Whoop di dooo!

VAT Carousel fraudster Craig Johnson must pay £28 Mn. or face 10 more years in jail

We first posted about how 37 year old Craig Johnson who was one 7 members of a gang ... and claimed "mastermind" ...who were involved in a highly successful £68 million VAT fraud (probably part of a greater £138 Mn. fraud resulting in 21 people jailed for up to 130 years) . He pleaded guilty to conspiracy to laundering £6.3 million from the proceeds of crime and was given a two year jail sentence at Birmingham Crown Court - VAT fraud - launder £6 Mn get 2 years Saturday, September 27, 2008 which was added to 10 years for fraud in 2006 when after Operation Emersed, 12 people – including Johnson – were jailed for a total of 75 years..

Yesterday, at a confiscation hearing at Wolverhampton Crown Court he was handed down a repayment order for £28 Mn - £8m within the next 12 months and the remainder within a further 12 months. If Johnson does not repay the money he could face another 10 years in prison. The largest issued in UK courts. BBC photos of siezed assets, homes, helicopter, yacht, cars, watches, diamonds etc,

Johnson lived at his 300-year-old Meaford House with wife Amanda — now in Dubai with their children - where there is also suspected to be further property — and mistress Kim, who also took his surname.

The confiscation hearing, also involved 2 other defendants from the 12 strong gang – Linda Wragg, 44, of Hanchurch, Stoke-on-Trent, who previously got six-and-a-half years, (UPDATE - Wragg ordered to re-pay £88,685 to the public purse or face an extra 21 months in prison Nov 24th) and 28-year-old Steven Lipinski, from Essex, jailed for 6 years.

A second confiscation hearing is set for the beginning of January 2009, for 6 other criminal associates – Christopher Sanders, Robert Capewell, Gwyn Jones, Stephen Hancock, Nicholas Shipley, Anthony Trickett-Smith.

A third confiscation hearing is set for next March for the remaining three criminals – Charles McWhinnie, Catherine Temple and Sharon Hawcroft.

The total level of such VAT "carousel fraud" is unknown, but it was running at £400 Mn. monthly for several years - Current levels of such fraud have not been published but some official estimates say that Europe wide it costing European taxpayers up to £170bn a year - twice the European Union's annual budget.

VAT fraud - launder £6 Mn get 2 years

Missing Trader Fraud has at it's peak been costing the UK taxpapyer £400Mn a month,for several years. Yesterday the HMRC (who have had up to 1,500 staff on the case at a time) finally succeeded in jailing some of the active UK based participants.

At Worcester Crown Court yesterday as a result of the HMRC Operation "Shoot"

Gerard Michael Forrest (DOB 18.08.1968) of Prince Regent Mews, London, was sentenced to 3 years in prison.

Stephen Hancock (DOB 05.03.1958) currently of HM Prison Service and formerly of Grove Farm, Kingsley Road, Cellarhead, Stoke-on-Trent, Staffordshire, Stoke-On-Trent, Staffordshire, was sentenced to 5.5 years in prison.

Barbara Moran (DOB 03.08.1956)(Hancock's girlfriend) of Laurel Cottage, Scot Hay Road, Alsangers Bank, Stoke-on-Trent, Staffordshire, was sentenced to 3.5 years in prison.

Shane Matthews (DOB 05.08.69) of Ironside Court, Burslem, Stoke-on-Trent and formerly of 6 Partridge Close, Stoke-on-Trent, Staffordshire, was sentenced to 7 years in prison.

In all they stole at least £50 Mn. from the taxpapyer by an elaborate VAT MITC fraud

The related Operation Shepherd, resulted in seven men being sent to prison for a total of 39 years for stealing £68 million.

In related Operation Emersed assets to the value of £6 million have been seized under the Criminal Justice Act 1988 - including 4.5 million in a related investigation (Operation Emersed). Confiscation Orders are being secured to reclaim this money for the public purse. These assets inlclude a helicopter, a yacht, two properties including Meaford Hall, Stoke. Performance vehicles - a Ducati, Aston Martin, Ferrari and two Bentleys, Rolex watches and diamonds.

