Tag Archives: Fraud

CPS pair sentenced to 6 years for £1m taxi fraud

cps

Facts

On 14th March 2013 two Crown Prosecution Service employees, Lisa Burrows (41) and Tahir Mahmood (50) pleaded guilty to Conspiracy to commit fraud under Criminal Law Act 1977 s 1. (See the CPS press release for details)

Burrows was an Area Finance Manager for CPS West Midlands. She was authorised to submit any invoice up to the value to £25,000 without recourse to a senior manager. Mahmood was a CPS employee (that employment was facilitated by Burrows) and prior to that employment he was a taxi driver. The Judge commented that it was that experience which underpinned the fraud.

The two CPS employees set up false invoices to claim for non-existent taxi rides (with a non-existent taxi firm) to transport non-existent witnesses to Court. Mahmood set up a bank account using an alternative surname to facilitate the fraud. They managed to get in over £1 million over a five year period, amounting to about £4,000 per week.

The BBC stated that they used the funds to pay off their mortgage, buy designer goods and to pay for trips to Dubai and New York,

Delay

The pair pleaded in March, so why the delay? The authorities conducted financial inquiries to trace the money, for the purposes of recovering the proceeds of the offences. We are unaware of the outcome of the inquiries. This should not have resulted in a discounted sentence.

Judges’ Comments

The sentencing remarks are available here.

Aside from the sheer amount involved, the features that make this conspiracy particularly serious are these:  This was a huge fraud on the public purse causing substantial losses to a department already under serious financial pressure.  It was carried out by someone in a position of very considerable trust.  The fraud involved significant planning by both of you.  It continued formore than five years.  It would have carried on had it not been discovered as is apparent from the fact that you, Burrows, had further bogus invoices ready for submission.  Very large sums of money remain outstanding.  Where the proceeds can be traced,they wentlargely on high living. The fraud was motivated purely by greed. The fact that the fraud involved the Crown Prosecution Service and was committed by a senior member of that Service – the body responsible for bringing criminals to justice – will have affected and eroded public confidence in that Service.

Plainly the element of breach of trust applies mostsignificantly to you, Burrows. Whilst you, Mahmood, were an employee of the Crown Prosecution Service in the latter stages of the fraud, your employment was not an integral part of the fraudulent process. Equally, Burriows, you have lost everything as a result of the fraud and I cannot ignore the fact that you, Mahmood, held the purse strings. I do not intend to distinguish between you in the sentence I impose.

The Judge appears to suggest that the aggravation of the breach of trust (most applicable to Burrows) is cancelled out by the fact she has ‘lost everything’, thereby allowing the Judge to treat the defendants equally for the purposes of sentence. He continued:

It is difficult to envisage a more serious fraud of its type that the one you committed. Had you contested the case the sentence in your case in the region of nine  years would have been appropriate.

Clearly the Judge took a dim view of the offending.

The Judge made no reference to the guidelines.

Sentence

In March, we looked at what sentence they could expect. News reports had suggested the pair had pleaded to Fraud Act 2006 offence. We said:

“The Fraud Guidelines will apply. The most suitable category is ‘Banking and Insurance Fraud’ (page 24). It is professionally planned and over a long period of time, and, given the amount of money, it is in the top category.

The starting point (based on £750,000) is 5 years, with a range of 4-7 years. This is after a trial and both will get full credit for pleading guilty.”

This was incorrect. The pair pleaded to conspiracy to commit fraud. They each received 6 years, representing a sentence of 9 years after a trial (as the Judge gave them full credit for their pleas).

When sentencing for conspiracy offences, it is usually appropriate to sentence for the individual role in the conspiracy, as well as participation in the overall conspiracy. This often results in higher sentences than where merely a substantive offence is charged. (Eg. conspiracy to burgle / burglary).

The guidelines

Officially, the guidelines do not apply. The guidelines apply to the offences listed in Annex A. Section 1 states:

…if a person agrees with any other person or persons that a course of conduct shall be pursued which, if the agreement is carried out in accordance with their intentions, either—

(a)will necessarily amount to or involve the commission of any offence or offences by one or more of the parties to the agreement…

he is guilty of the conspiracy to commit the offence in question.

