Proceeds of Crime – Sold up the River

When canoeist John Darwin paddled off over the horizon in 2002 he dreamt of a life insurance scam to be made good in tropical Panama. When the new life of he and his wife collapsed in a media scrum that became a prosecution which ended with 6 years in jail they must have thought their crushing story had ended. But beyond grabbing the tabloid headlines the prosecution had also gone after the money. Crime doesn’t pay, is the mantra of the authorities, and the proceeds of crime are the state’s for the taking. And take they did, to the tune of over a million pounds.

Recently in Bristol Rita Lomas, a queen of the pyramid scheme scam, also faced the wrath of the financial recovery team at the Crown Prosecution Service. Yet her part in a £21 million scam resulted in an order that she pay only one pound.

But these schemers and scammers have something in common beyond their humiliating dishonesty. They are at the mercy of orders under the Proceeds of Crime Act that require the benefit value of the crime to be calculated, recorded and remembered. Forever. The fraudster will be ordered to hand over every penny they have (after selling their houses and cars, draining their bank accounts at home and abroad) but if there is a shortfall against the benefit the state is allowed to bide it’s time. If you can’t repay the whole value now, maybe you will be able at some later point in your life. So Ms Lomas must be penniless now (hence her one pound order) but if and when she comes into money later then they’ll be back onto her in no time. And that is what the canoeists were reminded of in early July 2015. Mr Darwin was back in court 7 years after his case finished, because he had become due a pension. Thank you very much said the CPS, we’ll have that as well.

The courts are starting to see now a steady stream of defendants coming back for applications that they hand over assets, often years after their crime and in respect of assets that everyone accepts have been wholly innocently and properly obtained. No matter, until you’ve repaid the benefit value of your crime, you still owe the state.

And the benefit value of crime can be a whole lot more than most people think. Benefit doesn’t mean how much you made from a crime. Or how much you might have made if you’d have got away with it. It doesn’t mean your share of the spoils either. The benefit value usually means the most the state can say the value of the crime adds up to. For example, if a waste disposal business operates without a licence, the value of the offending won’t be just the cost of the licence, but the combined value of each and every waste disposal undertaken without the licence.

Further, many crimes are so called ‘lifestyle offences’. That means that the courts assume you have a criminal lifestyle and that every penny you have and have had over recent years is the proceeds of crime, unless you can prove to the contrary. Proving to the contrary can be difficult and expensive, especially if you don’t have well kept accounts, you have been self employed or your tax affairs are other than straightforward. Proving the purpose of every single transaction on your bank accounts going back years is a daunting and expensive task. Anything you can’t prove will have to be paid back, now if you can afford it now, but otherwise at some point in the future.

Proceeds of Crime used to be mostly about drug dealers with apartments on the Costa del Sol. Now though, it is business and regulatory crime that is attracting the interests of police and regulators – often where the money is to be found. Individuals and directors are increasingly finding that added to the damage to their reputation and any sentence imposed are orders under the Proceeds of Crime Act.

As our canoeists have shown and our pyramid scammer is sure to be reminded, these are orders that will get you in the end. Paddling off to Panama won’t be enough to escape. Nor will being broke. No respite will be found in the passage of time either. Only paying for your crime or your criminal lifestyle will leave you in the clear, even if that takes you a lifetime.


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