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England and Wales High Court (Queen's Bench Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> The Assets Recovery Agency v Virtosu & Anor [2008] EWHC 149 (QB) (05 February 2008) URL: http://www.bailii.org/ew/cases/EWHC/QB/2008/149.html Cite as: [2008] EWHC 149 (QB), [2009] 1 WLR 2808, [2008] Lloyd's Rep FC 225, [2008] 3 All ER 637 |
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
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The Assets Recovery Agency |
Claimant |
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- and - |
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Gheorghe Virtosu &Victoria Virtosu |
Defendants |
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Mr Virtosu in person.
Mrs Virtosu did not appear and was not represented
Hearing dates: 14, 15, 17th January 2008
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Crown Copyright ©
Mr Justice Tugendhat :
THE CLAIM
"This case concerns property derived from unlawful conduct, namely; (i) people trafficking; (ii) money-laundering; and (ii) mortgage fraud".
THE UNLAWFUL CONDUCT AND THE FORM OF EVIDENCE IN SUPPORT
"241 "Unlawful conduct"
(1) Conduct occurring in any part of the United Kingdom is unlawful conduct if it is unlawful under the criminal law of that part.
(2) Conduct which—
(a) occurs in a country outside the United Kingdom and is unlawful under the criminal law of that country, and
(b) if it occurred in a part of the United Kingdom, would be unlawful under the criminal law of that part,
is also unlawful conduct.
(3) The court … must decide on a balance of probabilities whether it is proved—
(a) that any matters alleged to constitute unlawful conduct have occurred ..."
"5.12 The proposed civil forfeiture regime is intended to provide:
• a reparative measure – taking away from individuals that which was never legitimately owned by them; and
• a preventative measure – taking assets which are intended for use in committing crime.
5.13 Although civil forfeiture is not intended as a punitive measure, it can be expected to be keenly felt and strongly resisted by individuals who have grown accustomed to having possession of their unlawful assets. … the large body of anecdotal evidence from UK and other overseas law enforcement [shows] that individuals associated with criminal activities are as concerned about losing their assets as they are about losing their liberty, in some cases more so.
5.14 Like other forms of asset recovery, civil forfeiture is a disincentive to crime – more effective recovery of unlawful assets will act to reduce the anticipated reward in the risk/reward trade-offs that some criminals make (as explained in Chapter 3). And it reinforces the rule of law – by demonstrating that the justice system will work effectively to remove illegal gains (also explained in Chapter 3). In addition, it:
• opens up a new route to tackling assets that are currently beyond the reach of the law. Civil forfeiture should be used in particular to disrupt the activities of organised crime heads who are remote from crimes committed to their order, yet enjoy the benefits; and
• should allow the recovery of unlawful assets held in the UK, but derived from crime committed overseas."
THE EFECT OF THE FRENCH JUDGMENT
"25. Assisting unlawful immigration to member State
(1) A person commits an offence if he—
(a) Does an act which facilitates the commission of a breach of immigration law by an individual who is not a citizen of the European Union,
(b) knows or has reasonable cause for believing that the act facilitates the commission of a breach of immigration law by the individual, and
(c) knows or has reasonable cause for believing that the individual is not a citizen of the European Union".
i) Conspiracy to make a false document contrary to s.1 of the Forgery and Counterfeiting Act 1981 (the making of false passports and administrative documents);
ii) Conspiracy to use a false instrument contrary to s.3 of the Forgery and Counterfeiting Act 1981 (the provision of false documentation to be used to gain entry and to leave France);
iii) Conspiracy to procure a woman to leave the UK to become a prostitute in the world contrary to s.22(b) of the Sexual Offences Act 1956 (transposing the acts in France of sending the women to other jurisdictions for the purposes of prostitution). This section provides
"22 (1) It is an offence for a person— …(b) to procure a woman to leave the United Kingdom, intending her to become an inmate of or frequent a brothel elsewhere; …;"
iv) Conspiracy to procure a woman to become a prostitute in any part of the world contrary to s. 22(a) of the Sexual Offences Act 1956 (a wider offence to that under s.22(b). This section provides:
"22 (1) It is an offence for a person— (a) to procure a woman to become, in any part of the world, a common prostitute;…";
v) Conspiracy to detain a woman against her will in a brothel contrary to s. 24(1) of the Sexual Offences Act 1956 (even if Mr Virtosu had been in France at all times, the fact that the women were ultimately detained in England would be caught by a conspiracy count). This section provides
"24(1) It is an offence for a person to detain a woman against her will on any premises with the intention that she shall have unlawful sexual intercourse with men or with a particular man, or to detain a woman against her will in a brothel…;"
vi) Conspiracy to live on the proceeds of prostitution contrary to s.30 of the Sexual Offences Act 1956 (this would reflect the overall purpose of the scheme). This section provides:
"30(1) It is an offence for a man knowingly to live wholly or in part on the earnings of prostitution.
