Case Study
Operation Stirling

Aver and Police worked in partnership with HMRC Criminal Cases Unit on an Operation in a 5-year £10 million organised crime investigation, which led to the conviction for tax evasion and money laundering of a top organised crime group in England.

In October 2008 an individual was convicted of Tax Evasion and Money laundering. This followed a 5 year investigation by Police during which Aver were asked to provide expert advice on the case.  This was a typical ‘Al Capone’ type investigation where an Accountant was needed to secure a conviction.  This is how a local newspaper reported the conviction:

An individual is now serving a four-year prison term for a £350,000 tax evasion and money laundering scam.   The hard man was jailed in October 2008 by Woolwich Crown Court, London.  He admitted being the man behind an empire of up to 30 pubs running a tax scam across England over a four-and-a-half year period.

He, installed front men to run the bars on his behalf but pulled the strings from the shadows and kept a tight grip on all the profits, a court was told.

And all the while the companies he set up to manage his pub network dodged the taxman, failing to pay VAT, business rates and council tax. He admitted six charges of tax evasion (the process whereby a person, through commission of Fraud, unlawfully pays less tax than the law mandates).

At a high security hearing at London’s Woolwich Crown Court in October 2008, as well as one count of money laundering (the process of taking the proceeds of criminal activity and making them appear legal). He also admitted one of fence of mortgage fraud.

On the same day, his mother admitted a single charge of money laundering, which related to £49,000 found hidden in the bathroom of her home.  She was given a nine-month suspended prison sentence but her son was locked up for four years for masterminding the tax scam, along with a nine-month term for the other offences, to run concurrently.

No details of either the individual’s case could be reported due to strict restrictions designed to protect the case of the individual’s co-defendant, who was the man he put in place to run his pub empire.   The co-defendant was also later convicted and imprisoned.

The court heard two pub companies were set up with the co-defendant as their director, Prosecuting counsel said:

“This case, as far as this individual is concerned, is about a deliberate fraud of the public revenue.

“This case isn’t about what is sometimes called tax fiddling.

“This case concerns the owners and managers of highly profitable businesses who quite deliberately and dishonestly tried to avoid their tax dues.

“Every lawful business pays business rates to the local authority and pays the net VAT it has received to the revenue.

“The pub trade is a cash business and in 2000, this defendant decided to move into it.

“The usual attraction is precisely that it is a cash trade.

“He could skim off cash from the business and take sizeable profits through tax evasion.

“Over the five years, he took up the tenancies of a large number of pubs.

“As many as 25-30 pubs were trading as part of his business, although not all at the same time.”

The Sayers pub empire started with one pub and over time it grew.   As the weeks and months progressed, more and more bars were taken over.

Prosecuting counsel said:

“In this case, the defendant chose to take on the licences of pubs, many of which were located at challenging sites.

“We are not talking about smart, city-centre gastro pubs.

“Many of the pubs, it might be argued, may have seen better times. The defendant’s business expanded rapidly and freehold landlords were more than happy to rent out pubs.

“Historically, some of the pubs had a high turnover of tenants.

“For an honest publican, it would be a challenge to make a healthy profit.

“It is, of course, possible to increase and generate a profit, even at a difficult site, through the crime of tax evasion. If a company doesn’t account for the 17.5% VAT, in other words put differently, it steals it, and it evades local authority taxes, then hugely greater profits are realised.

“This was, in essence, the business plan of this individual and others.” He added: “It is the case that he set up a business running pubs, using a front man.  During the course of the conspiracy, this individual was running pubs across England.

The prosecutor continued: “There can be no real commercial or marketing reason for the change in name or corporate identity from one to another.

“The crown’s case is that this individual acted as a shadow director of both of these companies.

“A shadow director is someone that the main director takes instructions from, in other words the real boss.”

The charge of money laundering admitted by the individual related to £51,000 found at a commercial, which was bought by his mother in 2003 and used as the defendant’s office towards the end of the period of the tax cheat.

