Proceeds of Crime – when does it all end?
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. That is not always the end of the matter.
What are the proceeds of crime?
If a defendant is determined to have had a ‘criminal lifestyle’ and benefited from it, or if he has benefited 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 are factors such as 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, and there are no time limits for the making of an application.
There is a time limit of 6 years, starting 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 properties had been in his wife’s name and 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, with the application being 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, and in 2006 a confiscation order was made in the sum of £9,520, the benefit amount was said to be £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 all the assets were legitimate and had been acquired after the conclusion of his prison 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, and 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 the 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 and application was made to the court as a property owned by Mr Mundy that had a negative value in 2008 was now worth £17,000 and 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, 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’, and the Court of Appeal agreed that it was open for the judge to decline to vary the order.
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