(2) For the purposes of this section a man who lives with or is habitually in the company of a prostitute, or who exercises control, direction or influence over a prostitute's movements in a way which shows he is aiding, abetting or compelling her prostitution with others, shall be presumed to be knowingly living on the earnings of prostitution, unless he proves the contrary";
vii) Conspiracy to steal contrary to s.1(1) of the Theft Act 1968 (bank card fraud);
viii) Conspiracy to defraud (bank card fraud).
"a judgment ... is conclusive as against all persons of the existence of the state of things which it actually affects, when the existence of that state is a fact in issue" (p596-7).
"72 In our judgment, this subject has become overcomplicated, and complication tends to obfuscation. It is, as we have said, necessary to distinguish between admissibility and how admissible evidence may be proved. In our judgment, the Polish convictions were admissible pursuant to and subject to s.101(1)(d) and (g), and s.103 of the 2003 Act. The rule in Hollington v Hewthorn was abolished for criminal cases, in so far as it may ever have applied or have survived, by s.99(1) of the 2003 Act.
73 The convictions were provable, as opposed to admissible, under s.7 of the 1851 Act, whose formalities were complied with in this case. That meant that the whole Polish record, including all the record of evidence, was provable by s.7. It was also in a form such as that referred to in Humphris."
'Before we leave this case we point out that it has a moral for other cases of this sort. First, it emphasises the importance of the Crown determining whether they need any more evidence than the actual previous conviction to achieve the purpose for which they want the evidence to be admitted. Second, it emphasises the importance of the Crown deciding that if they want more than the evidence of the conviction and the matters that can be formally established ... they must ensure that they have available the necessary evidence to support what they require. That will normally require the availability of either a statement by the complainant relating to the previous convictions in a sexual case or the complainant to be available to give first-hand evidence of what happened."
"They were far more extensive than a certificate or memorandum of conviction that might be produced from this jurisdiction under s.73 of the Police and Criminal Evidence Act 1984, as admissible evidence that the person named in the certificate, if it is proved that this is the defendant, was convicted of the offence recorded. The details of the offences were described in the same terms as the part of the document put before the jury to which we have referred [as described at para 31]."
"Even were it proved that it was the accident that led to the prosecution, the conviction proves no more than what has just been stated. The court which has to try the claim for damages knows nothing of the evidence that was before the criminal court. It cannot know what arguments were addressed to it, or what influenced the court in arriving at its decision. Moreover, the issue in the criminal proceedings is not identical with that raised in the claim for damages. Assume that evidence is called to prove that the defendant did collide with the plaintiff, that has only an evidential value on the issue whether the defendant, by driving carelessly, caused damage to the plaintiff. To link up or identify the careless driving with the accident, it would be necessary in most cases, probably in all, to call substantially the same evidence before the court trying the claim for personal injuries, and so proof of the conviction by itself would amount to no more than proof that the criminal court came to the conclusion that the defendant was guilty. It is admitted that the conviction is in no sense an estoppel, but only evidence to which the court or a jury can attach such weight as they think proper, but it is obvious that once the defendant challenges the propriety of the conviction the court, on the subsequent trial, would have to retry the criminal case to find out what weight ought to be attached to the result."
"Mr. Robertson also placed reliance on Hollington v. F. Hewthorn & Co. Ltd. [1943] K.B. 587. That decision, he submits, precludes the tribunal from placing any reliance upon the opinion of the board as to the truth of the matters which it was the tribunal's duty to inquire into and determine. This submission, in our judgment, falls to the ground once it becomes clear that the tribunal is not bound by the strict rules of evidence, save for the effect of rule 41 already referred to. The effect of Hollington v. F. Hewthorn & Co. Ltd. was removed by sections 11 and 13 of the Civil Evidence Act 1968 in cases to which those sections apply.
