Confiscation Offences

BSQ Fraud Team instructed to Challenge £64m Confiscation Order

BSQ’s Fraud defence team has been appointed to represent Dr Gerald Smith in enforcement proceedings concerning one of the highest confiscation orders ever made – now standing in excess of £64m including interest - ever made in the UK.

Mr Smith features in proceedings brought by the SFO in one of the largest cases under the CJA 1988 to be ever heard, presided over by Mr Justice Popplewell before the Commercial Court. The complex litigation involves more than 12 different parties and concerns assets worth in excess of £200 million.    

The BSQ partners instructed are Daniel Godden and Roger Sahota.   

The case has been widely reported in the media including the Evening Standard.  

Berkeley Square Solicitors Negotiate Favourable Confiscation Settlement

Berkeley Square Solicitors partner Goran Stojsavljevic successfully represented a client in complex confiscation proceedings following a conviction in a £3m fraudulent trading prosecution. The Court accepted that our client did not have any beneficial or legal interest in a list of properties that the Crown asserted belonged to him. Consequently a settlement was reached at a figure £410K below that initially requested by the Crown.

Counsel instructed was Benjamin Newton of Doughty Street.   

For more details see http://www.bbc.co.uk/news/uk-england-bristol-32031442

If you require advice on a confiscation or fraud matter call our Mayfair offices. 

 

Berkeley Square Solicitors instructed in Third Party In Challenge to Multi-Million Pound Confiscation Order

Roger Sahota has been instructed to represent a third party interest in challenging one of the UK’s largest confiscation orders. 

The case concerns a potential application under s2 of the Serious Crime Act 2015 for the Crown Court to recognise the interest of a third party in property included when calculating the amount available for the Defendant to pay towards his order.

Roger Sahota is currently representing a number of third party interests in challenging the terms of confiscation orders.

Roger has a particular specialisation in acting on behalf of the wives, business partners or family members or convicted offenders who wish the court to take into account their beneficial interest in property which is the subject of confiscation proceedings.

Confiscation Order Settlement for Berkeley Square Solicitors

Our confiscation department is happy to report another successful outcome in a case where we represented a third party to confiscation proceedings.

Our client had instructed a number of other lawyers before he was referred to Roger Sahota. After making representations to the Crown Roger was was able to persuade all parties to agree to a settlement at a fraction of the original amount sought. The case concerned an application for a spouse applying for their interest in the matrimonial propoerty to be recongised after an order had been made. The value of the house had been taking into account when calculating the available amount under the order.

Read our clients review on Google reviews here.

if you require advice on a confiscation application under POCA 2002 please contact our financial crime department.

 

Client Guide to Financial Statements During the Confiscation Process

Confiscation law is one of the most complicated areas of criminal law. Roger Sahota is one of the leading criminal solicitors in this narrow field. We have prepared this guide for clients who are concerned at what will happen if they are involved in confiscation proceedings after their conviction.

This guide has been prepared in response to many frequently asked questions from of our confiscation clients we have prepared an overview of the confiscation process under POCA 2002.Itr predates the Serious Crime bill 2015. It is a general gude to the law and procedure - for specific advice on your individual case please contact a lawyer.

Below we set out the procedure for defendants who are asked to provide a financial statement after their conviction.

POCA Confiscation Procedure

Which Court?

The Confiscation procedure begins in the Crown Court after an Defendant has been sentenced.

Who Brings the Confiscation Proceedings?

The confiscation process begins as soon as a prosecutor requests it or the court believes it to be appropriate.  If the Prosecution requests it the Court must proceed.

The process begins in a case where the Prosecution brings proceedings when the Crown serves a notice on the Court under s 16 of POCA. This notice confirms their intention to apply for confiscation.

What is the Standard of Proof?

Unlike ordinary criminal cases, the standard of proof in any POCA case, for all parties is the balance of probabilities, a lower threshold than beyond reasonable doubt.

Ordinary rules of criminal evidence also do not apply so, for example, hearsay evidence is admissible.

What Information Must the Defendants Provide?

The Defendant will receive a statement from the Court issued under Section 18 (3) of the Proceeds of Crime Act.