The guideline specifically excludes conspiracy to defraud (a different common law offence) but doesnt mention conspiracy to commit the substantive offence (which is covered by the guideline). A little complicated.

Whilst the guidelines do not officially apply, I am of the view that they can be of some assistance.

The starting point of 5 years (based on £750,000) can be raised to reflect the fact that over £1m was obtained. That could legitimately be increased to 6 years (or a bit more), but is unlikely that a starting point of over 7 years would usually be deemed to be appropriate in absence of some serious aggravating factors. There plainly should be an increase for the breach of trust and the role played by each and the fact that the funds were used to finance a lavish lifestyle. There can be no increase for the length of time over which the fraud was carried out, nor the professional planning or multiple frauds, as this is already factored in to the starting point.

It would be necessary to increase the sentence to reflect the involvement in the conspiracy and so that may have taken the sentence towards the 9 year starting point that the Judge adopted.

Appeal?

Perhaps. In light of the fact that this was a conspiracy, the sentence doesnt seem so high as originally thought.

To the substantive offence, 6 years on a plea seems high. And it is hard to see how a sentence of 9 years, against a maximum of 10 could be upheld on an appeal. For a conspiracy, it may be that the sentence is about right, after considering the guidelines, adding a bit on for the conspiracy, the increased sum obtained and the lavish lifestyle it was used to fund.

Watch this space.

Note: This post was amended on 30 August 2013 after learning that the offence was conspiracy to commit fraud.

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Barrister jailed for benefit fraud – Nadine Wilson-Ellis gets 7 months

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Nadine Wilson-Ellis was convicted on 19th July 2013 of ‘two offences under the Fraud Act’. It seems that she was granted a council tenancy in Bristol in November 2009 on the basis that she was living and working in the city and was an unemployed single parent with one child. This was untrue however – she was living with her husband in Nottingham and working as a Law lecturer getting £30,000 a year (and sub-letting her Council Flat). The Council discovered that she had received about £10,000 over a period of 3 years from the fraud.

Ms Wilson-Ellis apparently owned two homes but applied for a larger house (as she had two children) in 2011 where the documents she submitted in relation to this were found to be false and the deception unravelled.

It’s not clear exactly what offences Ms Wilson-Ellis was found guilty of. It sounds as though the offences were in relation to obtaining a council tenancy that she was not entitled to. It is possible that there was a charge relating to the use of false documents.

Contrary to the popular view, the Courts tend to chuck the book at one of their own who get caught misbehaving.

The BBC News story is here.

Judges’s sentencing remarks

The Judge said:

“Your behaviour inevitably resulted in a more deserving claimant being denied the accommodation that was offered to you,”

“It was a fraud that was calculated, deliberate and planned.

“In defending yourself you brazenly lied in the fact of the most damning evidence, which fortunately the jury saw through.”

Sentence

She was sentenced to 7 months immediate custody.

There was no plea of guilty and so there could be no credit.

It seems as though the fraud was fraudulent from the outset and carried out over a significant period. These are factors which if correct, the Judge would have taken into account.

The guidelines are here and looking at benefit fraud, the range appears to be high community order – 12 months (looking at the £5-20,000 box, ‘fraudulent from the outset and carried out over a significant period or multiple frauds’).

It is presumed that she had no convictions and was of good character. That most likely made for little mitigation.

In mitigation, the courts have held that it is correct to take into account the loss of a career as a mitigating factor, however, many judges do not, as they believe that a) that is part of the punishment and b) that the offender knew that was a risk when committing the offences and were willing to ‘throw it all away’. In cases where the offender is a single parent and the argument is that the children need the parent to care for them (and so a custodial sentence should be avoided) some judges believe that is an aggravating factor because of the willingness to risk a custodial sentence.

It is difficult to assess the level of sentence as we are unsure of the offences of which she was convicted, but on a simple assessment of the criminality (as what we know from the news reports) against the 7 month sentence, it certainly appears to be in the correct bracket, with a bit of an uplift for the fact she was a barrister.