It is perhaps of interest to note that in Hunter v. Chief Constable of the West Midlands Police [1982] AC 529, 543 Lord Diplock, with whose speech the other members of the House of Lords agreed, said this of the decision of the Court of Appeal in Hollington's case:
"Despite the eminence of those who constituted the members of the Court of Appeal that decided it (Lord Greene M.R., Goddard and du Parcq L.JJ.) that case is generally considered to have been wrongly decided, even in the context of running-down cases brought before the Law Reform (Contributory Negligence) Act 1945 was passed and contributory negligence ceased to be a complete defence; for that is what Hollington v. F. Hewthorn & Co. Ltd. was about. The judgment of the court delivered by Goddard L.J. concentrates on the great variety of additional issues that would arise in a civil action for damages for negligent driving but which it would not have been necessary to decide in a prosecution for a traffic offence based on the same incident, and on the consequence that it would still be necessary to call in the civil action all the witnesses whose evidence had previously been given in a successful prosecution of the defendant, or a driver for whose tortious acts he was vicariously liable, for careless or dangerous driving, even if evidence of that conviction were admitted. So no question arose in Hollington v. F. Hewthorn & Co. Ltd. of raising in a civil action the identical question that had already been decided in a criminal court of competent jurisdiction, and the case does not purport to be an authority on that matter."
We point out that in this case the tribunal was charged with determining the identical questions which had already been decided in Western Australia by the board which was a tribunal of competent jurisdiction."
"11.52 In an EU of free movement of capital and persons, there is little justification for treating requests for restraint and confiscation of assets from other EU jurisdictions in the same way as requests from other parts of the world. This unnecessary impediment acts to increase the ease with which criminals can frustrate law enforcement efforts to recover assets. The UK has therefore promoted the mutual recognition of judicial decisions at EU level. And it has pressed for the mutual recognition of restraint orders to be the first area subject to any new mutual recognition agreement. At a special meeting of the European Council in October 1999 during the Finnish Presidency at Tampere, the Council decided to enhance mutual recognition of member states' judicial decisions."
THE CONTENT OF THE FRENCH JUDGMENT
"1) Aiding the illegal entrance or residence of a foreign national in a state party to the Schengen Convention in an organised gang;
2) Fraudulent possession of several false administrative documents;
3) Forgery in an administrative document establishing a right, identity or authority;
4) Use of forgery in an administrative document establishing a right, identity or authority;
5) Receiving stolen goods;
6) Receiving a false administrative document;
7) Aggravated crime of living on the proceeds of prostitution: multiple victims;
8) Counterfeiting or forgery of a payment or withdrawal card;
9) Use of a counterfeited or forged payment or withdrawal card;
10) Receiving the proceeds from a crime punished by a sentence not exceeding five years imprisonment."
FINDINGS OF FACT ON THE CONDUCT IN FRANCE
EVIDENCE OF BENEFIT AND OF CONDUCT IN ENGLAND
FINDINGS OF FACT ON PEOPLE TRAFFICKING IN ENGLAND
"A person obtains property through unlawful conduct (whether his own conduct of another's) if he obtains property by or in return for the conduct".
FINDINGS OF FACT ON BENEFIT
THE GIFTS Mr VIRTOSU CLAIMS TO HAVE RECEIVED - DOCUMENTS
"In my case the donations well documented from Moldova explain where the money comes from. The Assets Recovery Agency has not produced evidences to disprove it. They could easily write a letter of request to the Moldovian authorities seeking assistance on the authenticity of the documents".
THE CIRCUMSTANCE OF MR VIRTOSU AND HIS FAMILY
"annual benefit of ……. Gheveando (the main founder Mr Virtosu…..) in the amount of 2,730,000 Lei (US$ 210,000)".
"By default of account operations not performed for more than two years the accounts were closed on 12th December 2002".
"for sugar deliverance, on the sum of $400,000 US that according to the contract was paid to [Mr Virtosu] manager "Gheveando" SRL, directly on the bank account [and he gives the number of the Nat West account]. Because on this moment it was more advantageous for us that the transfer was made by our partner from Latvia Company "Hiperscale Inc" the sum was paid [and he identifies five payments in US dollars about $50,000 with dates corresponding to those on the Nat West account]. At the end of the year 2003, after whole payment, other transactions were not performed, because Ghevando SRL stopped its activity by unknown reasons for us".