The mortgage fraud charge related to him falsely declaring he had an income of pounds 50,000 as a delivery driver when he applied for a mortgage in August 2004 to buy a local pub.

Jailing him, Judge Charles Byers said:

“The public are always rightly concerned when someone steals from Her Majesty’s Revenue or Her Majesty’s Customs and Excise.  That is because anyone who steals from either of those two agencies steals from every honest taxpayer.  You embarked upon a sophisticated and widespread programme of tax evasion and you set up companies in an elaborate fashion in order to realise your ambition for making money without paying tax.

“As a result, the Inland Revenue Inland Revenue was defrauded of a sum of money somewhere in the region of pounds 300,000-pounds 350,000.

“I am quite satisfied in my own mind that this was a sophisticated and well-planned operation and I am satisfied that it was certainly done for your own benefit.”

He added:

“I give you credit also for the fact that you have pleaded guilty. “It is a plea that’s entered somewhat late in the day, though I do take the view that it may not have been possible to agree the terms of that plea at any earlier stage.

“It is also my view that it is unfortunate that you managed to involve your mother in your activities, asking her to hide money, and that I find particularly distasteful.

“I have to sentence you for your part in this sophisticated and elaborate plan, simply to make money out of the state and I have come to the conclusion that on counts one to six, the appropriate sentence is one of four years imprisonment.

The Detective Superintendent, who led the inquiry, said:

“This result demonstrates our determination to track down criminals and put them before the courts.

“The prosecution was the result of a fantastic team effort involving force detectives and intelligence officers and neighbourhood teams. The fact that guilty pleas were entered showed the strength of the case, which was built up.

“I would also particularly like to thank those people in local communities who worked with us in providing information which was crucial to this investigation. We will continue to use information like this to target criminals who seek to profit from crime.”

Case Study

In respect of paper documents, and in an investigation involving a number of licensed premises where the records were virtually nonexistent research into suppliers, utilities and the banking records, together with the use of known profit margins through the use of stock taker’s records, allowed profit and loss accounts to be prepared over a six year period to prove the criminality.

Case Study

In an assignment for a UK police force, the direction of the investigation was passed to the two-team members who had been engaged. In this respect they determined the documents that were to be requested by Production Order, and as the investigation progressed met the SIO on frequent occasions to provide updates, or to deal with any matters, which were causing delay.

Case Study

In a large international money laundering case involving the US and a Caribbean offshore jurisdiction there were upwards of 250,000 documents held. In order to interrogate these, we arranged for them to be scanned to a number of compact discs, and we involved a search facility, which allowed “key word” searches. The documents were further segregated into broadly different types, with financial records and banking transactions being held on different discs for ease of interrogation. In addition an index was prepared with a reference number allocated to each document with a general description and the compact disc number (there were 13 in all) so that when a particular document or documents needed to be examined, it was relatively easy to restrict the search to whichever compact disc(s) held the data.

Case Study

The team demonstrated this in a recent investigation where the documents from the initial police searches were initially copied, as scanning was not considered to be possible. These documents came from several different search locations and initially were indexed with details of that location, the searching officer’s initials and a unique reference number. The copies were then stored accordingly. As the forensic accounting exercise continued, substantial quantities of documents were received through Production Orders from external parties. While many of these were relevant to specific search locations, after being further copied, they were then indexed in a manner, which distinguished them from those obtained in the original searches. This allowed more accurate searching to be carried out throughout the investigation, as these latter documents played a significant role in the evidence chain. Original documents or copies supplied were stored by the police, and the working copies kept by the forensic accounting team at their premises in segregated locked cabinets where only members of the team had access.

Case Study

In the investigation of an accountant who was allowed to assist clients in their day to day operations such as wage preparation and banking takings, as well as preparing their prime records and financial statements, it was clear that manipulation of the accounting software had also taken place. As a result a detailed examination of the accounting records was required to make comparison with other external evidence held. This required extraction of certain aspects of the accounting information to determine where and if any deleted information could be recovered.