Confiscation Proceedings

These days confiscation cases seem to outnumber the predicate fraud cases that Mark Jenner & Co assists with.  They are self funding for the authorities who will not be cutting back on this area – even if they are forced to make financial cutbacks elsewhere.  According to the CPS, targets for confiscations will increase to some £1 billion – revenue which will be split between those with a vested interest – e.g. the police, CPS and the courts.

HOW CAN MARK JENNER & CO HELP?

To address the balance, the defence must be prepared for more POCA cases and high quality forensic accounting services should form a key part of the team.  More cases being brought may threaten the quality of the Crown’s financial statements and the defence must be ready to counter with their own financial expertise.

If the pressure on public funding continues to increase this will mean additional challenges for all parties of the defence team.  As forensic accountants specialising in fraud matters we are finding that confiscation and money laundering assignments seem to be filling much of our time.  In order to maintain the very high quality of response required and continue to be a valuable and readily available part of the defence team we are continuing to develop our approach to confiscations with funding constraints in mind.  Mark Jenner & Co was established to work within the increasing constraints of public funding while providing a very high proportion (sometimes all) of the work being undertaken by the expert – to provide defence responses that are robust and can be supported when it boils down to the inevitable negotiations between prosecution and criminal defence teams.

Our approach to confiscations

The recent legislation has never been crystal clear and its application seems to be evolving all the time. Such a dynamic framework means that a measured application of common sense very often prevails in many courts.  The prosecution seem to be getting more consistent with the preparation of their S16 statements latterly but even they admit they still adopt a rather “scattergun” approach.  This allows us to work through the underlying assumptions supporting the components of the benefit figure together with the amounts themselves with somewhat more finesse resulting in a critique that addresses a number of areas:

Arithmetical accuracy

Identifying arithmetic errors will result in the Crown making adjustments without much comment – but major blunders can result in cases being substantially watered down or dropped.

Double counting

As a result of the Crown’s rather blunt approach there is often substantial double and even triple counting that goes unnoticed in its financial cases resulting in benefit figures that are overstated.  This can result from a failure to identify inter-bank account transactions or reversals or, more alarmingly, failing to include all records that can be used to identify sources of funds and so eliminate unknown receipts within the benefit figure.

Legitimate sources of income

If the Crown is assuming a criminal lifestyle then the defence must prove the legitimacy of any funds that have been received.  This often requires tracing income through many different sets of bank account statements and recreating business activity from often incomplete accounting records.

False Assumptions

Every fraud is different introducing novel issues and different approaches are required. However, confiscations generally follow similar themes – components of benefit and realisable assets.  Our experience with generally recurring issues means we approach each case with a high level of efficiency that allows us to continue to undertake this work on a highly competitive basis.

For example we may question how much merit there was in our focusing on the defendant being a minor beneficiary in a fraud by directing our work to the business of others.  In R – v – May joint and several liability was decided for co-conspirators.  Instead, we might ask if it would be better if there was any way the financial activity of the defendant could be presented as simply being courier or custodian activities, as decided in R – v – Allpress?

Our view of these and other issues is that an application of common sense is required based on a general understanding of confiscation rulings.  We find counsel often appreciates our financial input early on to assist with his legal strategy.

We assisted in a confiscation following the case of a landlord who had built up a size-able property portfolio worth some £25 million.  He was caught assisting the illegal entry of asylum seekers into the UK and obtaining around £200,000 benefit on their behalf, which he kept towards their food and keep.  As a pillar of the local community, he immediately pleaded guilty and was sentenced to around 4 years in prison.

Then came the confiscation.  Of course the Crown wanted the whole £25 million for lifestyle offences.  Our report took the view that the defendant’s benefit was based on the £200,000 from particular criminal conduct and that the isolated illegality did not represent a criminal lifestyle. The Crown continued to press for lifestyle sanctions and began to introduce the idea of tax evasion – getting their own expert accountant to attempt to quantify how much tax had been evaded over some 30 years.

Eventually the lifestyle assumptions were quashed, but the prosecution argued that because illegal funds had been paid into the bank and mixed with several millions of other transactions – all funds had become tainted.  I recall the Judge’s response – “so you are saying if I stole £1 on Monday – then won £1 million on the lottery the next day and put both sums in the bank – I would lose the lot?” Prosecution counsel muttered “yes my lord” .   However, the Judge made a confiscation order equal to the sum we had proposed, commenting on our common sense approach in his summing up.  Following the recent decision in R – v – Waya the issues surrounding proportionality and the use of mixed funds have become much clearer.

Getting the benefit as low as possible

The benefit order stays with a defendant for the rest of his life, yet we have seen defence teams more focused on doing a deal with the Crown in relation to the realisable assets figure.  We aim to reduce the benefit figure as far as possible and even where a bigger figure than the agreed settlement remains, try to leave areas of doubt or disagreement within our reports should there be further recoveries pursued in the future.

Applying a bigger proportion of expert time

We prefer to increase our efficiency through the utilisation of our extensive confiscation experience rather than reducing the amount of input by the expert delegating large proportions of any assignment to junior staff.

By Mark Jenner BSc MA CFE FCA– Mark has been a forensic accountant for over 19 years specialising in fraud and money laundering for most of that time. He heads up a dedicated fraud advisory service line focusing on expert witness assignments and fraud investigation. Regularly attending court to give oral evidence, his portfolio includes criminal fraud prosecutions, proceeds of crime and money laundering offences, corporate enquiries (including insolvency investigations) and asset tracing assignments.

Mark can be contacted at: mail@mark-jenner.com

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About Mark Jenner

Mark Jenner is an experienced forensic accountant specialising in fraud and white collar criminal matters. He provides independent financial investigation and expert accounting witness services to police forces, fraud regulators and criminal defence lawyers, also providing assistance and solutions to organisations embroiled in financial disputes.

One Response to Confiscation Proceedings

  1. Pingback: Examples of forensic accounting cases | Mark Jenner & Co Limited - Forensic Accounting Services

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