure in the 1 November 2010 confiscation order increased to reflect new information (concerning the money laundering offending which apparently occurred throughout 2010) which had come to light.

Had that been done then the benefit to be included within the second order would have been able to fully reflect Mr O’Flaherty’s benefit obtained up to 1 November 2010.

In my view that would have been the proper way to deal with Mr O’Flaherty’s case.

Contacting us

Our contact details are here.

David

(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.)

UK Supreme Court rules on money laundering arrangements

Supreme Court logoThe UK Supreme Court recently ruled on the law relating to prosecutions for entering into, or becoming concerned in, an arrangement which facilitates the acquisition, retention, use or control of criminal property for, or on behalf of, another person – contrary to s328 Proceeds of Crime Act 2002.

The case arose as a result of the actions of a fraudster, referred to as ‘B’.

Shortly before commencing his fraud the defendant, referred to as ‘H’, opened two bank accounts and handed control of them to ‘B’ who then used them in connection with his frauds.  ‘B’ conned unsuspecting members of the public into making payments into these bank accounts (for services which in truth were non-existent).

The prosecution case was that ‘H’ must have known or at least suspected that ‘B’ had some criminal purpose even if he was not aware of the details of the con.  ‘B’ was convicted of fraud.  ‘H’ was charged with becoming concerned in an arrangement contrary to s328 PoCA 2002.

The Supreme Court was required to consider whether, in the circumstances alleged, ‘H’ could be guilty of a s328 offence – R v GH [2015] UKSC 24 (22 April 2015).

The Supreme Court broke the issue down into four key questions.  In addressing those questions it overturned some decisions of the courts below.

 

1  Must the property be ‘criminal property’ before the arrangement operates on it?

Counsel for the prosecution submitted to the Supreme Court that the same conduct could both cause property to become criminal and simultaneously constitute the offence charged under s328.  He made the same submission in relation to sections 327 and 329, correctly recognising that the three sections have to be construed coherently.

So, he submitted, a thief who steals “legitimate” property is necessarily at the same time guilty of “acquiring criminal property” contrary to s329.

The Supreme Court rejected that view, holding that it failed to recognise the necessary distinction between a person who acquires criminal property and one who acquires legitimate property by a criminal act or for a criminal purpose.

Sections 327, 328 and 329 are aptly described as “parasitic” offences because they are predicated on the commission of another offence which has yielded proceeds which then become the subject of a money laundering offence.

The Supreme Court therefore approved the decision of the Court of Appeal in an earlier case R v Geary [2010] EWCA Crim 1925 that to say that s328 extends to property which was originally legitimate but became criminal only as a result of carrying out the arrangement is to stretch the language of the section beyond its proper limits.  I have discussed the Geary case more fully in an earlier article on this blog.

However, for example, a thief who steals legitimate property might then commit a s329 money laundering offence by his possession or use of that property after his acquisition of it.

In practice such a thief should normally face a charge of theft rather than one of money laundering.  But the legal point that he may also be guilty of a money laundering offence is an important one because of the obligation on banks & others in the ‘regulated sector’ to report suspicions of money laundering under s330.

 

2  Must the ‘criminal property’ exist before the defendant joins the arrangement?

The Supreme Court agreed with the decision of the Court of Appeal in holding that it does not matter whether criminal property existed when the arrangement was first hatched.  What matters is that the property should be criminal property at a time when the arrangement operates on it.

It should be noted that the Supreme Court did not hold it to be necessary that the property should be criminal property at the time when the arrangement commences to operate on it.

The offence is complete when the arrangement becomes one which facilitates the acquisition, retention, use or control of criminal property for, or on behalf of, another person and the defendant knows or suspects this to be the case.

 

3  Were the monies ‘criminal property’ before being paid into the defendant’s bank account?

Counsel for the prosecution made a somewhat technical submission to the Supreme Court that the monies banked were criminal property at the time of payment because they represented a chose in action, namely the obligation of the purchasers of the supposed services to pay for them.

The Supreme Court were unimpressed by this submission, holding that there was a stark absence of material before the court to substantiate a case of this nature.

However the court did not close the door on such an argument being successfully presented in a future case.

 

4  Was the actus reus of the offence committed on the facts of the case?

Looking at the substance of the matter, the money paid by the victims into the accounts was lawful money at the moment at which it was paid into those accounts.  It was therefore not a case of the account holder acquiring criminal property from the victims.

But by the arrangement the respondent also facilitated the retention, use and control of the money by or on behalf of ‘B’.  Did the arrangement regarding the facilitation of the retention, use and control of the money fall foul of s328 on the basis that it was criminal property at that stage, since it was the proceeds of a fraud perpetrated on the victims?

In this case the character of the money did change on being paid into the defendant’s accounts.  It was lawful property in the hands of the victims at the moment when they paid it into the defendant’s accounts.  But it then became criminal property in the hands of ‘B’, not by reason of the arrangement made between ‘B’ and the defendant, but by reason of the fact that it was obtained through fraud perpetrated by ‘B’ on the victims.

There was a crucial difference therefore between this case and the situation in Geary (in which the arrangement itself had been the reason that the property in question became criminal property).