FINDINGS OF FACT ON MR VIRTOSU'S EVIDENCE
THE PROPERTY ACQUIRED BY THE RESPONDENTS
61 Briar Avenue
35 Crescent Way
42 Redford Avenue
MORTGAGE FRAUD
"… how does one know if the conduct which is said to have occurred in the United Kingdom (or abroad) was unlawful conduct under United Kingdom criminal law (or the criminal law of both the foreign country and the United Kingdom) unless one is given some information as to what the conduct is said to have been?
17. I readily accept Mr Crow's submission that sections 240 and 241 are framed so as to make it clear that the Director need not allege the commission of a specific criminal offence or offences. I further accept that Part 5 proceedings are not limited, as were the earlier forfeiture proceedings, to any particular kind or kinds of criminal offence, for example, drug trafficking, money laundering, et cetera, but it does not follow that the Director is not under any obligation to describe the conduct which is alleged to have occurred in such terms as will enable the court to reach a conclusion as to whether that conduct so described is properly described as unlawful conduct. For the purposes of sections 240 and 241(1) and (2) a description of the conduct in relatively general terms should suffice, "importing and supplying controlled drugs", "trafficking women for the purpose of prostitution", "brothel keeping", "money laundering" are all examples of conduct which, if it occurs in the United Kingdom is unlawful under the criminal law. It is possible that more detail might be required if conduct outside the United Kingdom was being relied upon, but that is an inevitable consequence of the Director having to establish that the conduct in question was unlawful in both the foreign country and the United Kingdom….
25. … The requirement that fraud or illegality should be specifically pleaded is not simply a procedural nicety. Rather, it reflects the requirements of elementary fairness. In my judgment, the Act deliberately steered a careful middle course between, at the one extreme, requiring the Director to prove (on the balance of probabilities) the commission of a specific criminal offence or offences by a particular individual or individuals and, at the other, being able to make a wholly unparticularised allegation of "unlawful conduct" and in effect require a respondent to justify his lifestyle. I say "in effect" because, although Mr Crow emphasised that the burden of proof to the civil standard would rest throughout any proceedings under Part 5 on the Director, he placed considerable reliance upon those cases which demonstrate that facts may be proved by inference, and that the absence of (or an untrue) explanation, where one is called for, may be sufficient to discharge that burden."
"1. In civil proceedings for recovery under Part 5 of the Act the Claimant need not allege the commission of any specific criminal offence but must set out the matters that are alleged to constitute the particular kind or kinds of unlawful conduct by or in return for which the property was obtained.
2. A claim for civil recovery cannot be sustained solely on the basis that a respondent has no identifiable lawful income to warrant his lifestyle."
"… it is one thing to point to an unexplained lifestyle, it may be another if an explanation is offered but rejected as untruthful; and taken with other evidence either might be more or less persuasive".
"Lies, if they are proved to have been told through consciousness of guilt, may support a prosecution case, but on their own they do not make a positive case of … any … crime".
MONEY-LAUNDERING
65. A substantive offence of money laundering can be proved by inference from the way in which cash is dealt with and it is not necessary to prove the underlying offence which generated the cash: R v El Kurd [2001] Crim. L.R. 234; and R v L,G,Q and M [2004] EWCA Crim 1579. As Mr Eadie submitted, if money is handled in a manner consistent only with money laundering, "the inference is that it must be criminal property because no one launders clean money". Mr Krolick submitted that it was a condition precedent to any allegation of money laundering that the property should be the proceeds of a criminal offence. He referred to the decision of the House of Lords in R v Montila [[2004] UKHL 50] [2005] 1 Cr App R 26. But what is required in law to establish money laundering and how that may be proved raise different issues. El Kurd was cited in Montila and referred to in the Opinion of the Committee with apparent approval and certainly without adverse comment on the question material to this case.
66. In this case, the evidence is, as the Director alleges, that around £195,000 cash (and £24,000 in unidentified credits) were credited to the accounts of Olupitan and Makinde in a period of some five and a half years. They remain unexplained and without any supporting documentation. Such explanations as have been offered have been rejected as untruthful. I accept Mr Eadie's submission that in the circumstances of this case as I find them to be it is a proper inference that money laundering has occurred.
"93C (1) A person is guilty of an offence if he -
(a) conceals or disguises any property which is, or in whole or in part directly or indirectly represents, his proceeds of criminal conducts; or
(b) converts or transfers that property or removes it from the jurisdiction,
for the purpose of avoiding prosecution for an offence to which this Part of this Act applies or the making or enforcement in his case of a confiscation order".
THE CASE AGAINST MRS VIRTOSU
FAIR TRIAL
CONCLUSION