HM Revenue & Customs has scooped a record £92.3m in a criminal tax fraud investigation against two members of a 21-strong gang.

Assets including a luxury flat in Kensington worth £4.5m; a house in Harrow worth £2m; a house in Buckinghamshire worth £1.5m; a riverside flat in Battersea worth £500,000; two apartment tower blocks in Dubai worth £80m; and luxury cars have been restrained by the taxman, all of which were purchased by the gang after stealing £37.5m in a ‘missing trader’ VAT tax fraud.

Richard Meadows, assistant director of criminal investigations for HMRC, said: ‘This is the largest ever confiscation order secured by Revenue & Customs at the end of one of our most complicated investigations. I believe it to be one of the largest confiscation orders in the UK to date. The gang stole £37.5m in a VAT tax fraud using the cash to invest in luxury property in the UK and abroad.

‘We are determined to bring to justice the criminals behind this type of fraud and take away the proceeds of their crime. We have worked very closely with the West Midlands Regional Asset Recovery Team (RART) and law enforcement agencies across the world to bring this case to a successful conclusion.’

The two convicted fraudsters are both serving seven-year jail terms, but if they fail to repay the money within two months they face an additional 10 years in jail as well as having to repay the money.

Source - Accountancy Magazine – 12.07.10

Harewood House commenced legal proceedings to recover commission that it considered it was owed, by Dine Catering, following events that it had held at Harewod House.

Dine responded with  a £1m counterclaim and the team at Forths were instructed to consider the reasonableness of the same.

It was held, by Judge Langan QC, that Dine Catering Ltd should pay Harewood House £30,000 and, further, dismissed the counterclaim in its entirety.

Defence lawyers criticised the agency for wasting public funds after it withdrew its case against two Lincolnshire businessmen accused of swindling more than £150 million from hundreds of investors in an elaborate Ponzi scheme.

Lincoln Fraser, 39, and Jared Brook, 37, former directors of Imperial Consolidated Group, a Lincolnshire-based investment scheme that collapsed in 2002, were cleared of fraud yesterday after an eight-year battle that included two long trials.

The pair had already been acquitted last month of one charge of conspiracy to defraud after a nine-month trial, but had faced a retrial after the jury failed to reach a verdict on other charges of conspiracy and fraudulent trading. It would have been the second retrial after a jury failed to reach a verdict after a six-month trial in September 2008.

Mrs Justice Gloster, sitting at Blackfriars Crown Court, directed yesterday that the two men be acquitted of the remaining charges after the SFO said that it had decided it would be inappropriate to seek a second retrial. The SFO said that only an extraordinary case could justify a second retrial and that this was not such a case.The SFO, which opened the case after ICG went into administration in 2002, said that it had spent £10 million on the investigation and legal fees, although several people involved with the case said that the total cost to taxpayers was likely to be far higher.

Senior figures within the SFO are understood to have decided to cut their losses on a complicated case that was regarded as a hangover from a previous regime. A spokesman said that the agency would review its handling of the case to assess how it could better conduct such prosecutions in future. Richard Alderman, the SFO’s director, has pushed for more focused and speedier prosecutions since taking over in 2008.

Reversals

• The SFO has suffered a series of high-profile reversals in recent years. In 2008 the agency suffered a big hit after a judge threw out a case of alleged price-fixing against five drug companies after an eight-year investigation that cost £25 million. That followed heavy criticism of the SFO for abandoning an investigation into suspected corruption relating to BAE Systems’ dealings with Saudi Arabia.

Source – The Times Online – 05.07.2010

Headed by Forths director Anthony Flint, the team combines more than 60 years’ hands-on experience of such cases and is well equipped to provide the expert forensic accounting skills for which they call.

Anthony Flint comments: “Bringing together the wealth of serious injury experience at Forths within a single team will enable us to provide an even more focused and specialised service to our solicitor clients”.

“Having seen so many of these cases, our teams members are highly attuned to the key drivers in any given set of post-injury circumstances. They are acutely aware of how critical presenting the right financial information in the correct format can be. Forths already has an outstanding track record of success in serious injury cases, on which we hope to build with the formation of this new team”.

“Our new Serious Injury team will work collaboratively with solicitors to develop and present their clients’ cases in a positive and comprehensive manner, leaving no stone unturned”.

Forths Forensic Accountants is one of the UK’s leading niche Forensic Accountancy specialists. Established in 2002, the business has grown strongly year on year and now provides a wide range of forensic accountancy services to solicitors throughout the UK.

Author – Forths Forensic Accountants

In this context, he discussed the absolute imperative for all such assessing third parties to be totally non-partisan and noted the general view that he was getting from many practitioners that, in their opinion, often the practices adopted amounted to loss adjusting rather than a true independent assessment.

Richard noted, “It is obvious from my discussions with MASS members across the length and breadth of the country that the independence of some Forensic Accountants operating on this basis is under the microscope. There is a recognition that a true straight down the middle assessment adds value to the claims process but that Defendant biased assessments simply undermine their clients position”

Author – Forths Forensic Accountants

Further to the investigations of the Forths serious injuries team, a multi million pound settlement has been awarded to a motorcyclist who was catastrophically injured in a road traffic accident in France.

It had been accepted, by the forensic accountants appointed by the Defence, that the report of Forths was correct in its entirety, and in the joint statement the report prepared by Forths was adopted by both experts as being a correct interpretation of the losses sustained by the injured Claimant.

Anthony Flint, head of the Insurance Litigation Department at Forths commented:

“The detailed investigations undertaken by the serious injuries team at Forths were clearly vindicated by the agreement of our report by all parties in what was a complex matter involving a property development company in its initial years of trading.”

Author – Forths Forensic Accountants

Three men suspected of running one of Britain’s biggest Ponzi schemes were ordered to repay almost £115 million to investors yesterday.