The Supreme Court (overturning the decision of the Court of Appeal) held that there was no artificiality in recognising that change in character of the money, and that it would be appropriate to regard the defendant as entering into or becoming concerned in an arrangement to retain criminal property for the benefit of another.

It was the retention, use & control of the monies after they had been paid into the bank accounts as the result of a fraud, under the bank account arrangement made earlier between ‘B’ & ‘H’, which could properly form the basis of a conviction of ‘H’ under s328.

 

Contacting us

Our contact details are here.

David

(Note: This article applies to prosecutions under the provisions of Part 7 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 trial 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.)

OFT penalises estate agents under MLR 2007

Estate agents boards copyright David Winch 2014In one of its last acts the Office of Fair Trading has penalised three firms of estate agents for failures to comply with the Money Laundering Regulations 2007.

Estate agents based in the UK dealing with the sale or purchase of land or property fall within the ‘regulated sector’ for the purposes of MLR 2007 and, in the course of that work, are obliged to comply with MLR requirements.

 

What went wrong?

The OFT penalised Hastings International UK Ltd (an estate agent in south London) £47,966; Jackson Grundy Ltd (Northampton) £169,652; and Jeffrey Ross Ltd (Cardiff) £29,000.

The failures in all three cases were described by the OFT as significant and widespread and included failure to:

  • Apply adequate customer due diligence measures when carrying out estate agency work;
  • Conduct ongoing monitoring of business relationships;
  • Establish and maintain appropriate policies and procedures on adequate record-keeping, internal controls or risk assessments; and
  • Train relevant employees in how to recognise and deal with transactions and other activities which may be related to money laundering and terrorist financing.

The MLR 2007 provide civil penalties for such failures.

These penalties will provide a wake up call to any other estate agents who are not properly implementing the anti-money laundering requirements.  These penalties may be subject to appeal.

 

Goodbye OFT, hello HMRC

From 1 April 2014 the Office of Fair Trading has ceased to exist.  Its responsibilities in relation to monitoring estate agents’ compliance with MLR 2007 have been passed to HM Revenue & Customs.  HMRC already monitor the MLR compliance of certain other types of business including ‘money service businesses’, ‘high value dealers’ and those accountants who are not members of another supervisory body.

David

Appealing out of time after a change of law

When the law changes can an appeal be made to the Court of Appeal outside the normal time limits?

Normally an appeal against a decision of the Crown Court in England and Wales has to be submitted within 28 days of the decision. But the Court of Appeal can give leave for an appeal to be heard where the deadline has been missed – and has done so in some cases where the deadline has been missed by months or even years.

Where a defendant has suffered a decision which, though it appeared to be well founded at the time it was made, now appears to be incorrect in the light of subsequent case law, what is the position regarding the submission of an appeal out of time?

This is an issue which arises from time to time – and may be particularly topical following the decision of the UK Supreme Court in the case of R v Waya [2012] UKSC 51.

 

The general rule

The general rule is that the Court of Appeal will not allow an appeal to be made out of time if the only reason for the appeal is that subsequent cases have shown the previous perception of the legal position was mistaken.

This was set out many years ago in the case of R v Mitchell [1977] 65 CAR 185 when it was said that, “It should be clearly understood, and this court wants to make it even more abundantly clear, that the fact there has been an apparent change in the law or, to put it more precisely, the previous misconceptions about the meaning of a statute have been put right, does not afford a proper ground for allowing an extension of time in which to appeal against conviction”.

That rule has been reiterated many times since.  See, for example, the comment, “alarming consequences would flow from permitting the general re-opening of old cases on the ground that a decision of a court of authority had removed a widely held misconception as to the prior state of the law” from the case of Ramsden [1972] Crim LR 547 and repeated, with approval, in the case of R v Ramzan & Others [2006] EWCA Crim 197 at paragraph [30].

In the case of R v Cottrell [2007] EWCA Crim 2016 it was said, at paragraph [42], “there is a continuing public imperative that so far as possible there should be finality and certainty in the administration of criminal justice.  In reality, society can only operate on the basis that the courts administering the criminal justice system apply the law as it is.  The law as it may later be declared or perceived to be is irrelevant”.

But there have been exceptions made to the general rule.

 

Substantial injustice

It does appear to be the case that where the Court of Appeal can be satisfied that a defendant has suffered a substantial injustice then it can be persuaded to hear an appeal out of time. In the case of Hawkins [1997] 1 Cr.App.R 234 the Court of Appeal commented that “the practice of the Court has in the past, in this and comparable situations, been to eschew undue technicality and ask whether any substantial injustice has been done”.
So, for example, where a defendant has been convicted of an offence of which, under a new understanding of the law, he could not now be found guilty – but the evidence shows that he must have been guilty of another similar offence (of which he had not been charged), then the Court of Appeal will generally not allow an appeal to be heard out of time. This was the position of a Mr Malik who had been convicted of conspiracy to launder money prior to the ruling in R v Saik [2006] UKHL 18 (which changed the law regarding the conspiracy offence where there was merely a suspicion that monies were proceeds of crime). The Court of Appeal considered that there was ample evidence of the substantive offence of money laundering in Mr Malik’s case and refused him leave to appeal his conviction out of time.