The notice requires an Defendant to provide a statement detailing all of their assets and liabilities by a certain deadline. The Defendant must set out details of all assets including

•    property,
•    bank and building society accounts,
•    savings, investments, premium bonds,
•    stocks and shares,
•    cash deposits,
•    traveller cheques, postal orders and other financial instruments

In lifestyle cases, the defendant must provide details of any gifts of transfers received of property from the relevant date i.e. six years before the present case began.

Supporting documentation must also be provided including receipts, invoices, statements and proof of purchase and ownership.

The Court will provide a timetable for the Prosecution to reply to the statement from the Defence and the date for a final hearing.

What are the Prosecutor’s Powers?

A Section 16 POCA Notice, known as a Statement of Information will be prepared by the Crown’s Financial Investigator early in the proceedings and normally once the Defence statement has been received.

The statement contains all the matters that the Prosecutor believes are relevant for the court to consider when deciding the case.

The statement will indicate if the Crown claim that the Defendant has a criminal lifestyle.

During this process the Prosecution can use their investigative powers under POCA to make further enquiries to determine what assets a Defendant has.

The s 16 statement will set out the
•    relevant facts of the underlying conviction
•    summarise the defendant’s financial circumstances
•    what is believed to be is the defendants benefit, the recoverable and  available amount
•    the amount of the confiscation order requested
•    It will clearly state if the Prosecution believes that the defendant has hidden assets or has made tainted gifts.

What are the Court’s Powers?

The Court has various investigative powers it can exercise at the request of the Financial Investigator and the Crown. Generally the Court also has a wide power to order an Defendant to provide further information to help it carry out its functions. If the Defendant does not co-operate, the court can draw an inference.

What Must the Defence Show?

If the Defence disagree with any of the facts that the Prosecution rely on or the conclusions arrived at they must say why. Failing to object could be seen as acceptance of the Crown’s submissions.

The Defence must serve a formal reply to the prosecutors notice setting out the information requested supported by a statement of truth from the defendant.

Documents should be provided by the Defence to prove any of the points they rely on.   The court will not accept or vague or generalised assertions made by the Defence.

In some cases it may be possible for the Defence and Prosecution to agree on the amount owed and the quantum of the confiscation order.  However, the Court is not bound by any agreement made by the parties.

What Happens At The Final Hearing?

Both parties are entitled to file replies and counter replies to the statements of information they rely on. After the parties have filed the documents, evidence and additional skeleton arguments they rely on a final date will be set for the confiscation hearing.

At this hearing witnesses and experts can be called to give evidence. The Defence have every opportunity to challenge evidence against them and to call witnesses.   Both parties will present their closing arguments before a decision on the Confiscation Order is made.

Confiscation Order Blogs – Reviewing the History of the Proceeds of Crime Act

Confiscation Order Blogs – Reviewing the History of the Proceeds of Crime Act

The Proceeds of Crime Act legislation is the most commonly used confiscation law. It is often described as draconian. Interestingly, the legislative background demonstrates that it was deliberately drafted to clamp down hard on the what was then seen as a loophole in the law.  

Client Guide to the Confiscation Order Process

Client Guide to the Confiscation Order Process

Confiscation law is one of the most complicated areas of criminal law. Roger Sahota is one of the leading criminal solicitors in this narrow field. We have prepared this guide for clients who are concerned at what will happen if they are involved in confiscation proceedings after their conviction

Confiscation Orders Blog – Section 22 of POCA

Confiscation Orders Blog – Section 22 of POCA

Anecdotal evidence suggests that there has been an significant increase recently in the number of applications recently made under Section 22 of POCA 2002.

This provision allows the Crown to apply to the court for a reconsideration of a defendant’s available amount after the confiscation order has been made. 

 Many recent clients have fallen foul of these provisions.  In one case, Client A, a defendant who had served his default sentence having been made subject to a confiscation order in excess of £1 million had recently found himself subject to a potential Section 22 Application. 

More Draconian Default Sentences On the Horizon – PAC Report On Confiscation Orders Published

Serious criminals are choosing jail as an alternative to paying their Confiscation Orders, concluded the Public Accounts Committee in it’s long awaited report on Confiscation Orders published on the 21st March 2014.

Read Roger Sahota's article at Fraud Focus here.

