How To Regulate Proceeds of Crime Cases

Confiscation proceedings are brought under the provisions within the Proceeds of Crime Act 2002. The provisions were intended to separate the criminal from his ill gotten gains. They were specifically directed at persons with a criminal lifestyle, and not intended to be an additional punishment for any crimes being committed.

Take the crime boss, living in luxury but with no apparent means of support. The local police know he is the kingpin in much of the local extortion, drugs and prostitution plaguing their patch but cannot connect him with the crimes. He was the intended target of POCA 2002, because if he cant explain where his wealth came from he lost it – either as un-taxed income with penalties or from suspected money laundering offences.

The POCA provisions were wide ranging, and covered the confiscation regime for all crime. Now it seems that any crime will bring the draconian provisions upon the perpetrator as an additional layer of punishment. Being caught selling a little home grown cannabis to your friends is no longer a relatively low risk enterprise, but can entail you losing your home, car and everything else you own in addition to any sentence you might receive from the courts at your trial.

Beyond reasonable doubt or assume the worst?

The authorities have trained an army of officers and civilians to become “Accredited Financial Investigators” capable of investigating a person’s wealth and presenting an assessment of criminal benefit obtained. Unlike the predicate crime, the level of benefit obtained can include “Assumptions” of criminal wealth. As a result of the rather adversarial nature of the criminal justice framework, these assumption are not always reasonable and not always based on supportable facts.

The need for independent forensic accounting scrutiny

At confiscation proceedings the Crown’s assessment of criminal benefit is presented by an accredited financial investigator in the form of a S16 Statement of Information. This will include an assessment of the value of the crime committed plus an assumption of additional wealth obtained as a result of having a “Criminal Lifestyle”. A criminal lifestyle means that an assumption can be made that anything that can’t be explained must have come from crime!

Such assumptions need to be examined closely and where appropriate challenged. Although the Proceeds of Crime Act was one of the lengthiest pieces of legislation enacted, its provisions were often very unclear and much case law has been developed since 2002. Even with this, it is often necessary to employ a high degree of common sense when providing a forensic accountant’s response to the S16 Statement rather than a strict interpretation of the statute and case law.

As a forensic accountant who looks at a dozen or so different confiscation cases each year, I notice a number of common themes within the S16 Statements of Information that needs to be challenged in an independent response to the Crown on behalf of the defendant – a few of these are as follows:

  • Confusing Particular Criminal Benefit with Assumed Lifestyle Benefit – this can impact the level of benefit particularly in cases such as mortgage fraud and instances where no actual loss is experienced by a victim of crime;
  • Property valuation – excluding mortgage or third party obligations is common. I have also seen the inclusion of the full value of a property when purchased, the amount of the mortgage obtained and the value of the sales proceeds when disposed;
  • Double (and triple) counting of the same money – this mistake used to be prevalent and still occurs from time to time. It can range from the inclusion of cheque receipts that are dishonored by a bank as income, to transfers between a series of bank accounts owned by the defendant. The point is that only unique money that actually exists can be assumed to be benefit;
  • Joint and several liability of criminals being convicted of the same crime – while such liability is accepted, there needs to be some balance that ensures multiple recoveries are not being made;
  • Hidden assets – this does not appear to be such a common theme these days and I have noticed that allegations of such are often dropped at the negotiation stage (i.e. on the steps of the Court!). When establishing the level of realizable assets available to settle a benefit order, it was common to include an element of hidden assets. Unfortunately, if these did not exist and the defendant could not pay, it would mean additional prison time in default (default sentence). This additional punishment could be for something that it would be impossible for the defendant to disprove (see Asset Recovery – Why Proving Hidden Assets Do Not Exist Can Be Difficult)

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