In R v Charles [2001] EWCA Crim 1755 the Court of Appeal said, at paragraph [41], “In practice judges and courts are probably not as reluctant to grant extensions of time as the authorities may suggest. It has been the experience of the members of this Court that consideration will usually be given to the merits before declining to grant an extension of time. Both in Jones (No. 2) and Asraf, the merits were considered notwithstanding the absence of any proper explanation for the delay. There are some cases, such as those where the applicant wishes to rely on fresh evidence unavailable at trial, where the extension of time will be readily granted. There are cases such as those envisaged in Hawkins where it will not be”.

 

Failure to address a key issue

Perhaps slightly different are cases where, because the law was not properly understood at the time, a key issue in the proceedings was not recognised and addressed in the Crown Court. This is illustrated by the case of Bell & Others v R [2011] EWCA Crim 6.

Mr Bell was subject to a confiscation order made in 2007 after he had been convicted of being knowingly concerned in the fraudulent evasion of the duty chargeable on cigarettes contrary to section 170(2)(a) Customs and Excise Management Act 1979. The confiscation order was based on the amount of duty evaded when the cigarettes in question had been smuggled into the UK. But in fact it does not follow that a person committing this offence is himself liable for the duty and thus has ‘obtained’ a pecuniary advantage which would form the basis for a confiscation order. That had not been appreciated by the Crown Court at the time the confiscation order was made. In consequence the Crown Court had not addressed the question of whether Mr Bell was himself liable for the evaded duty and evidence relevant to that issue had not been obtained.

Subsequently the Court of Appeal had decided the case of White & Others v The Crown [2010] EWCA Crim 978 which highlighted this issue. Mr Bell then lodged an appeal against the confiscation order made against him three years earlier.

Before the Court of Appeal it was accepted that, in fact, Mr Bell had not been personally liable for the evaded duty. The Court of Appeal granted leave to appeal the confiscation order out of time because “it would be a grave injustice not to grant leave”.

In place of a benefit of £157,775 based on the evaded duty, Mr Bell was made subject to a confiscation order of just £950 based on the payment he had received for his role in the smuggling offence.

 

The impact of R v Waya

We have yet to see whether the Court of Appeal will grant leave to appeal confiscation orders out of time following the decision of the UK Supreme Court in the case of R v Waya [2012] UKSC 51.

The Waya case decided two points of principle: (1) confiscation orders should not be ‘disproportionate’ because that would infringe Article 1 of the First Protocol to the European Convention on Human Rights and (2) a mortgage applicant does not ‘obtain’ a mortgage advance (for confiscation purposes) if that advance is simply paid to a solicitor, acting on behalf of both the applicant and the lender, and then remitted to the vendor of the property being purchased (or his solicitor) – because the mortgage applicant does not at any stage gain ‘control’ of the monies advanced.
It may be that defendants who have been subject to a confiscation order which they consider is more severe than the Crown Court would have made had the decision in Waya been available at the time will now seek to appeal their orders. It will be very interesting to see how such appeals are dealt with by the Court of Appeal.

David

EDIT: A further article on the subject updates the position: Appealing a confiscation order out of time.

(Note: This article applies to confiscation orders 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 order 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.)

The Money Laundering (Amendment) Regulations 2012

Amendments to the Money Laundering Regulations 2007 came into force on 1 October 2012, but what effect will these have on practitioners?  The answer in most cases is likely to be ‘little or none’.

It is now five years since the Money Laundering Regulations 2007 were introduced.  HM Treasury believe that the regulations should be reviewed and updated as necessary every five years.  The Money Laundering (Amendment) Regulations 2012 are the product of the first of these five-yearly reviews – but very little change has been made.

 

Estate Agents

Perhaps the only change of significance for practitioners relates to estate agents.  Previously an estate agent operating in the UK, but who dealt in properties situated overseas, was not subject to the MLR 2007.  That has been changed by way of a new definition of “estate agency work” in new regulation 3(11A).  However it remains the case that letting agents do not fall within the scope of the MLR.

 

Short term credit agreements

At the same time the regulations now make clear that a business whose only listed activity is the provision of fixed term credit by way of payments deferred by not more than 12 months does not thereby fall within the MLR regime.

 

Reliance – accountants and lawyers

In terms of the scope to rely on customer due diligence carried out by another practitioner, there is a minor simplification and relaxation of the rules relating to members of the various different professional bodies and a consequent redrafting of Schedule 3 to the 2007 regulations.

 

 

Supervisory bodies

The remainder of the amendments relate to increasing the powers of supervisory bodies and allowing the different supervisors to share information with each other.  So HMRC are now allowed wider scope to take matters into consideration for the purpose of deciding whether a person is “fit and proper”, and in consequence MLR 2007 regulations 28(2) and (3) have been removed.

 

Changes not made

The government had considered, and consulted on, some changes to the MLR 2007 that have not in the event been made.  In particular the government have not, after all, abolished the criminal penalties for breaches of the MLR 2007.

The government had also considered exempting some very small businesses from the need to comply with MLR 2007, but has not done so.

A proposed addition to the wording of Regulation 19 relating to the keeping of records of identity of beneficial owners also did not make it into the final version of the amendments.

