Hidden Assets- Having to Prove a Negative

 

 

As the number of confiscation proceedings under the Proceeds of Crime Act 2002 increases, the prosecuting agencies often include suggestions as to ‘hidden assets’ of the defendant in their statement of information.  Traditionally these were viewed as assets that may have been sheltered off-shore or simply disappeared. Increasingly, however, they focus on what are termed unexplained cash withdrawals from a defendant’s bank account, which are then included in his amount available.  

 

I was recently involved in a case involving a scrap metal disposal company that made the bulk of its purchases in cash. The prosecutor’s statement said that the numerous cash withdrawals from the bank account were unexplained and invited the court to regard these as ‘hidden assets,’ thus boosting the available amount to the same amount of the potential criminal benefit. To counter this I carried out a detailed exercise over a four year period, showing full audit trail of all cash withdrawals to purchase dockets and the defendant’s computerised accounting system. Right up to the hearing, however, the prosecuting agency remained unconvinced but it was necessary to carry out the exhaustive examination of the defendant’s records to ensure that the court was not presented with a very one-sided set of arguments. I am always conscious that in confiscation proceedings the defendants may start at a distinct disadvantage because they have already been convicted of or pleaded guilty to charges in Crown court.  

 

The burden of proof rests on the defendant to show that the amount available to him is less than the amount of his benefit.  When dealing with the available amount, and in particular when faced with allegations of "hidden assets", the defendant and more interestingly the forensic accountant retained by the defence is being asked to prove a negative.

 

Sumners.EWCA/Crim2008/872, Justice Penry-Davey said at paragraph 11 ‘"It is clearly established by authority and was accepted in this case that the burden of establishing that the realisable amount was less than the benefit so as to justify a lower figure for the confiscation order was on the appellant to the civil standard on the balance of probabilities and it is equally clear that if he sought to establish that he had to do so by clear and cogent evidence; Wallbrook and Glasgow [1994] 15 Cr App R (S) 783…followed in Anderson [2005] EWCA Crim 3384. Following from that, it is also clear that there is no burden on the prosecution to show a prima facie case of hidden assets, but for the appellant to provide evidence demonstrating the extent of his realisable assets.’

 

While there may be no onus on the prosecution to show a prima facie case of hidden assets they are increasingly alluding to the possibility of hidden assets and inviting the court to draw its own conclusions. I wonder if there is any limited comfort to be found in the judgment last week in GlavesVCPS. [2011]EWCA Civ 69. As Justice Toulson pointed out at paragraph 14 ‘ The expression "hidden assets", used in Summers and other cases, is not an expression found in the legislation and it is capable of misleading. There may be cases in which a court makes a positive finding that a defendant has hidden away all or part of the proceeds of his crime, but it is not incumbent on the prosecution to establish that fact. In Barnham Gage LJ, giving the judgment of the court, said at para 41: To hold that the prosecution must, in some way, show a prima facie case that the defendant has hidden assets in our judgment would defeat the object of the legislation. It is designed to enable the court to confiscate a criminal's ill-gotten gains. The expression "hidden assets" is indicative of the fact that the prosecution can have no means of knowing how and where a defendant may have dealt with or disposed of the proceeds of his criminal activities."

 

As the learned judge later made clear, cases involving unidentified assets can vary greatly from that of an ‘of an international drug dealer with evidence of a lavish lifestyle, ready access to large sums of cash and connections with a web of offshore companies and bank accounts, may merit different treatment from the case of a defendant whose apparent circumstances and amount of unaccounted for assets are much more modest..’ In most cases involving unexplained cash withdrawals the usual problem is an absence of ‘clear and cogent’ documentary evidence.  

Comments
cymraeg_draig's picture

This of course is yet another reason why this is an appalling an

cymraeg_draig | | Permalink

 

It effectively assumes that the accused is guilty until proven innocent, which is contrary to the very basis of our system of justice.

If ever a law warranted being repealed it is this disgraceful and corrupt piece of legislation which owes more in its concept to a communist dictatorship or a 3rd world country like Iran than it does to a so called civilised societies system of justice. 

Why dont we start stoning people in public, that is surely the next step. 

 

 

Publicus's picture

Hidden Assets Proving a Negative

Publicus | | Permalink

 

There has long been an unresolved debate as to whether the confiscation legislation and its predecessors strikes the correct balance between the interests of society in the recovery of the proceeds of crime and the rights of the defendant.  Recent cases indicate an over-zealousness of the various agencies which have been given power under the Proceeds of Crime Act 2002. There is no doubt that the legislation is more draconian than its predecessors.  

 

Even prior to PoCA in Smith. [2001]UKHL 68, their Lordships at para 23 said -
"If in some circumstances it can operate in a penal or even a draconian manner, then that may not be out of place in a scheme for stripping criminals of the benefits of their crimes. That is a matter for the judgment of the legislature, which has adopted a similar approach in enacting legislation for the confiscation of the proceeds of drug trafficking."

