Using the Proceeds of Crime Act, HMRC seized £35,000 cash in plastic carrier bags from a Mr Mann as it was suspected he was fraudulently evading excise duty. Boxes of vodka worth around £220,000 had also been found on the premises.
Seized cash, it can be held for up to 48 hours, after which time an application must be made to court for its detention. Under criminal law, the court can allow such applications if the detention is justified whilst the circumstances are investigated, or the person from whom the cash was seized is prosecuted for an offence relating to the cash. The cash may also be detained if there are reasonable grounds to suspect the cash is intended for use in lawful conduct.
In Mr Mann’s case, officers of HMRC made an application for the detention of the seized cash. On 3rd October 2019, the order was granted for a period of six months.
On 24th March 2020, just under six months later, Mr Mann’s representatives consented to the continued detention of the cash for a further six months. Two days later, HMRC filed the information and applications for an order for further detention.
Continued detention of seized cash
An application for an order of continued detention under the Proceeds of Crime Act must be made before the original order has expired. In this case, the application was made in time as the order expired on 3rd April 2020. HMRC contacted the court on several occasions to arrange for their application to be heard, but the court failed to deal with the matter. Part of the problem may have been the national lockdown which began on 26th March 2020.
The order expired on 3rd April as no hearing had taken place for an application for the continued detention of the cash. A telephone hearing was finally arranged for 28th April 2020, and the case was listed for legal argument to be heard on the issue of jurisdiction. The District Judge subsequently ruled that there was no jurisdiction for the court to order continued cash detention when the original order had expired, even though the application had been lodged in time.
High Court proceedings
HMRC asked the High Court whether the District Judge’s decision was correct. HMRC put forward two cases that dealt with the application for initial detention after the 48 hours of the seizure. They argued that if the application was received in time, Parliamentary intention should not be thwarted if the practicalities meant that the court did not make its order strictly in the time period.
The High Court disagreed with HMRC’s argument, saying the scheme of the Act allowed cash to be seized without any court process initially. Within 48 hours, authority had to be obtained; after that, a court hearing had to be held with at least seven days notice to the respondent for any further extension. There was no power or jurisdiction to extend the time period once the order had expired.
Although there was no power to order the continued detention of the cash, the HMRC may have been permitted to re-seize the cash. It would also have been open to Mr Mann to argue that doing so would be an abuse of process. The High Court did refer to this possibility but said that would be a decision for another court to make, and they did not express an opinion.
Our team are fully conversant with the Proceeds of Crime framework and can assist you with any case in which cash has been seized by the police.
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If you need specialist advice in relation to any criminal investigation or prosecution, from the initial investigation through to court proceedings, please get in touch. Call John Howey on 020 7388 1658 or email email@example.com. Let us help.[Image credit: “Banknotes, money, cash” by HowardLake is licensed under CC BY-SA 2.0 ] Read More
When someone is arrested for supplying drugs, it is not uncommon for drug money to be recovered as well. In the case of Mahmood  EWCA Crim 1532, the court dealt with the relevance of cash when determining which sentencing category an offence fell into.
A large quantity of drugs was seized from Mahmood’s premises along with around £30,000 in cash.
The Judge found that the offending fell into Category 2 harm, not Category 3 as had been submitted. The Judge aggregated not only the weight of the drugs found (in total, about half a kilogram), but also what the cash represented in terms of drugs. The Judge took the view that just under £30,000 of cash was equivalent to the value of about half a kilogram of heroin.
Together, drugs of about half a kilogram and cash equivalent to a further half a kilogram amounted to an overall weight equivalent of about 1 kilogram according to the Judge. This meant that the case fell into Category 2 and not Category 3.
On the Applicant’s behalf, it was submitted before the Judge that since the heroin found was 434 grams, the case fell into Category 3.
However, the Judge rejected the submissions advanced on the Applicant’s behalf. He found that the Applicant fell within the centre of Category 2, as if he had been in possession of 1 kilogram of Class A drugs.
Mahmood appealed his sentence.
What did the Court of Appeal decide?
The court held that:
‘…the Judge was entitled to assess the nature of the dealing and to find that the Applicant had a leading role. The evidence in particular of large quantities of drugs and cash, keys and safes at different addresses has more than one of the indicia of a “leading role” being satisfied. The purity of the heroin, which is not explained by the Applicant, indicated that he is likely to have had close links with the original source. It was not cut, and there was evidence that it was highly likely to be of high purity.
For the reasons which he gave, the Judge was also entitled to rely on the cash as evidence of an expectation of substantial financial gain. That was whether the cash was looked at simply as cash in hand from drug dealing or, as the Judge found, that it represented profit from drug dealing.
The fact that there was evidence of a number of addresses, two safes containing substantial quantities of cash at different addresses and keys in one property relating to another property, indicated and added to the ability of the Judge to find that a commercial operation was being undertaken which went beyond simply street dealing.’