 

The future

Work is well advanced a new EU Money Laundering Directive.  In practice however most of the ‘new’ requirements of this directive are already found in UK law (not least because the UK has adopted an ‘all crimes’ approach which entails a much wider definition of ‘money laundering’ in the UK than in most other countries, both within and outside the EU).

In consequence the most significant change which the new directive will bring in the UK is likely to be a widening in the definition of ‘Politically Exposed Person’.  At present a PEP is defined by reference to a person’s role outside the UK.  At some stage the legislation is likely to be amended so that it will apply equally to persons having a role within the UK.

Other than that the new directive, when it is finalised, is likely simply to require other EU member states to adopt money laundering regulations closer to those already in operation in the UK.

David

Money laundering – entering into an arrangement – s328 PoCA 2002

Prosecutors are sometimes tempted, unwisely, to strain the meaning of statutory provisions in order to charge a defendant.  There have been a couple of successful appeals recently against money laundering convictions under s328 Proceeds of Crime Act 2002 where a defendant has been charged with “entering into or becoming concerned in an arrangement which he knows or suspects facilitates (by whatever means) the acquisition, retention, use or control of criminal property by or on behalf of another person”.

In effect the courts have held that this statutory provision should be given its natural meaning and not artificially stretched to cover situations which it had not originally been intended to encompass.

 

The Geary case

That concealment would have involved a criminal offence of conspiracy to pervert the course of justice

So in the case of R v Geary [2010] EWCA Crim 1925, the defendant was asked to ‘look after’ some money for a friend who said he was about to become involved in divorce proceedings.  The intention was that this money would be concealed from the friend’s wife and from the divorce court.  That concealment would have involved a criminal offence of conspiracy to pervert the course of justice.  It was not disputed that Mr Geary had received over £100,000 from his friend and had returned it (keeping a few thousand pounds as payment for his services).

During his Crown Court trial the judge indicated that what Mr Geary was admitting amounted to the money laundering offence of entering into an arrangement contrary to s328.  In the light of that Mr Geary changed his plea to guilty – but he subsequently appealed.

 

The Court of Appeal’s decisions

On appeal it was argued by the Crown that, even on the ‘facts’ as Mr Geary had understood them to be (in reality his friend had lied to him, he was not involved in a divorce – the money was part of the proceeds of a fraud which the friend was trying to launder by duping Mr Geary) the money became ‘criminal property’ in Mr Geary’s hands when he received it with the intention of concealing it from the divorce court.  Therefore, the Crown submitted, Mr Geary had knowingly entered into an arrangement facilitating the retention of ‘criminal property’ by his friend.

To be caught by s328 the money had to be ‘criminal property’ before the arrangement affected it – not because the arrangement affected it

No, said the Court of Appeal.  To be caught by s328 the money had to be ‘criminal property’ before the arrangement affected it – not because the arrangement affected it.  To put this another way, there was a difference between a plan to use lawfully acquired money in an unlawful way (which was what Mr Geary had in mind) and a plan to deal with unlawfully acquired money (which could amount to a money laundering offence under s328).  In this case the money would only become ‘criminal property’ as a consequence of the arrangement, and that was not caught by s328.

But the Crown also submitted that, in that event, when Mr Geary returned the money to his friend it had by that stage become ‘criminal property’ and so Mr Geary was then guilty of a s328 offence.

It was not permissible to dismantle that arrangement into its constituent parts

Again the Court of Appeal said no.  The ‘arrangement’ in this case was that Mr Geary should receive the money and later return it (or most of it) to his friend.  It was not permissible to dismantle that arrangement into its constituent parts and then seek to base a conviction under s328 on only the later elements.  With hindsight the prosecution could have charged Mr Geary with an offence of transferring criminal property contrary to s327 (which is another money laundering offence) in relation to the repayment to his friend, with better chances of success.  But that had not been done.

So Mr Geary walked free from the court.

 

Mr Dare wins

In the second case the defendant, Mr Dare, met with a man named Mick (whom he knew to be involved in dealing in stolen cars) who offered to sell him a car for the bargain price of £800.  Mr Dare thought he would be able to re-sell the car for £3,500 and, after taking the car for a test drive, asked Mick to give him some time to get the money together.  In the event Mr Dare got £500 together and arranged to meet Mick again with a view to buying the car at that price.

But something intervened (presumably in the shape of the boys in blue)

But something intervened (presumably in the shape of the boys in blue) and the deal was never completed.  Nevertheless Mr Dare was charged with, and convicted of, a money laundering offence under s328 on the basis that he had entered into an arrangement with the intention of facilitating the acquisition of criminal property by whoever ultimately bought the car off him.

On these facts Mr Dare could have been charged with handling stolen property, contrary to s22 Theft Act 1968, if he had actually received the car – but he did not receive it because the deal was never completed.

On appeal, Dare v Crown Prosecution Service [2012] EWHC 2074 (Admin), Mr Dare’s conviction under s328 was quashed.  What Mr Dare had done was not something which, at the time, could be said to facilitate the acquisition of criminal property by another (who was at that time neither identified nor identifiable).  What he had done was far too preparatory to be caught by s328 both because a price had not been agreed for his purchase of the car from Mick and because he had taken no steps to identify a prospective purchaser to whom he could sell the car on.