 

It is most interesting that the term ‘hidden assets’ does not actually exist in the legislation but it is frequently bandied about by prosecutors. I certainly sympathise with the accountant who is tasked to prove a negative but am unsure whether the case GlavesVCPS. [2011]EWCA Civ 69 is of such comfort in Crown court proceedings as opposed to the further action by the defendant  for a certificate of inadequacy.  

davidwinch's picture

Certificate of inadequacy - hidden assets

davidwinch | | Permalink

Technically speaking a "Certificate of Inadequacy" is not required under PoCA 2002 (the term refers to a procedure under earlier confiscation legislation) but the principle behind it - that the defendant, after paying something off the confiscation order, has no assets left and cannot be expected to make any further payments in satisfaction of the order - still applies under PoCA 2002.

The problem with 'inadequacy' claims in 'hidden assets' cases (and you may feel at this point that you are reading Alice through the Looking Glass or Catch 22 rather than AccountingWEB) is that in order for the defendant to demonstrate that he has no assets left he has to explain what has happened to his 'hidden assets' (if the original confiscation order reflected any hidden assets).

If the defendant's position remains that no hidden assets had in fact ever existed (and he can say no more than that) then he cannot possibly explain what has happened to them.  So he is not eligible to have the confiscation case closed on the basis that he has no further assets.

What Mr Glaves was attempting to do was slightly different.  He accepted that cash had been withdrawn from bank accounts - and that the Crown Court had made a finding at his confiscation hearing that he had 'hidden assets' in that connection.  But he now wished to show, on a full disclosure of his financial affairs, that he now had no remaining funds left.  The Court of Appeal decided that he should be allowed to put his evidence before the Court by way of an application for a Certificate of Inadequacy (his case being under the confiscation provisions of Criminal Justice Act 1988 rather than PoCA 2002).  So the Court of Appeal decision in effect was "you can try" whereas the prosecution had contended his application was entirely hopeless and should not even be heard.

Clear?

Don't you just love confiscation law?

David

Gerard Murray's picture

David Winch- Why we love PoCA

Gerard Murray | | Permalink

 

Lord Justice Toulson applied the impeccable logic of both Lewis Carroll and Joseph Heller in his judgment in  Glaves/EWCA/Civ/2011/69.  

Counsel for the CPS clearly set out the apparent contradiction of Mr Claves having been unable in Crown Court to give ‘clear and cogent evidence’ as to what had happened to the ‘hidden assets’-the cash withdrawals- was hardly able to be likely to now explain them away to the satisfaction of the Court.   At paragraph 39 his Lordship said ‘The next step in the argument is critical. Mr Dennison (counsel for the CPS) submitted that in a case such as the present an applicant faces an insuperable problem in that he will be unable to show that his current assets are insufficient to meet the balance of the order unless and until he provides "clear and cogent" evidence about what happened to the cash withdrawn from the Natwest account. Since the respondent has no more to say on that subject now than at the time when the confiscation order was made, it necessarily follows that his application must fail.’   

The conclusion, however that he drew at paragraph 51 was as follows: “The prosecution's argument has a certain degree of logic to commend it but nothing else. The lifeblood of the law is not logic, although logic is a valuable tool, but justice. The inflexibility of the rule for which Mr Dennison contends has the potential to cause injustice.”   However, before rushing to view these words as a major breakthrough in the matter of ‘hidden assets’ his Lordship set out the law at paragraphs 53 & 54 as follows:  

53 ‘The fact that a defendant may end up with a confiscation order for more than he can pay, because he has been unable to produce sufficient evidence to satisfy the court of his true means, rather than because he has been deceitful or evasive, is hard but not unjust. It is not unjust, because it is right that the burden of proof should be on him.’  

54 “At the stage of an application for a certificate of inadequacy, the burden of proof is again on the defendant. He is unlikely to succeed unless the court is satisfied that he is being candid, and an application for a certificate of inadequacy is not intended to be a means of the defendant having a second bite at the same cherry. Those principles are clearly established. However, a rule of law which said that the court could not be persuaded that the defendant was unable to pay the outstanding amount by reason of a worsening of his financial circumstances unless he gave full disclosure of what had happened in the meantime to all his assets, including previously unidentified assets, would trammel the width of s83(POCA 2002) by imposing a restriction which is not in the statute. It would also be capable of causing not merely hardship but hardship amounting to injustice.”   

His Lordship found that Glaves was not trying to get a second bite of the cherry and that the court would ‘keep a sense of proportion in conducting the exercise.’ The defendant may not be able to give any new ‘clear and cogent evidence’ regarding the unexplained cash withdrawals from his bank account but it appears that he must, at least give full disclosure.

His final words in dismissing the appeal by the CPS were "the claimant is in principle entitled to pursue the application for a certificate of inadequacy despite a finding of hidden assets being made by the crown court".  It will be interesting to see the final outcome of the application by Mr Glaves for certificate of inadequacy. As to ‘hidden assets’ and cash withdrawals the burden of proof remains on the defendant to satisfy the court as to his available amount. An accountant retained to report is still in a minefield where the evidence is not there to substantiate the defendant’s explanations.   

cymraeg_draig's picture

.

cymraeg_draig | | Permalink

As I said - Guilty until proven innocent.

I wonder how many of us could actually account for and prove every penny we withdraw? 

