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