The advantages of the use of forensic accountants in confiscation proceedings

This article has been provided by Alan Burcombe, Senior Partner at Wells Burcombe Solicitors – www.wellsburcombe.co.uk

The provisions applicable following conviction, and indeed before conviction, such as restraint orders, under the Proceeds of Crime Act 2002 (“the Act”) are well known to be extremely restrictive and harsh in nature. Whilst their effect is designed to deprive a person of the sum they have benefited by from their criminal conduct, such is the nature of the provisions and assumptions which can be made under the Act, it is not uncommon for an initial statement served by the Crown under Section 16 to specify a benefit figure vastly in excess of that which has actually been obtained by a person convicted of a criminal offence such as fraud.

Such confiscation proceedings can relate to all assets and transactions 6 years from the commencement of the proceedings. The Crown will attempt to assess a defendant’s benefit from his particular criminal conduct in respect of the offence he was convicted of, but may also be able to look to him for the benefit of his general criminal conduct, should they be able to apply what are known as the criminal lifestyle assumptions. Whilst these provisions and their effect warrant consideration on their own, for the purposes of this outline it is fair to say they are extremely draconian in nature and mean that the Crown can ‘assume’ that a defendant has a criminal lifestyle and that all money and other property received over the past 6 years results from his general criminal conduct, and so the proceedings should not be limited to just his particular criminal conduct regarding the offence for which he has been convicted.

 

 

In reality, the use of the term” confiscation” is something of a misnomer in that the legislation effectively empowers a court to require payment of a sum of money, known as the recoverable amount, which equates to a person’s benefit from crime. If this sum is less than the declared benefit, then an order is made for payment of the “available amount.”

Whilst payment is due upon the making of an order, courts frequently allow time to pay the sum ordered as due of usually up to 6 months. Should payment not be made, then a person is liable to serve a further prison sentence in default of payment, in addition to any term imposed for the substantive offence. The likely level of the default sentence is detailed in a sliding scale and is dependent on the amount which is unpaid. Hence the need to get the figures accepted at the lowest possible level, and to ensure that the defendant has the means to pay the sum ordered.

Notwithstanding the nature of the legislation, the appropriate use of a forensic accountant in such proceedings, can provide considerable advantage to a client both in relation to the ultimate amount deemed available for confiscation following conviction, and also in relation to the figure which the court declares as the persons benefit from their criminal conduct. This latter issue is highly significant as the declared benefit figure remains with a defendant client, regardless as to the fact that an order for payment of a lesser figure is made. As such, should a client come into money after the conclusion of confiscation proceedings, then the Crown can seek to recover this from him, up to the amount of the benefit figure the court declared as applicable. Hence whilst on one view, the benefit figure is not so important as it is rarely ordered to be paid in full, such view may be considered as somewhat short term, as a client may establish another successful business, inherit money or win the lottery after the proceedings have finished.

A forensic accountants report is therefore vital in many areas, not least the obvious initial of checking as to the accuracy of the figures- it is by no means an infrequent occurrence that the Crowns initial figures are incorrect on an arithmetical basis, often to a client’s detriment. Additionally, it is also vital to identify all relevant sources of legitimate income, since this must of course be deducted from the benefit figure. This can involve tracing payments made through many accounts and sources, so as to show their provenance, and if cogent evidence of their provenance can be produced, this can make a considerable dent in the sums the crown can look to for confiscation.

Another area which must be looked into is that of the potential for double counting of monies in accounts. Usually, the statement under S16 of the Act is prepared by a financial investigator who is police officer .Whilst they are most often highly competent in this field, such officers have not usually had the benefit of in-depth specialist forensic accountancy training. With a forensic accountants scrutiny of all bank accounts, any double counting, or other duplication, most usually caused by inter account transfers, can be identified, and the benefit figure reduced accordingly. However, to the untrained eye, and if such an exercise is not undertaken, this is an area which can easily go undetected, resulting in an artificially inflated figure for the defendant’s benefit being proposed by the Crown.

The tracing of monies received is also essential, since if it cannot be demonstrated that monies or assets have been dissipated, it is open to the Crown to allege that there are hidden assets, where in fact there may be none, and which can lead to a default sentence. An accountants report can assist in showing where monies have gone, which might otherwise be missed, and that in fact such monies should not be treated as hidden assets. Not only will this mean a defendant is only liable to pay the actual amount of their appropriate realizable assets, but it will avoid a consequent prison sentence for nonpayment which often follows when hidden assets are found.

The above is merely an outline of some of the issues which may come into play in confiscation proceedings. However, there can be little doubt that one of the central rafts in any defence of these matters is the use of forensic accountants to prepare cogent and persuasive reports, which will hopefully enable a defendant to move on at conclusion of the proceedings with as little hanging over him for the future as possible.

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