Major Carousel Fraudsters Jailed

2 min read Networks & Network Services
After one of the biggest ever investigations by HMRC, involving nearly 100 mobile phone traders and two separate criminal trials, six men behind an £85 million VAT fraud have been jailed for a total of 47.5 years yesterday.
Raymond Cox from Staffordshire, Brett Issitt of Todmorden, Lancashire, Michael McNeill from Rossendale, Paul Sweeney who lived in Amsterdam, Peter Glover of Warwickshire and Colin Jones from Cheshire were all jailed at Liverpool Crown Court following a five-year investigation by HMRC officers. Tracking their fictitious trading across the North West, Midlands, Republic of Ireland and Europe and the subsequent court case has been one of the biggest 'missing trader' or MTIC frauds to be prosecuted. Over a nineteen month trading period HMRC officers identified losses of over £85 million in VAT linked to the activities of these co-conspirators.

Peter Hollier, Head of Criminal Investigation in the North West for HMRC said:

"This was not some kind of victimless crime, but organised fraud on a massive scale perpetrated by criminals all bent on making fast and easy profits at the expense of the British taxpayer. This was theft of revenue needed to fund our country's public services. Missing trader fraud is not merely a paper fraud but often features links to other forms of criminal activity. This case is a further example of our determination and success in bringing to justice the criminals behind this type of fraud. The sentence sends out a clear message to others who may contemplate such criminal activity."

His Honour Judge Swift said:

"This conspiracy generated considerable loss of public revenue. On the documents something like £85 million was taken from public revenue at a time when revenues were stretched and honest people continued to pay tax. It was a substantial and orchestrated exercise but it was no more than a scam in which all participated. "

The court heard the multi-million pound fraud centred on the mobile phone industry. Investigations by HMRC began in 2000 and involved breaking the audit trail of 98 businesses based in the UK, Germany, Belgium, Spain and the Netherlands. The fraudsters were directors and executives of seven of the companies identified during the trial.

The phones were purportedly imported into the UK VAT free by various companies set up by the fraudsters, who then sold the phones on, charging VAT that was never paid over to HMRC. These companies then went 'missing'. The phones were then 'sold' down the line to various 'buffer' traders before they were exported again often to be repurchased by the original companies at a trading loss. As the accomplices got more confident the transactions grew in number and value and it was clear from handwritten records found that those involved had difficulty themselves keeping a track of the transactions as the scale escalated.

In sentencing the Judge added:

"This was a conspiracy which overall cost the taxpayer a colossal sum of money. There was nothing genuinely commercial about any of it. It was fraud on a vast scale. I am satisfied there was a hierarchy with Cox at the top. From his involvement throughout, and that all his companies were involved. He had all the trappings of wealth. The fact that the phones returned to Cox's companies in my opinion is no coincidence."

The judge went on to commend the prosecuting team and HMRC investigators who had worked on this complicated case.

As in all successful prosecutions, confiscation proceedings are being pursued in order to strip the guilty of their assets, illegally derived from the proceeds of these frauds. All those sentenced were also given disqualifications for directorships of UK registered companies.

These cases were successfully prosecuted by the Revenue & Customs Prosecutions Office (RCPO). RCPO is an independent prosecuting authority that reports to the Attorney General, and is responsible for the prosecution of all HMRC cases in England and Wales.

David Green QC, Director RCPO said:

"An excellent result today. Cases of this nature represent a major threat to the public revenue and affect many EU jurisdictions. MTIC prosecutions are long and complex and test the mettle of the prosecutor. This is an excellent example of prosecutors and investigators working together in the fight against crime".