Warning: "continue" targeting switch is equivalent to "break". Did you mean to use "continue 2"? in /homepages/17/d251956207/htdocs/business/wp-content/plugins/all-in-one-seo-pack/modules/aioseop_opengraph.php on line 853
Confiscation Proceedings | Mark Jenner & Co Limited

CONFISCATIONS IN PRACTICE

Statistics reveal that the authorities recover some £200 million proceeds of crime each year through the confiscation process, about a quarter of this being the forfeiture of seized cash. The most recent figures show that £217 million was recovered in 2018/19.

Figures for the monitory value of crime are notoriously vague, because it is only possible to measure amounts stolen if they are actually reported and prosecuted successfully. Some commentators put the level of fraud in the UK at around £190 billion (National Fraud Indicator 2019) indicating that the total stolen may be much more when crimes such as drug trafficking and theft are included.

The simple relationship between amounts recovered and the level of crime indicates that only 0.1% is being recovered. It strikes me that the authorities are missing a trick and failing to maximize a self funding process or take advantage of a massive source of income.

I can only guess at why recovery levels are so low based on my experience providing regular expert accountant responses to confiscation reports prepared by Accredited Financial Advisors on behalf of the Crown. These reports are prepared according to provisions contained within the Proceeds of Crime Act 2002 and are known as “S16 Statements of Information”. Confiscations are triggered following a conviction for a qualifying crime (put simply this is where victims have lost money and the perpetrator may have been actively stealing over a period of time).

Having reviewed these reports for well over twenty years as a criminal defence expert accountant (previously they were prepared under the Criminal Justice Acts legislation) I can say that every effort is made by the Crown to exploit the assumptions permitted by law when estimating the amount of benefit a convicted criminal is supposed to have received. Because assumptions are allowed, it is up to the defendant to prove that any income received or assets owned have not been obtained through criminal means. This is of course a complete reverse of the process whereby the person was convicted in the first place, whereby it is up to the Crown to demonstrate guilt to the Court beyond any reasonable doubt. This reversal of obligations during the confiscation process has resulted in the need for a detailed rebuttal by the convicted person and is why a forensic accountant specialising in proceeds of crime cases is routinely invited onto the defence team.

Illustrative Case Example

For example, a businessman commenced a mail order business 10 years ago. He grew the business which was quite profitable. Three years ago, following a car accident, he was unable to manage the business properly for a while and debts increased while he convalesced. On return to work he experienced increasing pressure from creditors and had to let one of his two staff go. He started cutting corners and looked for some easy income. He found that he could buy counterfeit designer goods abroad and sell them in the UK for the high price of the genuine article. Eventually he was caught and found to have sold £100,000 of counterfeit goods over a period of one year. He was convicted and received a custodial sentence. Such an offence would naturally lead to confiscation proceedings.

What Does a Criminal Confiscation Order Look Like?

What should the confiscation order look like in this simple example? The question is how much has the defendant benefited from his crime? He hasn’t benefited to the extent of £100,000 because he has still had to bear costs associated with his business including buying the cheap counterfeit goods from his suppliers. However, he would still be deemed to have received £100,000 as proceeds of crime from his particular criminal offence, and this figure would be included within the S16 Statement of Information which is effectively a request for the Court to order the defendant to pay back this amount.

This is arguably a fair request, because the defendant has taken £100,000 illegally even if he has incurred some of his own overhead costs on the way. Similarly it would be wrong to deduct the cost of a burglar’s bus fair traveling to the scene of the crime! However, the S16 Statement would not stop there. The Crown is allowed to assume that the criminal had a “criminal lifestyle” and can look back over the defendant’s financial affairs – up to six years prior to first being charged and potentially further if a crime has been going on for many years.

In this case, a financial review revealed that there were some £200,000 unidentified deposits being made into the defendant’s bank accounts over the 6 years, he owned a car valued at £10,000 when he was registered as keeper three years ago and that his house that he currently lived in was valued at £290,000. This is a total of another £500,000 that would be added to the £100,000 initial benefit figure and be requested to be included within an order to be made by the court for repayment by the defendant.

To Pay £100,000 or £600,000?

Furthermore, it was established that the only assets that the defendant currently owned was the house and the car was only worth £5,000. There was a further £5,000 sitting in the business bank account. This means that there was £300,000 available to pay the proposed benefit order of £600,000 and that the defendant would leave prison with nothing but the £300,000 excess benefit over his head for the rest of his life. Most people would suggest that such a result would be unfair, because the defendant had been punished by his prison sentence and had not even profited by his crime by £100,000.

Fortunately, a balanced critique of the S16 Statement of Information by the defence might reveal the following:

  • Half of the unidentified deposits could be reconciled to the business records indicating that they were revenue received during the normal course of the business while the other half were transfers between bank accounts being double counted
  • A cheque payment for £10,000 was identified from the business bank account for the vehicle
  • The house had been purchased twenty years ago and the mortgage paid off ten years later

Now it can be seen that a £100,000 confiscation order would be more reasonable, and could potentially be raised as a mortgage against the defendant’s property. Thus he would have received a prison sentence for his crime, paid back all the money obtained illegally and potentially be in a position to build his life back up free of any residual benefit order hanging over his head.

In practice for most cases, a S16 Statement of Information will have been based on reasonable assumptions being made by the Crown and it will raise many bone fide areas where the defendant must rightly justify the source of his wealth. This is the whole purpose of the confiscation legislation. However, the three strands of added benefit that I have described above are examples of areas that are routinely included and where there is often a legitimate explanation that, when highlighted, can reduce the level of benefit that is ultimately ordered by the court.

My conclusion is that it is not the effort made by the Crown to confiscate within the various cases that are prosecuted (and result in convictions) that is to blame for the tiny percentage of criminal wealth that is recovered, but potentially the massive amount of financial crime that either goes undetected or otherwise un-prosecuted.

Bookmark:
  • Print
  • Digg
  • StumbleUpon
  • del.icio.us
  • Facebook
  • Yahoo! Buzz
  • Twitter
  • Google Bookmarks
  • Add to favorites
  • RSS
  • LinkedIn

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.

Leave a Reply

Please use your real name instead of you company name or keyword spam.

*