May 21, 2019

May 21, 2019

Subscribe to Latest Legal News and Analysis

May 20, 2019

Subscribe to Latest Legal News and Analysis

Money Grows on Trees for Local Council Pursuing Home Improvement Enthusiasts and Local Football Club Fundraiser

It is widely thought that proceedings under the Proceeds of ‘Crime’ Act, such as confiscation, are intended to obtain the money someone makes from committing a crime. So, the thinking goes, if a person is convicted of fraud having made £100,000 from the crime, then those funds can be confiscated by the courts.

While this basic premise is correct, UK money laundering laws are far broader in their application and are increasingly being used by UK authorities in innovative ways. Real estate matters in particular are receiving attention from UK local authorities.

For example, one innovative local authority has appointed surveyors to determine the increase in property value following illegal tree pruning and felling. The result, in addition to relatively nominal fines, is that courts have imposed significant – and some would argue punitive – confiscation orders.

Case 1 - The Ole Oak Tree…

The first case involves a 42-foot oak tree covered by a Tree Preservation Order (TPO) located in the back-garden of a Mr Samuel Wilson’s home in Canford Cliffs, Dorset.

A TPO is an order made by a local authority to protect trees and woodland. A person who contravenes a TPO is guilty of a criminal offence, and if found guilty, can expect to pay a fine of up to £20,000.

In 2016, Mr Wilson decided to cut a number of branches off the oak, which was casting a shadow over a Juliet balcony he had recently added to his £1 million home. After his neighbour contacted the local authority, Mr Wilson was prosecuted for cutting branches from the tree in violation of the TPO. He pleaded guilty to causing willful damage to a protected tree and was fined £1,200.

Following conviction, Poole Borough Council pursued Mr Wilson in confiscation proceedings. The council’s valuation experts said cutting the tree’s branches increased Mr Wilson’s home value by £21,000.

Three years after the original conviction, Mr Wilson was ordered to pay £15,000 in legal costs plus the £21,000 additional home value under UK money laundering confiscation provisions.  

Activity   

Pruning of one oak tree

Fine  

£1,200

Costs   

£15,000

Confiscation  

£21,000

TOTAL COST  

£37,200 (plus one criminal conviction)

Case 2 – Chainsaw Massacre 

In a second case, Mr David Matthews, a millionaire former owner of a scrap metal business, cut down 11 trees, all protected by TPOs, in the back garden of his £1.4 million Dorset home.

Mr Mathews was fined £12,000 and ordered to pay £20,000 in legal costs. Like Samuel Wilson’s case, resolved only weeks earlier, Poole Borough Council pursued Mr Mathews for the increase in the value of his property as a result of his conduct. In April 2019 Southampton Crown Court made a confiscation order against Mr Mathews in the amount of £137,500, the estimated increase in the value of his property following the removal of the trees, bringing the total cost of his garden improvement project to almost £170,000.

Activity   

Complete removal of 11 trees (genus various)

Fine  

£12,000

Costs   

£20,000

Confiscation  

£137,500

TOTAL COST  

£169,500 (plus one criminal conviction)

Local authorities have also used UK money laundering confiscation provisions in connection with convictions for other real estate planning offences. For example, there are many cases which involve individuals and businesses who have failed to comply with planning enforcement notices being pursued for confiscation. Unauthorized conversions of houses into flats have resulted in numerous criminal penalties and confiscation. Slightly more obscurely, a local football club and its directors were also pursued in relation to their fundraising activities.

Case 3 – Carry-On Car Park 

In R v Del Basso, the defendants decided to run a park-and-ride service from Bishop’s Stortford Football Club to Stansted Airport but were told by the local authority that the business required planning permission. Despite being served with an enforcement notice under the Town and Country Planning Act 1990, breach of which is a criminal offence, the business continued.

When the council revisited the park-and-ride and realised the business had not ceased, they commenced prosecution and, following conviction, confiscation proceedings. Mr Del Basso, the now former chairman of the football club which currently sits in the seventh tier of England’s league system, was considered to have had a ‘criminal lifestyle’, a statutory consideration which allows the court to make wide-ranging assumptions broadly that anything obtained six years prior to being charged with the offence was obtained as a result of criminal conduct.