 

perhaps

The Black Knight | | Permalink

there's a market for used betting slips ! lol

Gerard Murray's picture

Guilty until proven innocent

Gerard Murray | | Permalink

 c-d-getting hung up on guilty V innocent

As accountants, we should not get carried away about the jurisprudence issues involved in the application of the Proceeds of Crime legislation. The greatest problem facing defendants has been been their advisers tell them that this is heinous legislation that will be obviously judged by the courts in some favourable light. As accountants it is our duty  to tell clients (and the courts) what they need to hear rather than what they want to hear! When confiscation proceedings arise, it is on the basis that the defendant has already been found guilty or pleaded guilty in Crown court to specific offences.  As accountants and Expert Witnesses , we are not discharging  our professional and legal responsibilities by ranting about the perceived inequities of the legislation. That is a matter for parliamentarians although I greatly doubt if they want to re-visit this legislation. We are tasked to examine the case put forward by the prosecution in its calculation of the criminal benefit of the defendant and the available assets of the defendant. With regard to the latter issue the law is quite clear that there is a persuasive burden on the defendant to prove to the civil standard of what realisable assets he has.  

cymraeg_draig's picture

.

cymraeg_draig | | Permalink

 

I believe it is the duty of every citizen to repeatedly and loudly object to any legislation which is unfair or unjust. The alternative is to slowly sink beneath the waves of a dictatorship.

For example, the Poll Tax was seen as unjust and unfair, and it was brought down by the power of the ordinary man in the street standing up and saying to government - "I'm not putting up with this".

We have an annual census in a few weeks time. At the last census people objected to being questioned about their religious beliefs, and as a result the census was effectively sabotaged by vast numbers claiming to be "Jedi".

This appalling and grossly unjust legislation comes into the same catagory as the Poll Tax. Of course the man in the street isnt normally affected by it and is fed a diet of phoney claims that it "only hits drug dealers" by the tabloid press.  It is therefore the duty of those who are involved in this legislation, accountants, barristers, etc to press ministers to scrap or drastically change this unjust legislation, the legality of which is in itself questionable when measured against the rights of citizens enthroned in european law.

 

 

 

Caber Feidh's picture

Ask their Lordships

Caber Feidh | | Permalink

A very simple suggestion, whose feasibility I have not investigated. Could all those of you who object to POCA combine to support taking a particularly deserving test case to the Supreme Court, to see if their Lordships (to use their old title) might adopt a more lenient interpretation of the Act? It could be simpler and quicker than trying to persuade Parliament to amend the Act.

The Poll Tax did not seem particularly iniquitous legislation, especially not when compared with POCA. Margaret Thatcher's problem was testing it in Scotland. Some of my fellow Scots objected on principle to a law they saw as being inflicted only on them by an English PM, and a bossy female one at that (not my own view). Incidentally, I do not share C_D's confidence in the wisdom of the ordinary man. If such matters were left to ordinary men, we might still have public executions, bear baiting and cock fighting.

cymraeg_draig's picture

.

cymraeg_draig | | Permalink

 If such matters were left to ordinary men, we might still have public executions, bear baiting and cock fighting.

 

Posted by mrbdunsmore on Thu, 10/02/2011 - 03:54

 

An interesting thought - but I actually believe you are wrong. I think after witnessing one execution most people would in fact want the death penalty banned. I also think our view of animals is such that if cock fightng etc was legalised the public would in fact demand that it was banned.

That said, I could forsee the stocks being brought back for use on assorted hooligans and thugs. I also suspect that expenses fiddling MPs would find themselves subjected to a tougher regime, and I suspect that life sentences would actually mean life. 

And, getting back on topic, I suspect that the ordinary man in the street would support confiscation orders for drug dealers and the like but would NOT support these orders for ordinary people. The "man in the street" would, I believe, think it fair to recover the amount taken - but no more.   

ordinary tax evaders ? mmm

The Black Knight | | Permalink

You have to be fair to honest taxpayers too !

Lets face it the dishonest have got away with it for a long time, whether they be MP's or ordinary tax evaders.

there are grafters that also pay their taxes, and do not have nice cars and big houses.

with the exception of Mr Bowles most seem to have got their just deserts.

p.s. my religion this census will be Motorcyclist.

 

davidwinch's picture

Supreme Court

davidwinch | | Permalink

Confiscation cases have, of course, been taken to the House of Lords / Supreme Court in London and to the European Court of Human Rights.

Both courts have, more often than not, supported the prosecutor's interpretation of the legislation.

In the House of Lords in 2008, in the case of R v May [2008] UKHL 28 (a leading case on confiscation), the House of Lords quoted with approval a previous judgment in which it was said that the confiscation legislation was "a precise, fair and proportionate response to the important need to protect the public".

That may not be a view with which everyone would agree, but it was their Lordships considered opinion (the case was an appeal against a confiscation order against Mr May in the sum of £3.2 million in a VAT fraud jointly carried out by 16 conspirators - each of whom could properly be held, in law, to have 'obtained' the whole of the amount fraudulently obtained by the conspirators acting jointly).

David

Gerard Murray's picture

The Expectation Gap

Gerard Murray | | Permalink

In previous posts I have commented that it was for parliament to make amendments to money laundering legislation if it felt that the current law exceeded its intentions. The only politician I have heard express doubts about the present legislation was former Home Secretary, David Blunkett. Interviewed on the BBC's Panorama programme "Crime Pays" in March 2009 he stated that he was disappointed in the outcomes of the legislation that he helped to put on the statute book. 

Some posts have given a an alternative route suggesting that the Supreme Court should be the arbiter but as David Winch has pointed out a significant number of cases have come before the Supreme Court and its predecessor the House of Lords which have upheld the draconian legislation of the Proceeds of Crime Act 2002. The reality is that the legislation is here to stay.