Barrister in the Dock for Council Housing swindle

The same day that a Liverpool solicitor was getting banged up in Birmingham, a barrister was in Court in Bristol. Nothing unusual in that you may say, but this one was unfortunately on the wrong side of the dock.

Nadine Wilson-Ellis was convicted on 19th July 2013 of ‘various offences under the Fraud Act’. It seems that she was granted a council tenancy in Bristol in November 2009 on the basis that she was living and working in the city and was an unemployed single parent with one child. This was untrue however – she was living with her husband in Nottingham and working as a Law lecturer getting £30,000 a year (and sub-letting her Council Flat).

Ms Wilson-Ellis apparently owned two homes but applied for a larger house (as she had two children) in 2011 where the documents she submitted in relation to this were found to be false and the deception unravelled.

It’s not clear exactly what offences Ms Wilson-Ellis was found guilty of. It may be that she was claiming housing benefit, or it may be that it was in relation to obtaining a council tenancy that she was not entitled to. Either way, there was probably a charge or two relating to the use of false documents. In the absence of that it’s hard to know what sentence she is looking at but, contrary to the popular view, the Courts tend to chuck the book at one of their own who get caught misbehaving. Until then, here’s a look at the Sentencing Guidelines for Fraud to be getting on with …

She will be sentenced on the 9th August and we will return to it then. It may well be a headline of ‘barrister behind bars’ …

 

Man calls Solihull police to complain about prostitute’s looks

BBC News ran a story on 13 June 2013 about a man who had contacted police in Solihull regarding a complaint he wished to make. Nothing strange there.

 The man had contacted a prostitute to arrange for sexual services. Upon meeting her, he felt that she had misrepresented her appearance. He contacted the police as he wished to ‘report her’ for a breach of the Sale of Goods Act.

 In the telephone call in which the man makes his complaint to the police, he reportedly says:

 “I’ve arranged a meeting with her, but beforehand I’ve asked her for an honest description, otherwise when I get there I’m not going to use her services.

“Basically she has misdescribed herself, misrepresented herself totally.

“She was angry because she obviously thinks I owe her a living or something.”

Sales of Goods Act 1979

The Sale of Good Act 1979 deals with consumer’s rights in relation to contracts of sale. This primarily deals with the purchase of – you guessed it – goods. The prostitute is clearly offering a service and services are not covered by the Act.

Firstly, the man has got the wrong act.

Secondly, it does not create any criminal offences and therefore,

Thirdly, it is not a police matter.

So what happened?

The Sergeant who dealt with the man reportedly advised the man that the woman hadn’t committed any offences and that in fact, it was his actions – in soliciting for sex – that were criminal.  He refused to give his details but the police were able to track him down.

It is understood that he has been sent a letter warning him about wasting police time. This is a colloquial description for the offence of wasteful employment of the police, under the Criminal Law Act 1967 s 5(2). The maximum sentence is 6 months and/or a £2,500 fine. There is also the power to issue an £80 Fixed Penalty Notice.

So had she actually committed any offences?

Well it is possible to argue that she has committed an offence under the Fraud Act 2006. Section 2 reads:

Fraud by false representation

(1) A person is in breach of this section if he—

(a) dishonestly makes a false representation, and

(b) intends, by making the representation—

(i) to make a gain for himself or another, or

(ii) to cause loss to another or to expose another to a risk of loss.

(2) A representation is false if—

(a) it is untrue or misleading, and

(b) the person making it knows that it is, or might be, untrue or misleading.

 It would therefore be necessary to show that the woman:

a)      Made a representation (which it appears she did when the man asked her to describe herself)

b)      That representation was false (see subsection (2) – a jury would need to decide whether her representation was in fact untrue or misleading, and that she realised that fact)

c)       The false representation was made dishonestly

d)      She intended to make a gain for herself (this would be by making money out of the arrangement for sex between the man and woman)

A and D appear unproblematic. C and D would require an examination of the circumstances, what was said, and what the woman looks like.

Would (or should) the same argument be capable of being made (that the woman was guilty of fraud by misrepresentation) if she had promised to show the man ‘a good time’, but the resulting sex was disappointing?