Craig Johnson was the seventh member of the criminal gang to be jailed in connection with a £68 million VAT fraud. He pleaded guilty to conspiracy to laundering £6.3 million from the proceeds of crime has been given a two year jail sentence at Birmingham Crown Court.

It is noticeable that recovery of cash and assets is negligible in relation to the size of the theft - total losses the the UK taxpapyer since these crimes commenced is not less than £8 Bn. pounds.

The Chancellor of the Exchequer at the time was the current Prime Minister Mr Gordon Brown.

2 VAT fraudsters - took £16 Mn plus - get 10 years total = 5 years actual - assets recovered - ZERO

John Robert Donnan, DOB 13/2/1956, of 30 Watersfield Way, Edgware, Middlesex HA8 6RZ pleaded guilty to 8 counts of concealing or disguising the proceeds of criminal conduct contrary to section 93C (2) of the criminal justice act 1988, (money laundering totaling £4.86 million) committed between August 2001 and December 2002 yesterday, at Southwark Crown Court. He was sentenced to swell the chock full prison population for seven years imprisonment (AKA 3.5 years with good behaviour) and disqualified from being a company director for eight years.

Gerard Joseph Hyde, DOB 09/05/1952, formerly of 10 Lindfield Road, Ealing, London W5 1QR. He pleaded guilty to 7 counts (approximately £2 million) of concealing or disguising the proceeds of criminal conduct contrary to section 93C (2) of the criminal justice act 1988 committed between February 2002 and December 2002. He was jailed by Southwark Crown Court on 24 May 2007 for three years and six months for his part in the crime.

Donnan, is/was an Australian property developer and is alleged to be the Mr Big in a massive multi million pound money laundering operation that took place over 16 months and across several countries. He was the director of, or associated with, several companies in the UK, Ghana and the Channel Isles that were used to launder the criminal proceeds.

The scam exposed by HMRC used fraudulent companies who sold mobile phones to companies in the UK these companies sold the phones on, charging VAT and then disappeared without accounting for the millions of pounds in VAT. The tax payers money handed over by the HMRC in a period of 16 months amounted to almost £31 million.

Proceeds of the fraud of almost £16.5 million on the UK taxpayer were removed from a Hong Kong bank account and then laundered through accounts in Hungary, Dubai, Ghana, Isle of Man, Guernsey and the UK.

This sounds like a big bust . Missing trader fraud (MTIC) has resulted in losses by HMRC of up to £2 Billion per Quarter for several years and probably now totals over £20 Bn.... the cost say of Northern Wreck or a fleet of 6 massive new Aircraft carriers complete with their planes.

This sounds like a big bust . It is hardly scratching the surface of this massive fraud and recovery of funds in this case is (like most cases) zero.

Record UK Trade Deficit in 2006 - VAT / Duty Black Hole Mystery deepens

The Office for National Statistics announced today that Britain's goods trade gap grew to £7.142 Bn. December 2006 , from £6.871 Bn. in November 2006. December's figures added to the largest annual trade deficit since records began in 1697, with the total trade gap for 2006 widening to £55.8 billion pounds in 2006 from £44.6 billion in 2005. ( A rise of 25%)

Records were set last year for both exports and imports but , excluding oil and erratic items, the volume of exports rose by 1 % between November and December and the volume of imports rose by 3%. (Nota Bene No-one has said yet the economy has been "blown off course". Yet.)

Very significantly the Press release states (verbatim)

"Following a change in the pattern of trading associated with Missing Trader Intra-Community (MTIC) fraud, identified by Her Majesty’s Revenue and Customs, interpretation of the breakdown between EU and non-EU trade is more difficult. Originally, most carousel chains only involved EU member states. More recently, some carousel chains have included non-EU countries, for example, Dubai and Switzerland. However, the import adjustment is applied only to EU imports as the goods return to the UK via the EU - but it is this part of the trading chain that is not recorded." (i.e the gangsters are one step ahead)

A report was issued in March 2005 Report on impact of MTIC on UK Trade statistics
Report on further research into the impact of Missing Trader Fraud on UK Trade Statistics, Balance of Payments and National Accounts. by David Ruffles & Tricia Williams... (Download PDF 9 pages ) which baldy concluded that it was not possible to extend or refine the estimates for the impact of fraud on the statistics using the currently available sources. Page 1.