The debate has raised the reality that many businesses, professionals etc do not accept that PoCA should be applied to anyone other than ‘organized crime.’ A few years ago, the fishing industry in the UK was up in arms when PoCA was used in two high profile cases involving fishermen.  Firstly, in August 2008 there was a prosecution by the Marine and Fisheries Agency of three fishermen for landing 19 tons of sole for which they had no EU quota. The total value of this fish was approximately £99,000. Confiscation orders were then made totalling £213,461!

In June of the following year, Britain’s largest privately- owned fishing firm, W. Stevenson & Sons was the subject of a confiscation order of £710,000 having admitted 37 charges of submitting false sales notes to the Department for Environment, Food and Rural Affairs (DEFRA).

A petition was signed and sent to Downing requesting that the government cease use of POCA against fishermen. To quote from the online petition;

"[the fishermen] have received fines … [once] imposed the authorities have pursued the families stripping assets using the Proceeds of Crime Act. The act is on the statute to strip assets from criminals who have amassed their wealth from criminal acts"

There is clearly a gap between the law and many people’s perceptions as to what the law should be in this area. Professionals, such as accountants and lawyers retained for their professional services not their personal views of the legislation and must not lose sight of this.  

cymraeg_draig's picture

,

cymraeg_draig | | Permalink

There is clearly a gap between the law and many people’s perceptions as to what the law should be in this area. Professionals, such as accountants and lawyers retained for their professional services not their personal views of the legislation and must not lose sight of this.  

 

Posted by Gerard Murray on Thu, 10/02/2011 - 17:37

 

Whilst of course they must represent their clients and work with the tools at their disposal, these are the very people who can bring about change.

The judiciary has been systematically stripped of its powers and is now tied by so called "guidelines" and regretably the quality of the appointments to the judiciary has also fallen.  Indeed I would say that the judiciary is no longer independent of the executive.

It is, therefore, vital that those who see the daily effects of this insidious communistic law put pressure on legislators at any and every opportunity. I would like to think that professional ethics would prevent decent people from cooperating in the use of this draconian and unjust law by refusing to prosecute cases under it, unfortunately time-serving crown prosecutors are state controlled drones who seem to long ago have abandoned any ethical considerations. 

  

Publicus's picture

The Expectation Gap

Publicus | | Permalink

Reality check for c-d

It is time to wake up and smell the coffee. POCA 2002 is clearly draconian and penal but it is not unjust. Everyone who comes before Crown Court to face confiscation proceedings has been found or pleaded guilty to indictable offences. They have a criminal record before the confiscation proceedings begin. What part of this do you not understand?

In the cases quoted by Gerard Murray let me pose the following question- Let's say you are a completely honest fisherman who has not broken the quotas laid down, has not submitted false invoices and has been completely law abiding. How would you feel to read that others who have driven a coach and four through well understood laws and regulations, while making money in the process, should escape with a slap on the wrists and minimum fine?

This is not communistic rule with the authorities arriving at your door and dragging you off in the middle of the night. This is a democracy in which if you have chosen to break the law to derive a financial advantage over your law-abiding competitors. Yet, somehow, you expect to to be treated as some kind of martyr and rewarded for your criminality.

The best profesional advice for you is to be told what you need to hear and not what you want to be hear. Rather than rant about the abuse of process you should memorise the words of Spohocles-'Things gained through unjust fraud are never secure.' It has taken the law in the UK over two and a half thousand years to recognise this reality.

cymraeg_draig's picture

Publicus

cymraeg_draig | | Permalink

   I understand it extremely well, and you have actually made my point for me.  'Things gained through unjust fraud are never secure.' Now exactly where in that does it say - "and we will take everything else you have ever earned too unless you can prove how you paid for it because we are tearing up 2,000 years of legal pricipal dating back to ancient Greece and making you guilty inless proven innocent". 

What next ?  Witch trials ?  Maybe we should just toss people into ponds, those who drown are innocent, those who dont drown we will burn.

Confiscating the actual proceeds of a specific proven crime is fine, but tell me, how do you justify taking hundreds of thousands of pounds from someone when they have only been convicted of taking, say, ten thousand pounds?

That is legalised theft by the state.  Luckily many very senior members of the government have the same reservations, which is why I am onfident that before 2015 this law will see drastic modification, and it cant come soon enough.

 

 

 

davidwinch's picture

Choosing which laws to support

davidwinch | | Permalink

Just to have my own two penn'orth here, I do think that the PoCA 2002 assumptions and the way that the legislation bites on an individual's 'available amount' including legitimately acquired assets are too harsh.

However I also think that 'rules is rules' and I am not in favour of individuals choosing which laws they respect and obey and which laws they do not.  I am no anarchist!

This is why I consider it inappropriate for MPs to make claims for expenses which they have not incurred and, by the same token, MPs voting to flout the UK's obligations concerning voting rights for prisoners.  MPs, and the rest of us, should have respect for the rule of law in my view.

David

cymraeg_draig's picture

"Rules is rules"

cymraeg_draig | | Permalink

 

 

"Rules is rules" - the problem with that David is that if we all took that attutude we would still have slavery, burn witches, and kids going up chimneys.

