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 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.  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.

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 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.

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.

Comments

Well done, Dacid

Stephen Morris | | Permalink

I am sure the CPS would wish to be consistent and so I look forward to confiscation proceedings being instigated  against those MPs caught fiddling their expenses!

davidwinch's picture

MPs and confiscation

davidwinch | | Permalink

Stephen

I don't know all the details of the MPs cases.

However I do know that a well-advised defendant might have certain matters drawn to his attention.  One of these is that confiscation proceedings will not be instigated against a defendant in circumstances where there is one identifiable 'victim' of his offence(s) and that victim has already been fully recompensed by the defendant (or will be shortly after the conviction).

So in a case of theft from employer or similar, a defendant who can pay back everything he stole to the person from whom he stole it will thereby protect himself from the ravages of confiscation.

If the defendant is facing an offence or offences which might result in a finding of a 'criminal lifestyle' in confiscation it makes an awful lot of sense to prevent that (if you can) by paying back the victim before confiscation can get off the ground.

Of course not every defendant has the means to repay and some offences (such as drugs offences) do not have an identifiable 'victim' to whom repayment could be made.

But I rather think the ex-MPs may have been well advised!

David

Judged by the company he kept ?

The Black Knight | | Permalink

although I bet they all say they were are not their drugs or they have never seen the money before............presumably the cash and cocaine was still transferring proceeds of crime assets..so was guilty of an offence anyway.

But surely if the criminal is left with nothing then that is the same as a minus figure unless they have been clever and hidden the real proceeds.

What happens if the cash appears later after time has been served or if after a life of crime they suddenly become successful businessmen ?

How can the court asses the criminal nature of lifestyle expenditure as the payment on mortgages, and cars etc must become small in comparison to, champagne, cocaine, women, foreign travel and gambling all of which I bet they never see the receipts for.

Is evidence ever presented of a lifestyle that does not appear on the bank statements ?

 

davidwinch's picture

Lots of questions!    1 thanks

davidwinch | | Permalink

Black Knight

As you suggest, although Brian said neither the drugs in his kitchen nor the cash in the car were his, neither of those assertions could be proved.  Who can say where the truth lies?

Brian pleaded guilty to PWITS (possession with intent to supply, contrary to s4 Misuse of Drugs Act 1971) on the basis that he planned to return the drugs to their owner (that counts as a "supply" even without any payment being received) and his simple possession of the cash in the car was sufficient to be an offence under s329 PoCA 2002 (no "transfer" is required).

You are correct in saying that, because his home is in 'negative equity' and an amount equivalent to all of his assets is payable to the Crown, he is left with liabilities in excess of assets after the confiscation.

If cash 'appears' later then the prosecution can return to court for the remaining benefit to be confiscated (in this case that would be a further £135,000, that is £180,000 benefit less £45,000 ordered to be paid initially).  The court will then order payment of up to that amount (uplifted for inflation) from after-acquired assets (whether legitimate or not) if it is just to do so, under s22.  There is no time limit on that.  So Brian could get a nasty surprise 20 years from now!

Prosecutors will endeavour to take account of unrecorded cash expenditure where they can - but they do need to produce some evidence (even circumstantial evidence) of that expenditure.

Sometimes prosecutors will get information from travel agents, casinos, etc in relation to foreign travel and gambling using powers under s345.  I have also seen cases in which estimates for cash expenditure on drugs for personal use have been included in the benefit calculations.

But, as with tax investigations, no doubt the law of diminishing returns applies and the prosecutors will seldom attempt to squeeze every pound of benefit out of a case.  One sometimes gets the impression that once the benefit has comfortably exceeded the most the defendant could have as an 'available amount' the prosecutors wrap up the financial investigation and move on to the next case.

David

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