 

Longer Prison Sentences Will Not Solve Our Confiscation Crisis

Facing withering criticism from the Chair of the House of Commons Public Accounts Committee, a Senior Ministry of Justice official issued an ominous warning last week, writes Roger Sahota.

 Mark Sedwill, answering questions from Chair Margaret Hodge MP, said that Government Ministers were considering changing the law to allow courts to impose even longer prison sentences in the face of criticism that the enforcement record of the authorities in recovering Confiscation Orders had been an abject failure.

 Mr. Sedwill did not provide any further details of the Government’s proposals.

Mr. Sedwill’s also claimed that the yardstick of the success of the confiscation regime should not be the revenue raised – an estimated £133m in 2011-12 against a cost to the taxpayer of £100m – but in the effect it had in deterring criminals from further offending

 At present those that default on Confiscation Orders can face prison sentences of up to ten years in addition to any penalty for the offence they are convicted of.  They are still liable to pay the sum owed once they serve the default sentence, with interest charged at 8% per annum.

As discussed elsewhere in this blog, there is little evidence that the threat of a lengthy prison sentence either acts as a deterrent or is effective in persuading offenders to cough up and pay the amounts they owe.  In fact, only 2% of offenders paid in full once a default sentence was imposed according to the National Audit Office Report published on the 17th December 2013.  

The original article can be found at www.confiscationorder.com

Orders Need to Suit the Facts

Roger Sahota writes for the Law Society Gazette Opinion Column Reports that 16 of Britain’s most high-profile offenders still owe £126m in unpaid confiscation orders will not surprise anyone with an interest in financial crime. But tabloid calls for new measures to “beef up the authorities’ powers to seize ill-gotten gains” are only part of the solution. The Proceeds of Crime Act isn’t working and the time is ripe for reform. Earlier this year, the MOJ admitted that £780 million in confiscation orders made against convicted criminals remains unpaid and may never be recovered. That figure represents 60% of the global sum (£1.3 billion) that was outstanding in mid 2011-2012.

For the government to effectively concede that it has no strategy in place to recover this money is understandably cause for public outrage. Millions may have to be written off the MOJ’s balance sheet (as the sum owed is accounted for as an asset) at a time that its budget has already been slashed.

Better enforcement to tackle non-payment and prevent criminals from hiding or dissipating their assets is one answer that everyone can agree on. However, this should go hand in hand with a review of the law governing the confiscation of the proceeds of crime from convicted offenders.

One of the principal reasons why this problem arises is because the courts regularly make confiscation orders that will never be realised due to the way in which the POCA legislation must be applied.

POCA became law in 2002. It’s objective was to deprive offenders of the benefit (defined as turnover, not profit) from their criminal conduct. Parliament laid down a mandatory regime which Judges regularly describe as “draconian” in application. They have little or no discretion in applying the rules. Difficulties arise because POCA requires the courts to make far-reaching assumptions about the extent of an offender’s benefit from criminal conduct, to order the confiscation of legitimately acquired assets, as well as tainted property, and to send defaulters to prison.

Invoking the law of unintended consequences, the strict application of these provisions means that our courts regularly end up making unrealistic confiscation orders for sums far in excess of what a defendant can pay.

The knock-on effect includes the cost to the Exchequer of POCA enforcement proceedings, as well as that of keeping defaulters in prison, serving sentences of up to 10 years. Exaggerated confiscation orders far in excess of an offender’s likely assets may also act, in the opinion of the Court of Appeal, “as a disincentive to co-operate.”

The POCA methodology has also been criticised for producing results that are manifestly unjust. An offender’s real benefit may bear little relation to the confiscation order that the court must pass. In the recent landmark case of Waya (2012 UKSC 51), the Supreme Court recognised that the Act can generate confiscation orders that are disproportionate or unfair. It highlighted the case of a pharmacist who had overcharged the NHS by £464 from a total batch of claims in excess of £200,000 but was liable to pay a confiscation order in the total sum. The Supreme Court hinted that a change in the law might be desirable;

“The Crown Court has encountered many difficulties in applying POCA 's strict regime. Many of the complexities and difficulties of confiscation cases, arising from the extremely involved statutory language, would undoubtedly be avoided if a measure of discretion were restored, but whether to restore it, and if so in which form, is a matter for Parliament and not for the courts.”