At the conclusion of confiscation proceedings, a confiscation order was made which declared Mr Del Basso’s benefit from criminal conduct was £1,881,221.19, and he was ordered to pay £760,000 – the value of his available assets at the time.

Activity   

Park-and-Ride – Bishops Stortford FC to Stanstead Airport

Fine  

£15,000 (£3,000 on each offence, five offences)

Costs   

£20,000

Confiscation  

£760,000 (Benefit £1,881,221.19)

TOTAL COST  

£795,000

Good Business

Assuming confiscation orders are paid (if not paid, the prosecution can seek lengthy custodial sentences), councils will get a proportion of the amount recovered under the so-called ARIS (Asset Recovery Incentivisation Scheme) scheme. The scheme, created in 2006, provides an incentive to pursue asset recovery by allocating a proportion of the amount recovered to the investigating and prosecution authority – up to 37.5% in some cases.

With local councils and public service providers increasingly cash-strapped, we expect more innovative use of money laundering laws by them as they seek to bolster their coffers.

©2019 Greenberg Traurig, LLP. All rights reserved.

TRENDING LEGAL ANALYSIS


About this Author

Shareholder

Anne-Marie Ottaway focuses on white collar and economic crime and government and internal investigations. Acknowledged for her criminal defence work, Anne-Marie provides clients with advice on all aspects of investigations relating to allegations of fraud, bribery, and corruption, as well as providing advice in respect of the implementation of effective anti-fraud, bribery and corruption compliance programmes and related anti-money laundering issues. She is recognized by Chambers & Partners for her “growing reputation for defending corporate clients subject to fraud and...

+44-0-203-349-8700
Barry Vitou, shareholder, London, UK, United Kingdom, Greenberg Traurig, white collar defense, special investigations, law enforcement
Shareholder

Barry Vitou focuses his practice on white collar defense and special investigations, advising corporates and individuals in connection with compliance, pre-investigations, investigations, and prosecutions conducted by numerous law enforcement agencies. Barry frequently represents clients under investigation by U.K. and U.S. law enforcement agencies and prosecutors, including the U.K.’s Serious Fraud Office (SFO), the Financial Conduct Authority, the Information Commissioner’s Office, the U.S. Department of Justice (DOJ), and the U.S. Securities and Exchange Commission (SEC). Barry regularly appears on television and radio, discussing the topics of corruption, money laundering, and the UK Bribery Act.

Barry counsels clients on law enforcement investigations all over the world including the European Union, Russia, and the British Overseas Territories. He also conducts internal investigations around the world and handles self-reporting actions. Barry has conducted compliance advisory mandates and global money laundering investigations for clients in numerous jurisdictions.

Experience

  • Representing a corporation under investigation by the Serious Fraud Office linked with the ongoing DOJ and SEC investigation into Unaoil bribery allegations. °

  • Representing a corporation in the first challenge (Judicial Review) of the Serious Fraud Office Section 2 (equivalent to US subpoena) powers to compel documents and information from parties outside the UK in respect of documents held outside the UK. °

  • Represented corporation in the infrastructure sector on the first failure to prevent bribery prosecution following claims of non-cooperation by the SFO and the refusal of the SFO to offer a Deferred Prosecution Agreement (DPA). Resolved matter in under a year. The case was successfully disposed of with a lower penalty and less onerous penalty than the preceding DPA. The case threw into sharp relief the lack of incentive, in certain circumstances, of entering into a DPA to dispose of a criminal offence and sparked a debate into the DPA ‘offer’ and further discounts in DPA’s which followed. °

44-0-203-349-8700
Gareth Hall London Investigations Attorney NCA HMRC
Associate

Gareth Hall has a range of experience representing clients throughout special investigations and criminal litigation. He has represented individuals subject to investigations conducted by the National Crime Agency (NCA), Her Majesty’s Revenue and Customs (HMRC) and the Serious Fraud Office (SFO) for a range of matters including complex conspiracies, fraud, money laundering, and bribery. Gareth also has higher rights of audience and has appeared as an advocate, representing individuals in the Crown Court.

+44-0-203-349-8700