For a businessman facing criminal sanctions for fraud there might be a choice – pleading guilty could result in a modest sentence and legal advice may suggest this is the better route, to avoid all the stress of continuing investigations and the trial.
However, this may not be the end of the matter and confiscation proceedings ensuing will present a whole raft of new problems. This time it will be upon the individual to prove to the Court (on the balance of probabilities this time) that he has not benefited from a criminal lifestyle.
The Crown will assess a benefit enjoyed during a period commencing six years prior to charges being first brought, by adding up all the income and assets obtained – where these cannot be easily explained. This means that cash windfalls, presents and legitimately earned income can be caught if paperwork has not been kept to show where it came from. Even that jar of coins that is eventually deposited in the bank account will be included – how can this be traced? This is also where anybody who has not been as inclusive as they should with their tax returns will be found out.
The expert accounting assessment of all this income and assets is a routine task for a forensic accountant. At Mark Jenner & Co Limited we routinely present compelling arguments for reducing benefit figures from many millions to more reasonable sums often reflecting the much smaller amounts that were actually stolen.
However, although reducing the benefit is an important task in any confiscation’s defence, it is the separate realisable assets figure that might impact the defendant the hardest. These are the assets that the Crown says should be available for settling the benefit order that is eventually decided upon. True, a person stands to lose his house and savings when settling a large benefit order. However, when the available assets are not sufficient to do this, the matter of “hidden assets” can often cause much concern.
Here a defendant must prove that he has not secreted funds in hidden bank accounts or are being held by associates or family. If he has no such hidden assets, proving this can be quite hard, essentially he is having to “prove a negative” even if to a lower civil burden of proof than the criminal standard.
As forensic accountants, we often see the Crown adding up all the debits in the defendant’s business and personal bank accounts where they cannot be immediately matched to expenditure receipts. Of course anybody dealing in cash, withdrawing sums for spending on day to day items, cannot easily show where the money has gone. Our approach, after excluding transfers to other accounts and account reversals that the Crown has erroneously included, is to build a rational and common sense based picture of the defendant’s financial activity in order to present a clear view of reasonable outgoings that match the business and personal lifestyle. A pragmatic approach, that balances the often zealous estimates presented by the Crown, will usually find favour with the Court.
It is important that allegations of hidden assets are rebutted strenuously, because if a defendant is ordered to pay an amount greater than he actually possesses, and he is unable to do so, then a default prison sentence is available to the Court. A judgement of having hidden assets of £1,000,000 that cannot be paid (if they do not exist) can result in a default sentence of 10 years. Such a figure is not that hard for the Crown to assume, especially when looking at a defendant’s modest business activities over 6 or 7 years.
Though the Crown has a difficult task when attempting to take away the fruits of organised criminal effort, sometimes its robust approach is extended to “sharp” businessmen who have exceeded the boundaries of good practice. Thus when caught and presented with the opportunity for a slap on the wrists, they must consider the possibility of confiscation proceedings being brought that will add substantially to their punishment (something the POCA 2002 legislation was never intended to do).