Under the old law (pre-1995 and pre-POCA), a Judge could make a confiscation order to “pay such sums as the court thinks fit” in certain situations. POCA took that power away. A simple amendment to the Act, as advocated by some commentators, could restore it. Allowing the Judiciary to tailor confiscation orders to suit the facts of a case, taking into account what is actually realisable, would remedy many of the practical problems arising from the way POCA currently operates. More importantly, it would also help restore public confidence in our confiscation system.

Public Accounts Committee Scrutinises Confiscation Enforcement Record

Margaret Hodge lived up to her fearsome reputation yesterday by savaging officials from the Home Office, the Director of Public Prosecutions and the Head of the National Crime Agency during questioning before the Public Accounts Committee on the subject of Confiscation Orders writes Roger Sahota. 

 The Public Accounts Committee were considering the National Audit Office Report on Confiscation Orders published recently. It had concluded that only 26p of every £100 from the criminal black economy is seized by Confiscation Orders. 

 A live recording of the session is available here.

 An Evening Standard report of the proceedings noted that Ms. Hodge said

“This is one of the worst reports that I have read for a long time. We are losing billions and billions and you are just not getting a grip,” she said.

 “You haven’t got a strategy, you have no cooperation between you, you don’t prioritise things, you haven’t got the right information database. It’s rubbish. The fact is that you have collected hardly anything. It is pathetic.”

The original article can be found at www.confiscationorder.com

Does the Confiscation System Cost More Than It Delivers?

Largely overlooked in the coverage of the National Audit Office’s (NAO) report on Confiscation Orders (17 December 2013) is the NAO’s findings on the impact of sending offenders who cannot pay their orders to prison, writes Roger Sahota.

Currently defaulters may have to serve up to 10 years in prison in addition to the sentence for their crime if they fail to pay a confiscation order within the time set. Interest payments of 8% per annum add to the amount they owe. Having served a default sentence, they remain liable for the sum due.

The logic behind these draconian measures is the familiar refrain that these deterrent measures are necessary to show fraudsters that ultimately crime does not pay.

But how effective is the threat of prison in encouraging criminals to cough up their so-called ill -gotten gains?

Not very according to the Courts and Tribunals own figures. In 2012 only two per cent of offenders with orders outstanding paid in full once a default sentence was imposed.

Presumably the remaining 98% of offenders will have to serve default sentences at her Majesty Pleasure.

Precisely how many defaulters fall into this category is not known. The numbers are likely to be substantial. The expense of detaining these offenders is also unclear, but we do know that it costs upwards of £40,000 per year to keep someone in prison.

Does the Confiscation System Cost More Than It Delivers?

The NAO report concluded that the confiscation system did not offer value for money to the taxpayer. However, the real picture may be even bleaker than that appreciated by the NAO.   

In 2011-12 the NAO estimated that confiscation orders raised £133m in revenue against a cost to the taxpayer of £100m, leaving a modest surplus of £33m. Against this backdrop, another £1.3 billion pounds is still said to be owed in unpaid orders and the MOJ has conceded that 60% of this amount should be written off.  

But factor in the burden to the tax payer of housing those serving default confiscation sentences, which does not appear to be included in the NAO’s calculations, and there is even more cause for concern.

The cost of enforcing our confiscation laws and of detaining those who default, may far exceed what the system generates in revenue.

The original article can be found at www.confiscationorder.com

A Seismic Shift in Confiscation Law

 At last there may be some light at the end of the tunnel for anyone facing confiscation proceedings, writes Roger Sahota.

The good news is that in an important recent decision the Court of Appeal said that there has been a "seismic shift" in confiscation law recently.

This follows the case of Waya, which became law in December 2012. Waya requires the Crown Court in every case to consider if a confiscation order is proportionate (or fair) applying the European Convention of Human Rights.

Defence lawyers should now be considering Waya in every POCA confiscation case.

The bad news is that the Appeal Court has also said that this fairness test does not apply retrospectively to cases heard before Waya.

Furthermore, Waya does not offer defendants an escape route from POCA. If an order is not “unfair” and does not breach the ECHR, Judges must follow the legislation.

Nevertheless, it is hoped that Waya will mitigate some of the manifestly unjust results POCA often produces.

