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How To Deal With Confiscation Proceedings

Providing expert accountancy reports in Proceeds of Crime confiscations has represented a substantial proportion of the crime and fraud focused work that I have been doing for quite some time now. When I started my specialist forensic accountancy business almost ten years ago the POCA jobs came in thick and fast. A dozen or more cases large and small still account for a large part of my business each year.

The focus of my firm’s work seems to change from year to year, with frauds, money laundering and tax evasion all coming and going as flavour of the month. However there are always confiscations on the go, and over the years I have not seen a significant change in the way the prosecutors run their cases.

Although I also work as an expert forensic accountant for the police and other regulators, where confiscations are concerned I am always acting as a criminal defence expert. The overriding reason for this is that I am not an “accredited financial expert”, the qualification normally awarded to various public sector police officers, HMRC inspectors and local council fraud investigators after completing the appropriate courses.

It is possible for a private individual to take these courses to become accredited, and it is not particularly onerous or expensive to do so. However, I have not followed this route, believing that an independent financial appraisal of any confiscation case comes from the application of common sense by an appropriately qualified and experienced defence expert who is not bound by a prescriptive approach. This independent role is an essential part of the confiscation proceedings because it allows the partisan approach adopted by the accredited financial investigators to be moderated.

Having considered the S16 Statements of Information in hundreds of different confiscation cases over the years it has become clear that a set of standard procedures has been taught to budding financial investigators that means that the starting point when assessing a convicted person’s benefit from their life of crime is always the same – put as much benefit into the assessment as possible in the hope that most of it will stick!

Particular Criminal Benefit (or benefit from the offending)

Very often the particular criminal benefit will be fairly presented, the defendant may even have pleaded guilty to a particular sum that has been stolen or defrauded. It is the lifestyle benefit where the interesting numbers will appear.

Assumed Lifestyle Criminal Benefit

Usually a financial investigator will go through all the defendant’s finances for six years prior to the date of charge looking for any source of income that cannot be explained. There seems to be no obligation for the investigator to look beyond the most obvious sources of income, such as a regular monthly salary that is clearly identifiable in the bank accounts. Therefore it is quite normal for sums of money that form part of the particular criminal benefit or are transfers from other accounts controlled by the defendant to be included within the assessment of criminal benefit. Such double counting is seen time and time again, and even though it has been firmly recognized by the courts still appears in S1 statements.

Double Counting Is A Regular Occurrence

Double counting also appears when assets are being considered. It is not unusual for the value of a property to be included along with the full value of an associated mortgage. I have even seen the full purchase price of the property, the mortgage and the full sale proceeds included within the benefit total. Along with any deposit, this means that the same intrinsic value is being counted three times!

These types of issues still arise, though I must admit that the investigators are becoming more subtle with their inclusions. It is not fair to overly criticize accredited financial investigators, they are allowed to make assumptions that need to be challenged by the defence. However, a competent police officer who takes several weeks financial investigator training can never reach the same level of skills as a seasoned forensic accountant in that short period of time. They might be highly skilled detectives, but the regulators are renowned for their reticence when it comes to paying for additional expertise.

This means that a defendant, perhaps convicted of only a moderate crime, will continue to be faced with the shock of an extortionate assessment of the financial benefit they have allegedly received from their crimes. I recall occasions where someone has stolen a few tens of thousand pounds, only to be faced with accusations of a criminal lifestyle worth millions! Fortunately the initial sum never stands.

Defence Counsel Must Strike A Deal – The Bartering System?

I very rarely attend court in a confiscation. The normal procedure is for the defence to instruct a forensic accountant to provide an independent and unbiased view of what the levels of benefit should be. Then, armed with the expert accountant’s report, counsel for the defence will attempt to negotiate a better deal for the defendant. The more straight forward, clear and non partisan the report, the closer to the expert’s position will be the ultimate deal.

As an expert who regularly provides reports addressed to the court, often attending in person to undergo cross examination, I am unable to follow the same method used by the accredited financial experts – that is to go in low (like when bartering) only to concede points until a bargain is struck! I don’t have the luxury of presenting a different staring point expecting to concede some of the numbers as the matter progresses. I must attempt to get it right from the start.