Are there any other offences? Well David Allen Green (@DavidAllenGreen) raised the issue of trading standards, who deal with illegal sales activities and practices. It may well be possible to argue that the woman in this case has committed an offence under trading standards regulations, however the calling of some real work prevents me from looking into this further…perhaps for another day.

Millionaire McCormick found guilty of selling fake bomb detectors

James McCormick has today, Tuesday 23 April 2013, been found guilty of fraud.  The millionaire businessman set up a business selling fake bomb detectors to Iraq, Georgia and various other countries, knowing them to not work.  The businessman is said to have profited handsomely from the enterprise, with some reports suggesting that around £50m was made in sales.

BBC reports suggest that the devices were based on a novelty golf ball finder designed to detect explosives, drugs and even people.  McCormick made a series of inaccurate claims about the devices, including asserting that they could track an object up to a kilometre under the ground.  The BBC detail McCormick’s other assertions here.  Each device is said to have sold for up to £27,000 despite being “completely ineffectual and lacking any grounding in science”, said the prosecution.  Iraq alone spent over £26.2m on 6,000 such devices between 2008 and 2010.

Notwithstanding the amount of money needlessly wasted, the more worrying fact is that individuals placed reliance on them to protect against life-threatening explosives.  One such individual was Haneen Alwan.  She lost her unborn child and needed 59 operations having been injured in a bomb blast in 2009.

A Newsnight investigation revealed that senior Iraqi officials were aware that the devices did not work and even received bribes to ensure they were purchased.  The BBC has confirmed that General Jihad al-Jabiri, the head of the Baghdad bomb squad, is currently serving a jail term for corruption, along with two other Iraqi officials.

So what next?

McCormick is to be sentenced on 2 May.  Thereafter we envisage that the police will pursue McCormick’s wealth under the Proceeds of Crime Act 2002 in order to prevent him benefiting financially from his crime.  McCormick now faces loss of his several properties, including that previously belonging to Nicholas Cage.

Newsnight reported on this story at 10:30pm, BBC 2 on Tuesday 23 April 2013.

£1 confiscation order for Nicholas Levene, city financier guilty of £32m fraud

Nick LeveneFacts

Nicholas Levene, a ‘city financier’ was sentenced to 13 years for 12 counts of fraud, one of false accounting and one of obtaining a money transfer by deception.

Levene took investors’ money under the pretense of investing the substantial funds in shares. However the money was spent financing a luxury lifestyle. The frauds were carried out between 2005 and 2009 and involved high net worth investors and high profile victims, including the owner of The Ivy restaurant. He used his strong reputation in the City to convince customers into investing their fortunes with him.

Levene, who was said to have a personal fortune in the region of £15-20m, was addicted to gambling, spread betting and lavish purchases. The amount attributed to his false accounting was in the region of £32m, but after taking into account the lost profits of his customers, the figure rose to over £100m.

Some of the money was given to other investors in order to placate them and to prolong the length of time he was able to continue his fraud.

Sentence

We covered the sentence, the guidelines and the relevant considerations here.

Confiscation

Confiscation proceedings are intiated when a defendant is convicted of a ‘criminal lifestyle’ offence. These include fraud, money laundering and some drugs offences. The purpose is to deprive the defendant of the financial benefit of his or her crimes.

Confiscation is a terribly complicated area. There are many considerations. One such issue went before the Supreme Court last year in R v Waya.

It is necessary to determine the amount of benefit. Then, for the purposes of determining what can be confiscated, it is necessary to determine the recoverable amount – how much money is available to be confiscated? This may seem unduly fair to the defendant – if he has made £10m but squandered all but £50, why should the court only be able to recover £50? The principle is similar to that of the Asil Nadir compensation order – if the money isn’t available, what is the point in making an order for it?

The CPS Guidance on confiscation is available here.

At Southwark Crown Court on 25 March, HHJ Beddow made a nominal order of £1 against Mr Levene. Why?

This was reportedly to enable there to be an investigation into his assets, presumably to establish the precise sum that he has available.