 

The lesson

The lesson from these cases seems to be that there are in reality sensible limits on the scope of the s328 money laundering offence of entering into or becoming concerned in an arrangement which facilitates the acquisition, retention, use or control of criminal property by or on behalf of another person.

David

UPDATE:  The Court of Appeal’s conclusion in the Geary case has been approved in a subsequent decision of the Supreme Court discussed in a later article on this blog.

17 year sentence for VAT carousel fraud

Recently Dilawar Ravjani was sentenced to 17 years imprisonment following conviction for conspiracy to cheat the public revenue.  He was said to be the ring-leader in a complex missing trader intra community (MTIC) VAT fraud – sometimes known as carousel fraud.  But was that sentence – reportedly the longest ever given to an individual in the UK for this type of fraud – too harsh?

 

The offending

It is said that Mr Ravjani was at the head of a conspiracy involving purported trading in mobile phones of a total value of £1.7 billion.  But some of the phones did not even exist and a total of 5,700 fake transactions had been created to give the appearance of legitimate trading.  HM Revenue & Customs started their investigation in 2006.  It culminated in five trials and the conviction of 15 conspirators.  Only recently has the final trial been concluded.  The total VAT loss to HMRC was £107 million.

Undoubtedly the offending was serious.

 

The criminal charges

Mr Ravjani was charged and convicted of a single offence of ‘Conspiracy to Cheat the Public Revenue’.  He was sentenced to 17 years imprisonment and banned from acting in the management of a company for 15 years.  He is also to be subject to confiscation proceedings.

The offence of ‘Conspiracy to Cheat the Public Revenue’ is a common law offence in England & Wales with a history going back hundreds of years

The offence of ‘Conspiracy to Cheat the Public Revenue’ is a common law offence in England & Wales with a history going back hundreds of years.  The common law offence of ‘Cheat’ had applied more widely but was abolished by s32(1)(a) Theft Act 1968 except in relation to the public revenue.  The logic of that abolition was that the statutory offences set out in the Theft Act 1968 replaced the old common law.

One of the consequences of this was that, except in relation to offending concerning the public revenue, the statute introduced maximum sentences for offending formerly prosecuted as ‘Cheat’.  The maximum sentence for theft was originally set at 10 years imprisonment.  For some offences a lower maximum was set, for example ‘false accounting’ carried a maximum sentence of 7 years.

In relation to VAT a criminal offence was enacted by s72(1) Value Added Tax Act 1994 where “any person is knowingly concerned in, or in the taking of steps with a view to, the fraudulent evasion of VAT by him or any other person”.  Subsection (2) provides that “the evasion of VAT includes a reference to the obtaining of . . . the payment of a VAT credit”.  A ‘VAT credit’ is defined in s25(3) to include a VAT refund paid following the submission of a trader’s VAT return.

So it seems that Mr Ravjani could have been prosecuted under s72 VAT Act 1994.  But the maximum sentence for an offence under that section is 7 years imprisonment.

It appears to be the case that the offending occurred prior to the coming into effect of the Fraud Act 2006, which provides a maximum sentence of 10 years for fraud by false representation and similar offences.

However had the victim of this fraud been a wealthy individual, rather than the public purse, the maximum penalty (for the common law offence of conspiracy to defraud) would have been 10 years.

Mr Ravjani was not charged with any money laundering offence under Part VII, Proceeds of Crime Act 2002.  Such offences carry a maximum sentence of 14 years imprisonment.

the prosecutors may have had an option to charge Mr Ravjani either under the specific statutory offence or with the common law offence

So it seems that the prosecutors may have had an option to charge Mr Ravjani either under the specific statutory offence of s72 VAT Act 1994 (with a maximum sentence of 7 years) or with the common law offence of ‘Cheating the Public Revenue’ (which has no statutory maximum sentence).

It is perhaps not surprising that they chose to charge Mr Ravjani with the common law offence.  But were they entitled to do so?

 

Common law v statutory offences

It might be argued that Mr Ravjani ought to have been charged with the statutory offence under s72 VAT Act 1994 because his alleged criminal conduct fell within the scope of that statutory offence.

good practice and respect for the primacy of statute do in my judgment require that conduct falling within the terms of a specific statutory provision should be prosecuted under that provision unless there is good reason for doing otherwise

In the case of R v. Rimmington [2005] UKHL 63 Lord Bingham said this at paragraph [30]:
“Where Parliament has defined the ingredients of an offence, perhaps stipulating what shall and shall not be a defence, and has prescribed a mode of trial and a maximum penalty, it must ordinarily be proper that conduct falling within that definition should be prosecuted for the statutory offence and not for a common law offence which may or may not provide the same defences and for which the potential penalty is unlimited.  . . .    It cannot in the ordinary way be a reason for resorting to the common law offence that the prosecutor is freed from mandatory time limits or restrictions on penalty.  It must rather be assumed that Parliament imposed the restrictions which it did having considered and weighed up what the protection of the public reasonably demanded.  I would not go to the length of holding that conduct may never be lawfully prosecuted as a generally-expressed common law crime where it falls within the terms of a specific statutory provision, but good practice and respect for the primacy of statute do in my judgment require that conduct falling within the terms of a specific statutory provision should be prosecuted under that provision unless there is good reason for doing otherwise”.