Where a law is unjust or just plain ridiculous we have not just a right, but a duty, to campaign and pressure government until it is changed. Governments don't actually do things, they react to pressure from others to do things. And sometimes something is so unkust that it is, in my view, unethical for anyone to actually support it or do anything to enable its use. 

Obeying the law is one thing, but respecting bad unjust law is something no one should do if that law breaches every moral code and ethical standard they believe in.

As for voting rights for prisoners, I dont think the vast majority of prisoners actually give a damn. However, this vote is encouraging as it shows the Europratts that we will no longer be dictated to by a bunch of chair polishing overpaid muppets. 

Lets hope this is just the beginning. 

   

davidwinch's picture

Campaigning

davidwinch | | Permalink

I have no problem with campaigning and pressuring governments to change the rules.

What I have a problem with is people deciding not to obey those laws with which they disagree.

There is a difference between campaigning against a law and disobeying one!

David

cymraeg_draig's picture

Action

cymraeg_draig | | Permalink

What I have a problem with is people deciding not to obey those laws with which they disagree.

There is a difference between campaigning against a law and disobeying one!

 

Posted by davidwinch on Fri, 11/02/2011 - 00:15

 

I dont advocate "disobeying it" - but I DO advocate refusing to do anything to support it.  I woulld never under any circumstances do anything to assist the imposition of this disreputable "law" (unless the accused was a drug dealer or a terrorist - for whom parliament's stated intention was this act should apply to).  

If all barristers, solicitors, and crown prosecutors refused to seek confiscation orders there is absolutely nothing anyone could do. No one can be made to act against their ethical principals.

There are a great number of prosecutors in the USA who flatly refuse to prosecute capital cases because they do not agree with the death penalty.  In some states it has now become almost impossible to prosecute capital cases without "importing" prosecutors from other states, which has difficulties of its own because of the way the courts are organised in the USA. The tide is definitely turning against capital punishment and whilst they have difficulties finding prosecutors there are panels of lawyers willing to fly anywhere in the world to defend them. 

The same thing on a smaller scale should and could be done wherever a law is unjust.

 

 

 

Rules is rules

alistair_king | | Permalink

What I have a problem with is people deciding not to obey those laws with which they disagree. There is a difference between campaigning against a law and disobeying one!

I am very uncomfortable with this statement. Quite simply do you blindly follow all laws or is there some point where the weight of law crosses a boundary and morally you feel obliged to draw a line?

To give some clear examples:

I grew up in apartheid Southa Africa. Should me and my family have obeyed the apartheid laws with which we disagreed?

Pushing even further - what about Nazi Germany and the anti-Jewish laws. Should these laws have been blindly followed?

Looking at the UK: Gradually there has been a build up of nuisance laws and regulations. Some petty. Some bigger. But if we just passively accept these then clearly we have not reached our limit and the state can (and certainly has) move even more burden onto us.

To give this some perspective - I don't think POCA is as extreme as the South African/German examples above. But clearly it is resulting in some injustices. Is C_D correct to  stand up and say "enough"? Or is it better to allow the weight of case law from POCA cases to push further and further into creating injustice?

What about other laws introduced in recent years that limit personal freedoms or move further in the direction of a politcally correct monolothic state monitored by the thought police. For example, what about some of the excess in Harriet Harman's equalities act. As you can guess from my comments on apartheid I have strong personal views on equality but where do you draw the line between common sense and pushing too much burden onto business?

What about the build up of petty rules and regulations making it harder and harder on the individual to avoid breaking some petty rule or regulation...

What do you say for example when a council makes road signing deliberately misleading and then refuses to correct it AND places cameras there to collect all the fines as its a good source of income. Don't think it happens? I can give you several specific examples. What about CCTV cars to catch people parking on yellow lines - but that will happily park on yellow lines themselves for a few hours to do so... What about police abuse of photographers? What about someone in a parked car, with the handbrake on and the engine turned off, convicted and fined for using a mobile phone and therefore NOT being in control of the vehicle?

Put simply, when is enough enough?

davidwinch's picture

David Cameron = Adolf Hitler?

davidwinch | | Permalink

Alistair

Whilst there is an obvious parallel between David Cameron's Conservative Party and Adolf Hitler's National Socialists in that both initially came to power as partners in a coalition, I do not think the similarities between the two are very great.  But of course I would not dispute anyone's right to express an alternative view (although I was a little surprised to see it on AWEB!).

David

davidwinch's picture

Disobeying law v Not supporting law

davidwinch | | Permalink

C_D

I see a potential problem with your view about not supporting laws with which you disagree.  What is your response if a law with which you disagree places a legal duty upon you to do something?  How can you "not support it" without "disobeying" it?

In the past you have expressed a reluctance (you might put it more strongly) to report a suspicion of money laundering.  If you have a suspicion but deliberately fail to report it are you "not supporting" a law which you regard as "bad" or are you "disobeying" it?

Would you agree with former MP Jim Devine's approach to 'grassing up' an employee whom you suspected might be engaged in benefit fraud?

If you would regard not complying with a legal duty to disclose information as acceptable then would you regard, say, failing to disclose a previous heart attack on an application for life insurance, or failing to disclose a previous bankruptcy on a mortgage application, as acceptable?

Where do you draw the line?

David

Deterrent

The Black Knight | | Permalink

Surely the purpose of POCA is to act as a deterrent not just a method of collecting what is owed.