On Page 9 they add ..."There are also concerns about asymmetries in Intrastat data, in particular issues about possible fraud in other Member States, inconsistencies between Member States in the calculation of statistical value, estimation of Below Threshold Trade and late/partial response. The UK will continue to be active in the European meetings at which these issues are addressed.

While further research by HMCE into the various data sources is possible, it is very resource
intensive. In addition, because of concerns about the overall quality of those data sources, in the
judgement of the HMCE/ONS team it is unlikely to yield robust estimates for the impact on the
trade statistics of either carousel fraud in other goods or of acquisition fraud."

A report from Reuters suggested that VAT fraud cost the UK government at least £ 8.5 Bn. (yes Billion) in the year to June 2006, whic HMRC disputes burt cannot provide any precise figures - which the Chancellor was slated to produce in his December 2006 statement ...but didn't. (But.See Below in BBC report)

Intriguingly the BBC report today (although the source of the figures is not given and is certainly not in the monthly statistics) ...

"The latest trade figures also reveal a continuing slump in the amount of trade associated with VAT "carousel fraud", which has been a factor in the volatility of the figures."

In December the volume of dishonest trade dropped to just £100m. "

They continue to say, despite the caveat about dealing with non EU fraud trails noted above ...

In the whole of 2006 there was £28.7bn worth of trade associated with this fraud, far and away the worst year on record and twice as much as in 2005. Most of this was in the 1st half , .... with just £600m of it in the last quarter of 2006.

In last December's pre-budget report (unseen by anyone else) Gordon Brown revealed that the Treasury lost between £2bn and £3bn in 2005-06 because of this activity. (For statisticians that is a variance of 100% = in this case £100,000,000 - which is a fair margin for error)

Meanwhile 5 arrests were made today in Surrey by HMRC, of a gang believed to have smuggled more than 85 tonnes of hand rolling tobacco (say 5 container loads) into the UK since July 2006 which involves the evasion of tobacco duty in the region of £12.5million.

John David WRIGHT, DOB 04/08/66 of Ruxbury End, St Ann's Hill Road, Chertsey, Surrey, KT16 9NL remanded in Custody.

Andrew Jeffrey GREEN, DOB 12/01/62 of 22 Camellia Court, West End, Woking, Surrey, GU24 9XQ Bailed
Christopher William SHEARD, DOB 26/11/48 of 6 Monks Way, Staines, Middlesex, TW18 1QU Bailed.

Bali Shag is the only true European hand-rolling tobacco sold in the United States... do John Prescott and Jack Straw share the odd packet, Lord Patel wonders.

Massive Europe wide raids to tackle huge VAT fraud

VAT fraudsters , who are extremely successful and resourceful organised criminals steal £400 MN a month from the UK Treasury, more than the combined cost of the illegal Iraqi invasion and occupation force and sending ill equipped,and under resourced soldiers to a certain death in Afghanistan ...

As part of a massive integrated operation,targeting multi million pound VAT fraud, 300 HM Revenue and Customs staff (HMRC) have been deployed across France, Spain, Germany and the UK in the early hours of today.

A total of 50 search warrants were executed at business and domestic addresses in London, Glasgow, the Midlands, Manchester, Dover, Bristol and South Wales. A total of 13 people were arrested in the operation - further arrests are expected.

Whilst organised criminals steal £400Mn a month (at least - no one knows the true figure) HMRC have had some success, in 2005 - 06, there were six successful prosecutions for carousel fraud, resulting in 18 convictions and total prison sentences of 67 years.

A further nine successful prosecutions have concluded since April this year, resulting in 35 convictions and jail sentences totalling 165 years. - there have also been successful proceedings for asset recovery in one case a recovery of £13 Mn , plus a Marbella villa and 3 racehorses, even after the alleged criminal was found inoccent of VAT fraud.