It is clear that Mr Ravjani was regarded as the organiser and ring-leader in this conspiracy.  It is also clear that other members of the conspiracy were convicted of money laundering and sentenced to prison terms in excess of 7 years.  It follows that, had Mr Ravjani been prosecuted only under s72 VAT Act 1994, he would have received a lighter sentence than other conspirators who were considered less culpable.

But is that, in the words of Lord Bingham, “good reason for doing otherwise”?

It has to be said that appropriate sentencing in this area remains open to debate.  In the Court of Appeal judgment R v Meehan [2006] All ER (D) 105 it was indicated that organisers of such frauds should expect sentences well into double figures – clearly in excess of those envisaged in VAT Act 1994.  That appears to leave a tension between the views of the Court of Appeal and those of Lord Bingham in the House of Lords.

Perhaps that should be resolved by Parliament looking again at the 7 year maximum sentence under s72 VAT Act 1994?

But can it be right that a person who defrauds the public purse faces a higher sentence on conviction than a person who defrauds wealthy individuals or businesses?

David

P.S.  Mr Ravjani might, on the other hand, consider himself fortunate to have been prosecuted in England rather than in another jurisdiction.  At least he did not have to face a very, very long sentence such as that meted out in the US courts in the case of Bernie Madoff – 150 years!

UPDATE
On 29 November 2012 the Court of Appeal refused Mr Ravjani’s application for leave to appeal against his 17 year sentence R v Ravjani [2012] EWCA Crim 2519.

SECOND UPDATE
The Court of Appeal on 17 December 2013 in the case of Dosanjh & Others v R. [2013] EWCA Crim 2366 commented upon the use of common law charges in circumstances where the offending could be covered by a statutory offence. They said, at paragraph [33], “we are entirely confident that as far as Parliament is concerned, the offence of conspiracy to cheat the public revenue retains its established and clearly understood role in the prosecution of revenue cases. It is used to supplement the statutory framework and is recognised as the appropriate charge for the small number of the most serious revenue frauds, where the statutory offences will not adequately reflect the criminality involved and where a sentence at large is more appropriate than one subject to statutory restrictions”.
In practice however I see the common law offence being charged apparently routinely in cases which could not be described as “the most serious revenue frauds”. Will that no longer be the case in future?

Confiscation, conspirators, couriers and money launderers

What benefit, for confiscation purposes under PoCA 2002, is obtained by conspirators, couriers of money or drugs, or by money launderers?  The question has been considered by the appeal courts since the landmark ruling in R v May [2008] UKHL 28 left some unfinished business with its closing words, “it may be otherwise with money launderers”.

The judgment of the House of Lords in May, and in the case of CPS v Jennings [2008] UKHL 29 delivered at the same time, set out the importance in confiscation proceedings of establishing what the defendant had ‘obtained’.  The judgments noted that a defendant “ordinarily obtains property if in law he owns it, whether alone or jointly, which will ordinarily connote a power of disposition or control”.  From these judgments sprang issues concerning what it was, in particular circumstances, that a defendant had ‘obtained’.

To some degree these issues have been resolved but, in the author’s view at least, there may still be some loose ends

To some degree these issues have been resolved in the judgments of the Court of Appeal in R v Sivaraman [2008] EWCA Crim 1736 (in relation to conspirators) and Allpress & others v R [2009] EWCA Crim 8 (in relation to couriers and money launderers).  But, in the author’s view at least, there may still be some loose ends to be addressed.

 

Conspirators

The issue in Sivaraman can be simply stated.  The defendant was employed as a manager of a filling station.  In that capacity he accepted between 8 and 10 deliveries each of approximately 30,000 litres of diesel fuel on which excise duty said to amount to £128,520 should have been paid.  To the defendant’s knowledge that duty had not been paid and on that basis he pleaded guilty to conspiracy to fraudulently evade excise duty.  He admitted being paid £15,000 for his role in the conspiracy.  For the purposes of confiscation was his benefit limited to the £15,000 he was paid or was it the £128,520 duty evaded by the conspiracy in which he had played a part?

The Court of Appeal held that Mr Sivaraman had himself ‘obtained’ only £15,000 from his criminal conduct and accordingly his benefit was £15,000.  Whilst May had demonstrated there where ‘property’ (meaning an asset of any description) was obtained jointly by more than one person then each person obtained the whole of it (and so each had a benefit of the whole of it), it did not follow that in a conspiracy each conspirator obtained everything which had been obtained as a result of the criminal conspiracy.

A conspiracy is not a legal entity,  in confiscation proceedings the court is concerned with the benefit obtained by the individual conspirator

A conspiracy is not a legal entity but an agreement or arrangement which people may join or leave. In confiscation proceedings the court is concerned not with the aggregate benefit obtained by all parties to the conspiracy but with the benefit obtained, whether singly or jointly, by the individual conspirator before the court.

So in confiscation proceedings following a conviction for conspiracy it is necessary to consider the role played by the individual conspirator and the benefit obtained by him (including any benefit which he has obtained jointly with one or more other members of the conspiracy).