If you are already guilty of an offence for which the amount (due to poor book keeping records) is uncertain then I think it is perfectly reasonable to assume the difference is from the same type or other illegal activity,

It cannot be right that a man who steels £100 a thousand times should only have to pay back £100 because he was only caught in the act the last time. That would make crime profitable even if you were caught. Especially given the very low detection rate for tax fraud.

From a tax perpective most more serious cases are given the option to come clean under COP9 if they then fail to use their last dogs chance then what can you do for these people.

The more I hear about POCA the more I like it.

Perhaps even the criminals will be encouraged to improve their book keeping !

cymraeg_draig's picture

.

cymraeg_draig | | Permalink

I see a potential problem with your view about not supporting laws with which you disagree.  What is your response if a law with which you disagree places a legal duty upon you to do something?  How can you "not support it" without "disobeying" it?

Where do you draw the line?

David

 

Posted by davidwinch on Fri, 11/02/2011 - 08:00

 

You draw the line at what you find morally and ethically repugnant.  Whether the law places a legal duty on you is irrelevent.  Indeed there is precedent for refusing to follow unlawful orders like the excuses at the Nuremburg trials that concentration camp guards were "following orders".  Those "orders" were lawful according to Germanys law at the time, but the court ruled that there was a higher duty than that imposed by the law.

The same principals still apply to modern day soldiers.

Sometimes it is necessary to break bad laws. Slaves gained their freedom only by "breaking the law". The Poll Tax was repealed only because people "broke the law" and refused to pay. 

No government, no man made law, can force someone to do something that is morrally unacceptable. Suppose for example that in the last parliament Harriet Harman had made being hetrosexual illegal and made homosexuality compulsary - would you have obeyed that law?  Of course not. 

There is a point at which people say enough is enough, and have no choice but to defy unnaceptable and unjust laws.

 

breaking the law

The Black Knight | | Permalink

The reformers who broke the law were still punished for it though.

How many accountants and lawyers are prepared to go to prison for a principle, very few I suspect.

Gerard Murray's picture

Accountants and PoCA

Gerard Murray | | Permalink

 With regard to some of the issues raised in previous posts -

Since the Proceeds of Crime Act 2002  took effect, solicitors and accountants have been jailed not for voicing their opposition to the legislation but for being in breach of it!

An increasing number of criminal offences are now covered by the confiscation regime as set out in the Proceeds of Crime legislation. It is judicially recognised as draconian and is drafted so as to severely limit any judicial discretion that might mitigate its effects. Once confiscation proceedings are set in motion the courts have very limited powers to stop them and limited discretion to alter the ultimate outcome.

The confiscation of assets obtained as a result of criminal conduct is, in principle, a reasonable and proportionate response by the state to acquisitive crime. The confiscation powers are certainly an exercise in follow the money although as Sir Paul Stephenson, the Metropolitan Police Commissioner told the Police Foundation in July attempts to get to grips with the problem and actually confiscate the proceeds of crime are un-coordinated and inadequate.

When accountants become involved in confiscation cases the first matter is the affirmation of the principle that an expert witness has an overriding duty to assist the court. The forensic accountant is usually involved in the stage of computing the criminal benefit and the amounts available under the terms of the legislation. In this context the role of the forensic accountant retained by the defence is to use expertise in scrutinising the Prosecutor’s Statement in the proceedings in relation to criminal benefit, pinpointing weaknesses, checking the supporting documentation and providing opinion on its validity. A great part of the work of the forensic accountant then entails the preparation of a statement of available assets of the defendant at the date of the confiscation hearing not at the date when the offences were committed.

In my opening post I highlighted the difficulties in dealing with unexplained cash withdrawals or more relevantly cash withdrawals for which the defendant may have an explanation but no evidence. In a wider context businesses that are subject to enquiry from various agencies are often in on-going contact with their accountants before bringing the mater to their solicitors. Increasingly accountants in practice should advise their clients to start thinking POCA as soon as the investigators appear. Unfortunately this is seldom the case. To have a chance of success in confiscation proceedings the single most important factor is to think about it early and plan the defence accordingly      

cymraeg_draig's picture

.

cymraeg_draig | | Permalink

How many accountants and lawyers are prepared to go to prison for a principle, very few I suspect.

 

Posted by kalden on Fri, 11/02/2011 - 12:06

 

More than you think.  Bullying people into complying with immoral laws is simply another indication that the law itself is wrong, and, that those imposing it are morally bankrupt.  After nearly 40 years of campaigning to get rid of the death penalty in the barbaric nations which still use it (& I include the USA in that description), I can tell you that there are many lawyers who are willing to be arrested and who have been arrested for standing up for justice instead of blindly obeying morally indefensible "laws".

 

______________________________________________________

 

 Increasingly accountants in practice should advise their clients to start thinking POCA as soon as the investigators appear. Unfortunately this is seldom the case. To have a chance of success in confiscation proceedings the single most important factor is to think about it early and plan the defence accordingly      

 

Posted by Gerard Murray on Fri, 11/02/2011 - 13:09

 

Actually, the best strategy is to never cooperate with HMRC etc, never "admit" the offence, and fight tooth & nail to avoid any conviction that could potentially lead to subsequent confiscation proceedings.

 

David Cameron = Adolf Hitler???

alistair_king | | Permalink

I didn't expect that interpretation!