Kautilya Pruthi, 39, Kenneth Peacock, 41, and John Anderson, 44, were told by the High Court to hand over their profits from an allegedly fraudulent investment scheme to the Financial Services Authority. The regulator has accused the trio of unlawfully accepting deposits without authorisation, in breach of City rules.

Mr Pruthi was ordered to repay £89.8 million, Mr Anderson £13.2 million and Mr Peacock £11.6 million. Overall, it is the biggest recovery the FSA has secured in a case of this kind.

The trio are also facing a criminal investigation by City of London Police after being arrested in May last year on suspicion of conspiracy to defraud, money laundering and fraud by misrepresentation. No charges have yet been brought.

They attracted hundreds of depositors between 2005 and 2008 through Business Consulting International, a Knightsbridge-based investment firm. Investors, many of whom were introduced through friends and family, were told the money would be used to provide loans to companies. They were promised high returns of up to 20 per cent a month.

However, Mr Justice Vos said: “The rates of return offered by the defendants were simply uncommercial and unsustainable.”

Yesterday’s judgment states Mr Pruthi began BCI in September 2005 and was joined by Mr Anderson and Mr Peacock two years later, who passed deposits to Mr Pruthi. They profited by paying investors lower rates than Mr Pruthi paid to them.

However, there was no evidence that Mr Pruthi ever made sufficient onward loans to fund the high interest rates he was offering, Mr Justice Vos said. “It seems that Mr Pruthi was, for a while at least, funding the payments of interest to old depositors by taking new deposits,” he said.The FSA began investigating BCI after a tip-off in August 2008. In November that year the regulator obtained an injunction freezing the trio’s assets and preventing them from accepting further deposits.

The FSA said that despite yesterday’s judgment, investors may not recover all of their losses.

Source – The Times Online – 01.07.10

The answer, quite simply, is that there’s nothing wrong with your normal accountants when they are preparing your year-end accounts, tax returns etc. That’s where their experience lies. And it’s that experience – coupled with their knowledge of your business – that enables them to prepare these documents correctly and submit them to the relevant parties.

Our experience as forensic accountants is somewhat different. We operate in the space between the legal and accountancy professions. We combine skills learned from our accountancy training with knowledge of the law as it applies to formulating quantum in a legal case.

Marrying these skills enables us to pull together rafts of relevant documentation into a reporting format a) that the Court will readily understand, and b) that fits the prevailing legal framework. This ensures the losses presented conform with rules established over years of quantum-based case law.

This doesn’t necessarily exclude input from your own accountant. They may be able to furnish us with important knowledge or information. But presenting losses in the cogent and accepted format we adopt plays a vital role in moving a case forward from a legal perspective and expediting settlement.

We often get involved in cases where an extended circular correspondence between the claimant, their insurers, and their accountants has gone precisely nowhere. The cost and frustration this causes could often have been avoided by drawing on the legal knowledge of a specialist forensic accountant.

There’s more to it than that, of course, but – in a nutshell – that’s why you need a forensic accountant!

Author – Forths Forensic Accountants

Regina v Modjiri

In relation to an application for a confiscation order, a defendant’s part interest in a property was to be included in the available amount on the basis of sale of the property as a whole and receipt by the defendant of his due proportion of the proceeds of sale.

The Court of Appeal (Lord Justice Stanley Burnton, Mr Justice Davis and Judge Roberts, QC) so held on April 22, 2010, when allowing an appeal by the prosecution against a confiscation order of £6,128.14 made on May 1, 2009, by Judge Hillen at Blackfriars Crown Court.

LORD JUSTICE STANLEY BURNTON said that the defendant owned a 25 per cent interest in a flat. The sentencing judge accepted that that interest had no value unless and until the co-owners agreed that the property should be sold.

Under section 84(2)(b) of the Proceeds of Crime Act 2002 property was held by a person if he held an interest in it. Section 79(3) of that Act provided that the market value of the defendant’s interest was to be taken into account, but that provision was concerned only with valuation and not with the realisation of property. It did not require an assumption that a beneficial interest was sold separately.

The correct assumption was that the property was sold as a whole and the defendant received his due proportion of the proceeds of sale.

Source. The Times Online

Published June 01, 2010

Mr Justice MacDuff ordered that 1,650 people, who suffered medical complaints due to the presence of Dimethyl Fumarate (DFM) in leather sofas manufactured by Chinese companies Linkwise and Eurosofa, should be compensated for their injuries. The group action was launched against Argos, Land of Leather and Walmsleys – all of whom admitted liability. Victims will receive payouts between £1,175 and £9,000, depending on the severity of their symptoms.

However, 350 customers of Land of Leather, which went into administration in January 2009 will miss out.

Although liability had been admitted, a decision was made by the retailer’s insurers, Zurich, not to pay out on claims relating to products made by the manufacturer Linkwise, citing a breach of their policy. This decision was upheld by the courts last month and is being referred to the Court of Appeal.

Richard Langton, senior litigation partner at Russell Jones & Walker and the solicitor who led the group litigation against the retailers in question said: “Many suffered serious health problems, simply because of the new sofa they chose. At the start there was a real fear factor as nobody knew the cause. The doctors took nine months to identify the chemical. Some people thought they had skin cancer or were dying.

“We believe many sofas are still in use with DMF in them. Anyone who develops symptoms should seek urgent medical advice. Anyone who has not registered a claim yet, should seek help as time is running out to bring a claim. ”

Legal proceedings are still ongoing for 3,000 cases where liability remains in dispute.

The EU has now banned the use of DMF after consumers in at least five European countries suffered skin burns and breathing problems due to the chemical used in numerous imported leather products.

Source -  The Post Online – 26.04.10