The nominal figure will be able to be varied at a later date.

The Judge stated that if Levene made money in the future, he may be liable to pay back more.

The LCCSA reported:

Justine Davidge, representing the Serious Fraud Office, told the court yesterday (MON) that the bankruptcy order was still in place and that investigations into his assets were ongoing.

“All assets that have been released would go to the trustee of bankruptcy,” she said.

“Because of the circumstances, what the Serious Fraud Office propose is that there is an order in respect of the benefit to the sum of £32,352,027.

“In respect of the realisable amount, we suggest the court make a nominal order of £1 to be paid in seven days.”

Rohan Pershad QC convicted of cheating the public revenue

pershardFacts

Rohan Pershad QC, a barrister who used to practise from 39 Essex Street in London, was today convicted of cheating the public revenue.

Cheating the public revenue is a common law offence (as opposed to an offence defined by statute) which alleges the dishonest non-payment of VAT. It is crucial that the prosecution prove that a defendant has acted dishonestly in the non-payment of VAT in order to achieve a conviction.

It was alleged that Pershad failed to pay VAT on the sums he billed for his services as a barrister between 1 June 1999 and 24 September 2011, thereby cheating the public revenue. He claimed that he thought his chambers had indicated that his VAT liability had been taken care of.

HMRC considered Pershad to be a ‘missing trader’ after he left 2 Crown Office Row for 39 Essex Street. The Lawyer reported that he ‘dropped off the VAT radar’ and that following the verdict, HMRC revealed that Pershad was still filling out self-assessment forms, but used an invalid VAT number on invoices and pocketed the money himself rather than pay into the public purse. The forms showed that his income increased from £85,000 in 2001 to £346,000 in 2008.

Prosecutor Andrew Marshall QC of 18 Red Lion Court, said this had provided Pershad with a “private tax-free income of £600,000” and in that time he bought two homes – a property in Somerset for £490,000 and another in Virginia Water, Surrey, for £1,105,000.

The jury disbelieved Pershad and convicted him. Pershad received £624,579 which should have been paid to HMRC in VAT.

Sentencing powers of the court

As the offence is a common law offence, the maximum sentence is life imprisonment, however in reality, sentences fall far short of this.

There is no credit for a guilty plea and there is the highly relevant factor of the period over which the offence was committed.

When sentencing, the court can consider making the following orders:

  • Compensation Order
  • Confiscation Order
  • Financial Reporting Order
  • Deprivation Order
  • Disqualification from acting as the director of a company

Guidelines

The Fraud guidelines do not apply to the offence of cheating the public revenue, however it may be open to the court to consider the principles of the Fraud guideline in relation to revenue fraud, however only as a point of reference. Higher starting points than the revenue fraud guideline are generally considered to be applicable.

Aggravating and Mitigating Factors

The CPS list the following as aggravating a mitigating factors:

  • The amount involved
  • The use to which money was put (spending on luxuries more venal than on necessities)
  • Breach of position trust, such as by employee, director or trustee
  • Elderly or vulnerable victim
  • Extent of loss – intended and actual
  • Extent of gain – intended and actual
  • The period over which and the persistence with which the fraud was carried out
  • Guilty Plea
  • Voluntary repayments
  • Personal factors such as illness, disability, family difficulties, etc

 Likely sentence

Offences of cheating the public revenue vary in their seriousness, from the amount of money involved, to the specific conduct. In this case, we have few facts to go on currently and so the following is a broad assessment of the possible likely sentence.

Mr Pershad cheated the revenue out of over £600,000, over a 12 year period. He lied about his conduct (by virtue of his conviction) and therefore did not plead guilty. The starting point in the revenue fraud guideline for £500,000+ a fraud not fraudulent from the outset and continuing over a significant period is 3 years. Presumably this is the category into which Pershad fits most neatly as prior to 1999, there are no allegations of impropriety in relation to his VAT bill.

Taking a little off because the starting point (although relating to obtaining money over £500,000) is actually based on a figure of £750,000, and adding a little on because cheating the public revenue is generally a more serious offence, Mr Pershad may be looking at a sentence in the region of 2-4 years.