My point was that there is an extreme at which the law cannot morally be followed. Apartheid South Africa and Nazi Germany represent this extreme. I am therefore uncomfortable with any statement that laws must be blindly obeyed simply because they are the laws.

Obviously our current situation falls far short of this extreme. Some of our laws are just and fair. But some are not.

The question is simply when do you cross the line from:

  • the law must be actively supported
  • to I cannot carry out actions that support this law
  • to I must break this law and encourage others to break it too

If I understand C_D correctly he believes POCA crosses the first of these lines. I think for some cases he may be right. All? I'm not so sure.

On the other hand I am very unhappy with the last few years undermining of civil liberties and personal freedoms by increasingly draconian regulation, and the increase in political correctness at the expense of common sense ...

At the same time as we have seen  the introduction of a surveillance society and increasingly militant policing. Irrelevant to POCA, but I'm also not sure that I like the idea of UK bobbies being armed with water cannon and tear gas. I once got caught in the middle as an innocent bystander between a police line and a demonstration in London and I have to say it was thoroughly frightening. Not least of which being the police assumption that since I was there I wasn't innocent (and a gloved police hand in my face).

It still doesn't make the UK a tyranny. But is an erosion and sliding in the wrong direction. And the some of the (ab)uses of POCA form part of that. If we don't make our voices heard we do risk sliding further in this wrong direction.

cymraeg_draig's picture

Lines

cymraeg_draig | | Permalink

The question is simply when do you cross the line from:

  • the law must be actively supported
  • to I cannot carry out actions that support this law
  • to I must break this law and encourage others to break it too

If I understand C_D correctly he believes POCA crosses the first of these lines. .

 

Posted by alistair_king on Fri, 11/02/2011 - 17:46

 

 

It crosses the first line wherever it is applied to anything other than terrorism and drug dealing (which was its original purpose).

In my view, where amounts seized exceed the amount actually PROVEN to have been the proceeds of the crime, then it crosses the second line too.  Would I break the law?  Lets just say I would definitely defy it.  

Judges trying hard but both hands tied

JackHarper | | Permalink

Lawyers especially judges have hard choices to make, as in Russia and Zimbabwe and the Third Reich.

I am normally suspicious of them, saying that the main qualification for the Bench is never having travelled on a bus, but the case of Windsor v CPS [2011} EWCA Crim 143 http://www.bailii.org/ew/cases/EWCA/Crim/2011/143.html is one where the three appeal judges did their best to temper a law that is repugnant to morality and would be ludicrous if levity were possible. They only interpret the law not make it but each lawyer should know the limit beyond which his integrity will be compromised. Sir Thomas More did and doubtless there are some lawyers in the Cairo crowds who do.

A cash and carry business was subjected to a restraint and receivership order on 6 December just before their busiest time of the year. They work on high volumes and low margins. A receiver was appointed to run the business and his charges were some £483,000. Bet that helped the margins. The Court thought the business was almost certainly 95% legitimate and pointed out that the defendants said 100%. The receiver was able to sell all the stock of "illegal" booze without breaking the law (geddit?). The restraint and receivership orders were granted on the papers by a single judge (Uncle Hawkins, for it was he). The Court decided Uncle Hawkins did not have reasonable cause to grant. And they had the power to suspend the orders and did so. The defendants now go for trial at the Crown Court but who knows what shape their business is in after the receiver has vomited into it. The girl Torres would have been a cheaper appointee.

The Court admitted:

"It is now established that the receiver's professional fees, litigation costs and expenses will come out of the realisable assets in respect of which the receivership order applies, even if the person against whom the restraint order has been made is not charged or, if charged, is not tried or, if tried, is acquitted: see Capewell v HMRC [2007] 1 WLR 386, [2007] UKHL 02.[1] Compensation is only payable in the event of serious default (see section 72)."

Wake up judges and po-faced lawyers paying obeisance to immoral laws and listen : the Waffen SS are outside marching to the rousing strains of the Horst Wessel Lied. And by the way: you're all next for a visit from the nice men at Prinz-Albrecht-Strasse Berlin 8 Deutschland .

 

Jack Harper

 

davidwinch's picture

A small - but important - point

davidwinch | | Permalink

Jack

In your very interesting post you make one error in that you say, "The defendants now go for trial at the Crown Court".  In fact the defendants have not, as things stand, been charged with any offence (see paragraph 8 of the judgment).

Whether they will be further interviewed and / or charged is unlikely to be resolved for some months as the defendants (who technically are not defendants at all - not having been charged) are obliged to present themselves at a police station in June to see what comes next.  In the meantime police / HMRC enquiries will continue.

David

weaversmiths's picture

My 6 Eggs

weaversmiths | | Permalink

What an interesting thread.  It is great to see trained and experienced minds throwing down the gauntlet.  Perhaps this law appears draconian but it really is time for those we all support through our taxes and who laugh openly in our faces for being honest were brought to account.  Unfortunately PoCA prosecutions appear to be taking the easy option and hitting on the weak, but then the Boys in Blue are behind it all and I think most of you know my (extremely) low regard for the abysmal way they conduct their business throughout the land.   If only - but then that view is unrealistic; shouldn't be, but it is.