Whether it succeeds in this depends on how the courts apply the fairness test.

Until now we have had little guidance on that from the Appeal courts. But some recent decisions, particularly the recent cases of Harvey and Sale, have thrown up some useful pointers. They are examined below.

Partial Restoration

Harvey 2013 EWCA Crim 1104 is an important recent decision not just because the Court of Appeal spoke of a “seismic shift” but as it also reviewed older cases to see if they were still good law following Waya.

One particularly controversial area it touched upon was “partial restoration” cases. Offenders who repay part of the loss incurred to their victim are strictly speaking not entitled to have this deducted from their confiscation orders. Only if full payment is made will this count.

In Harvey, the offender had repaid 81% of the loss to his victim. These payments were disregarded when calculating what he should pay under the order.

But the Court said that the decision was “close to the line”, opening the door for arguments that partial restoration payments should be deducted from a confiscation order where, for example, an offender had repaid most of the loss to his victim.

Business Turnover

R v Del Basso and Goodwin [2010] EWCA Crim 1119 is a notorious case that was also reviewed by the Judges in Harvey.

The defendants operated an illegal car park. They pleaded guilty to breaching planning regulations.

A confiscation order was made that required them to pay all the money (i.e. entire turnover, not profit) they had received from their business. No deduction was made for any business expenses they had incurred.

Applying Waya and the fairness test, the Court also held this decision was “close to the line” and the order made was “excessively harsh.”

If heard today, it is likely the order would have been calculated differently.

Identifying the “Real Benefit”

Sale is another case where the principle that an offender’s benefit is his turnover from an illegal business was challenged. The MD of a small engineering company obtained contracts to the value of £1.9m by bribing a Network Rail Manager.

The court made a confiscation order for £1.9m or the total value of the contracts. On appeal the order was held to be unfair.

A new benefit figure was calculated based on the gross profit made by the firm, which was around £197,000. Prosecutors were urged in future to identify the “real benefit or pecuniary advantage derived by the wrongdoer.

The original article can be found at www.confiscationorder.com

Is Our Confiscation System Broken?

Confiscation orders are in the headlines again. The National Audit Office report published on the 17 December 2013 makes depressing yet familiar reading. The main headlines are that-  

  • The Confiscation System does not offer value for money

  • Only 26p in every £100 of criminal proceeds was confiscated in 2012-13

  • The Government has no strategy on tackling the enforcement gap

 The NAO report describes a confiscation system teetering on the brink of collapse.

 Many law enforcement agencies do not use their powers under the confiscation laws often enough.

 Less than 1% of crimes result in confiscation orders. Only 6,400 confiscation orders were made in 2012 -3. In that period 673,000 offenders were convicted of a crime, many of which had a financial element.

 Enforcement is Poor

 “The fundamental problem is a lack of strategic direction and agreement on what level of confiscation would constitute success. This is compounded by poor information, lack of knowledge, outdated IT systems, data errors and ineffective sanctions.”

 While 90% of low value orders of under £1,000 are collected in full by the Courts and tribunals service there a huge gap in enforcement with large value orders.

 “The confiscation order process, which we estimate costs more than £100 million a year, is not value for money.”

 Overall, the impact of confiscation orders in tackling fraud in the economy is minimal.

 “The government has not specified a target but only about 26p in every £100 of criminal proceeds was actually confiscated in 2012-13.”

 There is a case for far-reaching and urgent reform

 “There is a sharp need for a coherent and joined-up cross-government strategy. At the moment this activity cannot be seen as value for money nor as a credible deterrent to crime.”

 The Public Accounts Committee is due to discuss the report on 15 January 2014. Expect some fireworks when it considers the NAO's findings.

 (Quotes from Amyas Morse, head of the National Audit Office, 17 December 2013)

 The original article can be found at www.confiscationorder.com

The Limits of Proportionality 2

The Supreme Court’s (SC) judgment in Waya ([2013] 1 A.C. 294) has been rightly lauded as a landmark decision in the field of post-conviction confiscation, writes Roger Sahota in the third of a series of articles considering the impact of the case.

Last week I noted how the SC in Waya were careful to emphasise that their decision did not provide Judges with a discretion to tailor confiscation orders to suit the facts of a case.

However two further important qualifications also applied to the Courts decision.