Total assets recovered so far do not exceeed £20 Mn, 2 days take for the fraudsters...each day ... every day... all day.

Assets recovered in Edinburgh

Michael Voudouri, (pic) from Alloa in Clackmannanshire, got 4 years in 2004 after pleading guilty to or operating a major VAT fraud involving £3Mn VAT evasion by three companies he operated. Fairwood Trading and Cortec Management, textile traders and also £20Mn of turnover with - Computer Technics, who acquired computer chips from Denmark, Luxembourg and the Republic of Ireland.

He is now out of prison and at the High Court in Edinburgh, on 28th November, assets of his were seized and he was given 6 months to pay £1.3m, the single biggest seizure under Proceeds of Crime legislation. The proceeds from the sale of a £600,000 Bridge of Allan house will be added to that of other addresses in Alloa and London.

Music industry group involved in mobile phone fraud of £40Mn.

In September 2005 4 people received jail sentences totalling 22 years forma £40MN VAT fraud. In passing sentence, Her Honour Judge Williams said, "It was an audacious and outrageous fraud... all defendants showed a shameless dishonesty."

The highly organised scam, operated over 2 years, involved buying mobile phones from twelve fictitious companies (they were clones of legitimate UK firms, set up in Hong Kong with names and letter-heads identical to British firms dealing legitimately in telephones and computer chips) and using false receipts to charge VAT on the transactions, resulting in a loss to HM Revenue & Customs of more than £40 million. The proceeds from this crime were then sent to the Hong Kong bank accounts of a number of companies created to perpetrate the fraud.

All four defendants faced two charges, Cheating the Public Revenue with intent to defraud, contrary to Common Law and (Money Laundering) Assisting another to retain benefit of criminal conduct contrary to s93A(1) (a) CJA 1988.of cheating the public revenue with intent to defraud, and money laundering.

Musician Stephen Pigott, DOB 27/12/62. A musician/ music producer of Dubai, UAE. Was sentenced to nine years on both counts to run concurrently. His work invloved star names such as Celine Dion, Rod Stewart,The Pet Shop Boys and Mike and the Mechanics and had a string of song-writing awards to his name.

As part of the fraud Pigott had emplyed a trick lifted from the Frederick Forsyth novel The Day of the Jackal, Pigott got a passport in the name of David Roy Chapman after finding the name on a child's gravestone in a churchyard near his birthplace in Yorkshire.

Stacy Haber-Hofberg, DOB 25/01/62 a former environmental judge in New York , who had moved to Liphook, Hampshire with her English husband and their three young children , received six years on each count to run concurrently.(pic) She is also a songwriter, producer (of countless music videos, documentaries, the Off-Broadway play The Man From Verona, and the feature films "Def By Temptation" and "Rockabilly Vampire", the latter two often cited [she insists by design!] as being amongst the worst horror films ever made).

In addition both Pigott and Haber-Hofberg were both disqualified from holding the position of company director for the next fifteen years.

Joanna Harris DOB 24/02/69. A fitness instructor of London SE26. She was sentenced to three and a half years on both counts to run concurrently.

Theresa Igbanugo (38) a record label director of Sydenham, she had a reputation as a very good pioneering music entrepreneur, talent-spotting young acts. London SE26 received three and a half year sentences on each count to run concurrently. Harris and Igbanugo were also both disqualified from being a company director for ten years.

Recovery of assets proceedings are underway.... but ... Mr Big got away , Piggott refused to identify a man he called "Matt" whom he met in a bar ... he is thought now to be in Dubai from where he cannot be extradited. To HMRC he was John Andrew Shaw (code Z111), 52, a businessman and father of two from Sheffield. HNRC had a 67-page dossier on him. Another codename, Mauve 111, is a code given to his former home, a converted farmhouse in a South Yorkshire village.

The dossier identifies a lengthy series of suspicious transactions via banks in Dublin, Hong Kong, Ghana and the Isle of Man, as money was harvested from the HMRC frusdulently and then washed by banks around the world ... who know nothing about the fraud.