As for Prisoners.  I have some little expereience of them though an ex-husband PO.  For example, are you aware that there are varied and numerous religions with various and numerous festival days where the (said) believer does not have to work (in the laundry, farm, or even get out of bed if he/she doesn't want to).  All the more time to watch telly or play on their games consuls. Long term prisoners are well read experts on this, via the prison library of course,  and they can cause as much disruption within their power to the running of the prison by changing their religion to suit the day?  I doubt there are many prisoners who want the vote for the right reasons, merely to cause disruption (which may turn out to be extremely lucrative for them on this occasion) and to get out of their cells for various reasons pertaining to their "rights".  If I was a prisoner I could spend endless hours cooking up intricate schemes to pass the time as could we all. 

 

TheAncientOne

Publicus's picture

The Thrust of POCA Prosecutions

Publicus | | Permalink

 

 

weaversmith-The Ancient One

'Unfortunately PoCA prosecutions appear to be taking the easy option and hitting on the weak.' This is a widely held perception that is not borne out by the facts. The vast majhority of cases that come before the Court of Appeal are in relation to Organized Crime indicating that the authorities are hitting at the Mr Bigs.

 

Likewise, the number of the cases against trading companies and individuals are in respect of offences that could  not be described as minor is on the increase.  In the vast majority of cases the Court of Appeal or the higher court of the House of Lords/Supreme Court have dismised the appeals of the defendants.

Maybe, in spite of all the howls of indignation the law is being fully and equally applied and we should all welcome this. There are kinks in legisaltion that is less than a decade old but  the POCA legisaltion is balanced.

Gerard Murray's picture

Production Orders in Search of Hidden Assets

Gerard Murray | | Permalink

On a separate post there has been much debate about the actions of an accountant, Mr Doshi who revealed to his client that he received a Production Order from the police and as a result was convicted under the tipping-off sections of the Proceeds of Crime Act 2002.

Production Orders appear to be often used as a fishing expedition as well as to obtain evidence. I began this post on the subject of the quest for hidden assets and the difficulties that accountants have in tring to prove a negative in confiscation proceedings. The numerous comments on the Mr Doshi and the issue of Protecion Orders reminded me of a recent case, when Production Orders were served on the defendant's bank for copies of the bank statements for a four year period subsequent to the period fro which they had been convicted for not having waste disposal licences. Firstly, the defendant had fully co-operated throughout the investigation and would have been more than happy to supply copies of the statemetns if requested to do so. The Prosecutor was seeeking to prove the existence of hidden assets and the method was to invite the court to agree that that all substantial cash withdrawals were unexplained and should be considered hidden assets.

I greatly suspect the the prosecutor thought that saying that the statements had been obtained as the result of a Production Order would, for the benefit of the court, have sounded more ominous for the defendant that a simple statement that the prosecutoir was simply drawing inferences from copy bank statements provided by the defendant. 

I hasten to add that the basis upon which I became aware of the Production Order was that that it was highlighted by the Prosecutor in his rebuttal of a report that I had prepared.The bank in question had fulfilled its obligations by not tipping off the defendant that it had been served with a Production Order, which should  be the standard behaviour of banks an all in the regulated sector upon the receipt of Production Orders.  However, I greatly doubt whether a disclosure by the bank to its customer  would have, in this particular case,prejudiced the investigation. 

My main concerns are :

1) that the Production Order was completely unnecessary in the this investigation and was designed to portray the defenant as highly criminal.

2) that the Prosecutors were attempting to flavour the case against the defedant by stating in their rebuttal  that they had applied to the court for a Production Order and then used it to draw completely unsupported inferences about the defendant's business activities.

3) that the action of the Prosecutors greatly added cost to the defendant's ultimately successful efforts to disprove the allegations of hidden assets and demonstrate that the inferences drawn by  the Prosecutors were groundless. 

It again demonstrated that it quite pointless for the defence and the accountants it appoints to throw their toys out of the pram and roar and shout that the law is an ass. The professional responsibility to examine the details of the cae and, whre possible,  produce evidence to rebut the charges of the prosecution and any inferences that may have been drawn.   

Comparison...

alistair_king | | Permalink

After all the discussion about POCA I thought it might be nice to breathe deeply and be glad we are not on the far side of the Atlantic...

http://www.rollingstone.com/politics/news/why-isnt-wall-street-in-jail-20110216?page=1

http://www.zerohedge.com/article/how-allstate-used-sampling-confirm-jpmorganwamu-lied-about-virtually-everything-when-selling

At least we can have confidence it would never happen in the UK:

  • After all, no members of the former Labour government taken positions with banks, have they?
  • Osborne successfully dealt with bankers bonuses and splitting retail and investment banking?
  • With a couple of exceptions (GFX plus a couple of recent prosecutions for insider trasing) there is no need for our regulators take many actions. The UK immune to this culture of greed and abuse so that there is no need for them. There are no big bankers bonuses in the city, hey. And none of the companies named in the Rolling stone article have offices in the city, sharing that same culture.
  • Our police doesn't spend 90% of its time and effort chasing the middle classes for nonsense crimes while ignoring the career criminals out on the streets or ignoring white collar crime.
  • Our bankers would never avoid UK tax by leaving their earnings on non-UK dealing outside the UK
  • Our politicians can be trusted and have never ever ever had their snouts in the trough

 

So all is bright and sunny and POCA is wonderfully applied to the big boys as well as to the small fry.

 

 

Add comment
Log in or register to post comments