First, the SC made it clear that A1P1 will have limited application to S.75 “lifestyle” cases where the assumptions are triggered.

Second, the SC also upheld the House of Lords observations in May concerning an offenders benefit. 

Proportionality in Lifestyle Cases

In certain cases POCA allows the court to assume that any property transferred to or held by an offender in a six year period prior to the commencement of the proceedings represents the proceeds of criminal conduct. The burden is on the offender to displace the assumption.

S10(6)(a) and (b) of POCA allows the court to disapply the assumptions if they can be shown to be incorrect or if making them would give rise to a serious risk of injustice.

In the SC’s opinion the operation of these “safety valve” provisions made it very unlikely that any order would “court the danger of being disproportionate because the assumptions will only by applied if they can be made without risk of serious injustice.” 

R v May Still Rings True

The SC was also at pains to state that the operation of A1P1 would not result in a new definition of an offender’s real benefit.

Nor would it allow criminals to set off the expense of committing their crimes as if they were legitimate business costs against the sum they were required to pay to the court. The findings of the House of Lords in May still rang true and a “legitimate, and proportionate, confiscation order may have one or more of three effects:

(a) it may require the defendant to pay the whole of a sum which he has obtained jointly with others;

(b) similarly it may require several defendants each to pay a sum which has been obtained, successively, by each of them, as where one defendant pays another for criminal property;

(c) it may require a defendant to pay the whole of a sum which he has obtained by crime without enabling him to set off expenses of the crime.”

So When is an Order Disproportionate?

Unfortunately the SC gave scant guidance as to when it would be unfair to make a confiscation order. References were made to two past cases that the Court felt that should have been decided differently as examples of where in future a confiscation order “ought to be refused” by the Judge as a disproportionate measure.

Confiscation in Excess of the Victims Loss or Offenders Reward

Citing R v Shabir (a pharmacist overcharged the NHS by £464 but the Crown applied for a confiscation order in excess of £400,000) confiscation orders where the victim’s loss or offenders reward is disproportionate to the quantum of the order may be disproportionate.

Full Recovery

An order where the offender had repaid the sole victim the extent of his loss in full may also be disproportionate as in R v May.

While these examples give some clues as to the approach endorsed by the SC, the category of cases amenable to challenge must remain open and is likely to provide fertile ground for argument in the future.

The Future Post Waya?

According to the editors of the Criminal Law Review there are many decisions where confiscation orders have been upheld that may now be in question. They provide some pointers to the avenues that could be explored;

Where the Defendant repays an amount equivalent to the sum he receives from the fraud – query if the order should not be based on the sum obtained but the profit made from itR v Farquhar

VAT evasion cases – where the goods liable to duty are seized and so any pecuniary advantage to the offender is purely notional

Money Laundering – should a launderer receiving a specific fee for allowing monies to wash through his account be liable for the entire sum passing through his hands (Allpress)

R v Neuberg – a business providing value to customers but operating under a name closely associated to another venture now in liquidation, should the order take into account it’s entire turnover

 

The original article can be found at www.confiscationorder.com

The Limits of Proportionality 1

 

The Supreme Court’s (SC) judgment in Waya ([2013] 1 A.C. 294) has been rightly lauded as a landmark decision in the field of post-conviction confiscation, writes Roger Sahota in the second of a series of articles considering the impact of the case.

No Return to Judicial Discretion

Many defence practitioners regularly express frustration at the “draconian” confiscation orders that often result from the operation of the mandatory provisions of POCA.

To their dismay, the SC in Waya was careful to emphasise that it’s decision did not (and could not) confer Judges with any discretion as to the making or quantum of a confiscation order.

Under the old confiscation laws the position was different. s.71 of the Criminal Justice Act of 1988 allowed a Judge to make a confiscation order to “pay such sum as the court thinks fit” in certain circumstances.

In Waya the SC hinted that a return to the position under the old law might be desirable however;

“The Crown Court has encountered many difficulties in applying POCA ‘s strict regime. Many of the complexities and difficulties of confiscation cases, arising from the extremely involved statutory language, would undoubtedly be avoided if a measure of discretion were restored, but whether to restore it, and if so in which form, is a matter for Parliament and not for the courts.”

The original article can be found at www.confiscationorder.com