The Court of Appeal summarised the position in the case of R v Rooney [2010] EWCA Crim 2 as follows: “(a) if a benefit is shown to be obtained jointly by conspirators, then all are liable for the whole of the benefit jointly obtained. (b) If, however, it is not established that the total benefit was jointly received, but it is established that there was a certain sum by way of benefit which was divided between conspirators, yet there is no evidence on how it was divided, then the court making the confiscation order is entitled to make an equal division as to benefit obtained between all conspirators. (c) However, if the court is satisfied on the evidence that a particular conspirator did not benefit at all or only to a specific amount, then it should find that is the benefit that he has obtained.”

 

Couriers

The Court of Appeal judgment in Allpress dealt with several otherwise unconnected cases in which similar issues arose.

the courier’s benefit for confiscation purposes should not include the cash or assets which he was merely conveying

With regard to the benefit arising to a person who acted merely as a courier of cash or assets belonging to others, the court held that the mere physical possession of the money or assets was not sufficient to amount to the ‘obtaining’ of them by the courier.  It follows that the courier’s benefit for confiscation purposes should not include the cash or assets which he was merely conveying.

It may be therefore that a courier has been convicted of possessing criminal property (which is a money laundering offence contrary to s329 PoCA 2002) but have obtained no benefit from the offence for the purposes of confiscation.

 

Money launderers through the banking system

However, in the same judgment, the court also considered the case of a Mr Paul Morris who was a Staffordshire solicitor who had laundered the proceeds of a VAT fraud committed by a Mr Raymond Woolley. Not only had Mr Morris passed the monies through his firm’s client bank account but he had arranged the transfer of over £4.5 million to a company called Thornbush Entertainment Inc (USA).  The evidence showed that Mr Morris had a connection with this company but Mr Woolley did not. It seems that these transfers were part and parcel of the laundering by Mr Morris of the proceeds of the VAT fraud.

Mr Morris was not acting as a bare trustee of funds belonging to Mr Woolley but Mr Morris’s connection with the funds was “far more than that”

Mr Morris had been convicted of money laundering in relation to those funds.  In the confiscation proceedings which followed the Crown Court judge had held, on the evidence, that Mr Morris was not acting as a bare trustee of funds belonging to Mr Woolley but Mr Morris’s connection with the funds was “far more than that”.  The Court of Appeal held that the Crown Court judge had been entitled to make that finding and also noted that Mr Morris had sole operational control of his firm’s client account through which the monies had passed.

In these circumstances Mr Morris had ‘obtained’ the monies and his benefit for confiscation purposes was the amount which had passed through the bank account under his control.

But the judgment in Allpress concludes with these words: “The laundering of money or other criminal property can take many forms. This judgment does not attempt to address all of them, but only the types of case which we have been directly considering.”

 

The value of that which has been ‘obtained’

One issue which did not arise in Allpress was the situation in which a defendant obtains property but has only a limited interest in it.  In that event s79(3) PoCA 2002 provides that if “another person holds an interest in the property its value . . . is the market value of [the defendant’s] interest”.

The defendant would in effect be acting as a nominee or bare trustee for the beneficial owner of the monies

I would suggest that a defendant who launders monies through a bank account on behalf of another may find himself in a position of having ‘obtained’ the monies laundered (when he deposits them in a bank account in his name and under his control) but that his own interest in those monies may have no value (since the monies belong to someone else).  The defendant would in effect be acting as a nominee or bare trustee for the beneficial owner of the monies.  In that event it would appear that the market value of that which he has obtained is nil and so his benefit for confiscation purposes in relation to those monies will also be nil.

However as far as I am aware that point has not, to date, been successfully argued in court.

David

UPDATE: The value of property “obtained” and the implications of s79(3) in that connection were considered by the UK Supreme Court in their June 2014 judgment in the cases of R v Ahmad & Ahmed and R v Fields & Others [2014] UKSC 36 and are now discussed in my blog article “UK Supreme Court rules on benefit obtained jointly“.

Criminal lifestyle confiscation – a case study

Brian considered himself unlucky.  Some friends of his had come under police observation.  He had been having a coffee with them in Starbucks in Wolverhampton one morning when the police swooped and arrested everyone, Brian included.

Then the police searched the car in which Brian and some of his friends had driven to Starbucks – finding £24,000 in a bag in the boot.  The police also searched the homes of all the persons arrested.  Brian had had £2,000 worth of cocaine (with an 8% purity) in a kitchen drawer at home, which he had foolishly agreed to look after for a friend.  There was also another £10,000 in cash at Brian’s house and a couple of valuable watches.  The police seized the drugs, the cash, the watches and Brian’s mobile phone.

Brian and the others from Starbucks were charged with a serious drugs conspiracy involving an organised criminal enterprise importing and supplying drugs over a wide region.

But the cash in Brian’s house was not contaminated with drugs and there were no suspicious messages on Brian’s mobile phone.  Although the alleged conspirators had been under observation for some time, Brian had not been observed with any of them prior to that morning at Starbucks.  Brian had no criminal record.

Brian was advised to plead guilty to possession of the cocaine with intent to supply

Brian was advised to plead guilty to possession of the cocaine found in his kitchen with intent to supply and possession of the cash found in the car boot (possession of criminal property).  The serious conspiracy charges against him were dropped.  He was sentenced to 3 years imprisonment.