However, we have to treat this decision with a degree of caution. Mahmood had pleaded guilty to money laundering so far as the cash was concerned, as it was the proceeds of crime. When the cash can not so clearly be linked to criminal conduct, caution must be exercised before too readily concluding that it is a proper factor in assessing harm for sentencing purposes. In all cases, those defending will need to examine such evidence with the utmost care.
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[Image credit: “Money on my mind” by jo.sau is licensed under CC BY 2.0) Read More
We have all read newspaper articles reporting that a drug dealer or fraudster made hundreds of thousands from their offending but was ordered to pay back a much smaller amount. However, that is not always the end of the matter. The prosecution can ask for a change to the order under the Proceeds of Crime Act.
What are the proceeds of crime?
If a defendant is determined to have had a ‘criminal lifestyle’ and benefitted from it, or if he benefitted from his particular criminal conduct then the court must decide on a ‘recoverable amount’ and make a confiscation order requiring the offender to pay it.
This is the amount they have gained from their criminal activities.
If a defendant can establish that he does not have the recoverable amount, he can be ordered to pay a lesser amount that he does have. That sum is the ‘available amount’, and that order is also known as a confiscation order.
It is quite possible to ‘benefit’ from crime financially but to have spent all of that money by the time you are arrested. It is in these circumstances, because you spent all the money on drugs, for example, that the benefit figure far exceeds any available amount.
What if I later win the lottery?
If a confiscation order is made, and the amount to be repaid is less than the recoverable amount, then the prosecutor or receiver (someone who is appointed to help enforce a confiscation order) can apply to the court under section 22 of the Proceeds of Crime Act 2002 for reconsideration of the available amount.
If this new calculation of the amount now available is higher than the original amount, the order may be varied, and you will have to pay more money back.
How much more could I be ordered to pay?
The court can order any amount it believes to be ‘just’, as long as it does not exceed the benefit amount (as found at the original hearing) although there is also a power for the court to reconsider the benefit amount. The court also has to take inflation into account and any change in the value of money.
What does ‘just’ mean?
The court must first consider whether it is just to make the order. The word ‘just’ means just in all the circumstances, bearing in mind that the purpose of such orders is the advancement of the public interest in confiscating the proceeds of crime.
The court must take certain factors into account when considering what amount should be ordered. These include any fine imposed for the original offences, any forfeiture order already made, compensation or the victim surcharge.
Is there a time limit?
The prosecutor or receiver can make any number of applications for a new calculation of the available amount. There are no time limits for the making of an application.
There is a time limit of 6 years from the date of conviction to seek a revaluation of the benefit amount.
In what circumstances have applications been made?
- The canoeist, John Darwin, faked his own death to receive life insurance payouts. The benefit amount in his case was found to be £679,073.02. In 2014 it was reported that he had only repaid £121 although most property had been in his wife’s name. She had paid over £500,000 under a separate confiscation order. Before committing these offences, he was a teacher and prison officer and had pensions as a result. On the maturing of two pensions, the prosecutor made an application for reconsideration of the available amount. The application was made five years after the confiscation order was imposed. He was ordered to pay £40,000 by the court.
This case clearly demonstrates that even legitimately obtained monies will be taken into account.
- Gurdeep Padda was a drug dealer. In 2006 a confiscation order was made in the sum of £9,520, and the benefit amount was set at £156,226.74. In 2012 an application was made for reconsideration after Mr Padda gained employment and subsequently set up a limited company. The case proceeded on the basis that the assets were legitimate and were acquired after the conclusion of his sentence. He attempted to argue that as the funds were derived legitimately, they should not be confiscated to satisfy the original order. He was not successful, and a new calculation was made of £103,162.41. In upholding the order on appeal the court referred to the “legislative policy in favour of maximising the recovery of the proceeds of crime, even from legitimately acquired assets”.
- Adrian Cole was sentenced for offences of concealing criminal property and false accounting in 2008. A confiscation order was made in 2009 with an agreed benefit figure of £575,000 and an available amount of £55,000. It was envisioned that he would sell property to realise the equity to pay the sum due. It transpired that others actually paid the money on his behalf and he did not sell the property. In 2014 he pleaded guilty to conspiracy to supply Class A drugs. In the resulting confiscation proceedings, an application was also made to recalculate the available amount from the 2009 order.
- Ian Mundy pleaded guilty to various offences involving the supply of drugs. A benefit figure was assessed at £172,365, and a confiscation order of £9,275 was made in 2008. In 2017 an application was made to the court because a property owned by Mr Mundy that had a negative value in 2008 was now worth £17,000. In addition, he had several vehicles and positive bank balances. The increase in the value of the house was contested and confined to £10,000, referred to as a modest amount. The vehicles were not worth as much as the prosecution had initially thought and one of the respondent’s savings accounts was for his daughter’s education. The application was refused, and the prosecution appealed. The issue was what was ‘just’. The Court of Appeal agreed that it was open for the judge to decline to vary the order.
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If you need specialist advice, or any other criminal investigation or proceedings, then get in touch. Call John Howey on 02073881658 or email@example.com and let us help. We can advise on all aspects of your case.Read More