Case No. CR-2019-LDS-000669

387.In his report, Mr Lacey pointed out that given the purpose of selling stock for cash (and then not accounting for the proceeds) would be to avoid reporting sales, it would be innately difficult to directly demonstrate through available accounting records that sales had been for cash. I accept that there would be a difficulty but of course if the stock records were well kept then absence of stock, not accounted for by sales, should show up. This is particularly so given the detailed records required to be kept under legislation by scrap metal merchants.388.Mr Lacey identified the records available to him and that he had not been given access to the detailed stock records that were alleged to exist as being maintained on John’s laptop computer. Such records of stock as were available to him were very limited, such that he had no visibility at all over what stock was purchased and sold each month and no ability to reconcile stock.389.Accordingly an exercise that would in normal circumstances be difficult “has become impossible”.390.He therefore attempted to comment on movements in gross profit margin and reviewing the amounts realised from the sale of stock. He concluded that there was a significant increase in LWC’s gross profit margin between August 2015 and August 2016 and that this coincided with a drop in the overall price of copper and a period in which Lisa was said to have been applying a degree of scrutiny to potential cash sales. The inference (although this was not expressly stated) was that the increase in the gross profit margin could not be explained by a rise in copper prices and that the likelihood is that it was to be explained by sales being put through the books and the alleged practice of selling stock for cash without accounting to the Companies for the proceeds being restricted or suspended.391.However, in his answers to questions, Mr Lacey accepted that:“I do not know specifically why the margin was higher in that year, there are likely to have been a number of factors that impacted this. For example, in his Witness Statement John Hughes has referred to an increase in profitability post 2015 arising from a short term contract with BT. I am unable to verify whether that is correct, or, assuming it is correct, the effect this may have had on gross margins.”392.At the end of the day, I do not find Mr Lacey’s evidence on this area as being of any great assistance to me. There is a possible pointer to there having been the alleged cash sales in terms of the gross profit margin change, but that evidence is equally consistent with other explanations. At the end of the day the expert evidence on this point is simply neutral.393.It is therefore necessary to turn again to the evidence of fact.394.I have made a number of findings of fact earlier in this judgment. I have them all well in mind.395.As regards the alleged cash sales I find that these are not made out. The most significant factor in this respect is, in my assessment, the fact that this allegation was only raised by the petition and not in the course of the investigations and negotiations thereafter and not even in the defence to the Recovery Proceedings. 396.In addition: Charlie’s account is inconsistent with Lisa’s account so far as it suggests that they were both identifying cash sales at the same time. Further, he too did not raise cash sales as an issue in connection with his removal. Nora also did not raise the issue or even do anything about it though according to Lisa and Charlie she was told all about it.397.Although there were said to be copious records demonstrating the fraud, nothing significant has been produced and nothing was produced to Smith Craven.398.There are also other matters: Lisa’s unsatisfactory, late and inconsistent evidence regarding the CCTV. Her inability to explain what prompted her suspicions in turn prompting her alleged investigations into stock levels.