Confiscation proceedings followed.  Although he had no previous criminal convictions Brian was deemed to have a ‘criminal lifestyle’ for confiscation purposes because he had been convicted of the cocaine offence.

The prosecution had obtained copies of Brian’s bank statements, from the two banks he had accounts with, going back to the ‘relevant day’ (which was 6 years prior to the date on which Brian had been charged) and his tax records from HMRC.  They also had Land Registry records showing the purchase of his home, the price he had paid and the mortgages on it (Brian had taken out a second mortgage because his business was struggling).

A prosecutor’s s16(3) PoCA 2002 statement was prepared which, to Brian’s amazement, showed Brian’s benefit from criminal conduct to be over £500,000 and his available amount to be over £100,000.  Brian told his solicitors that he had, in truth, had no benefit from crime and he was broke.  Now he was faced with a demand for £500,000 with the threat of an additional 5 year default sentence for non-payment.

Attached to the prosecutor’s statement were, amongst other things, spreadsheets listing all the deposits in Brian’s bank accounts since the relevant day (both cash and cheques), a valuation of the two watches of £900 in total, and a calculation of the value his home based on the price he had paid for it some years ago uplifted by a national house prices index.

Brian’s solicitors contacted me for help.  I submitted a fee quotation to them for them to obtain a prior authority from the Legal Services Commission

Brian’s solicitors contacted me for help.  I submitted a fee quotation to them for them to obtain a prior authority from the Legal Services Commission.  I asked them to obtain from the prosecution electronic copies of the spreadsheets of bank credits and to obtain a professional valuation of Brian’s home.  I also asked them to obtain from Brian his explanations of the credits to his bank accounts (with any supporting evidence he could provide) and a letter of authority to enable me to obtain further detailed information from his accountant (who had prepared his tax returns).

Brian had been a self-employed electrician.  It transpired that his accountants had prepared tax returns for him based on limited business records and Brian’s verbal explanations concerning his earnings and expenditures.  They had seen his bank statements for one of his accounts but not the other.  They had not prepared annual Balance Sheets as these were not required for tax purposes.

Brian told his solicitors that not all his earnings had been banked in the account for which he had shown the statements to his accountants, but he had told them of all his earnings (or at least he had given them a fair estimate of them).  He sometimes had to juggle money between the two banks to keep within overdraft limits and have sufficient to pay his mortgage and other direct debits.  So he would take cash out from one bank and put cash in the other.  On these occasions the dates and amounts of cash drawn and deposited would be more or less the same, but the amounts drawn and deposited might not be identical and, although the transactions would be within a few days of each other, they would probably not be on the same day.

Also he had done some work as an electrician for builders who had paid him cash in hand and not bothered to go through the cumbersome CIS (construction industry scheme) tax procedures.  Those builders would probably not want to come forward and give evidence of this in court.

Brian was confident that he could ‘prove’ at least three-quarters of the deposits were legitimate.

Nevertheless Brian confirmed that none of the bank deposits were drug related and he was confident that he could ‘prove’ at least three-quarters of them were legitimate.

The watches seized by the police had belonged to his late father and were of considerable sentimental value.  Brian did not think the watches would have been listed in his father’s probate papers.

I obtained further details from Brian’s accountants, checked the prosecution’s s16(3) statement figures and looked for evidence of deposits in one bank account possibly being linked to withdrawals from another.

I prepared a report bringing together all the defence evidence in relation to benefit and available amount.  The property valuation had shown that Brian’s home was in negative equity – the current value being far below that indicated by the national house prices index used by the prosecution.

When the matter came to be heard I attended the Crown Court ready to give evidence.  However, as is usual in such cases, negotiations got underway that morning with both sides exploring the possibility of reaching an agreement that would avoid a lengthy hearing before the judge.

The Crown were persuaded to considerably reduce their benefit figure

The Crown were persuaded to considerably reduce their benefit figure to recognise that cheque deposits were unlikely to be proceeds of crime and that at least part of the cash was likely to be from Brian’s work as an electrician.  They accepted that there was no evidence of tax evasion as Brian had given his accountants information in addition to the bank statements on the one account.

The Crown also accepted, to a limited extent, that some cash deposits could be cash drawn from the other bank.  As a result Brian’s benefit figure would be reduced to £180,000.

In relation to Brian’s available amount the Crown accepted that there was no equity in Brian’s house and they agreed that Brian’s mother could purchase the watches back (at their expert’s valuation).

Brian accepted, for the purposes of confiscation, that his available amount included the cash seized from the car and from his house (which was already in police possession), the balances in his bank accounts and the market value of the watches and his car.  In total this was nearly £45,000.  This would be the amount Brian would be ordered to pay.

Brian was not happy with the outcome – but he did recognise that things could have been a great deal worse!

A brief hearing followed in which the judge was invited to make a confiscation order in the agreed figures.  Brian was given 6 months to pay (although in practice he signed over the cash already held by the police at the conclusion of the hearing, meaning there was only £11,000 left to pay) with a 15 month sentence in default (although in practice that would be reduced pro-rata to reflect the £34,000 already effectively paid).

Brian was not happy with the outcome – but he did recognise that things could have been a great deal worse!

David

Names, locations and certain other details have been changed to protect the identities of those involved.