Case No. EWCA-Crim-2366

[2012] EWCA Crim the Court upheld sentences of 15 and 14 years for appellants who had had an organising role in an MTIC fraud. The court noted the distinction between the sentencing regimes applicable to common law cheating and statutory fraud and observed at para 38: “There are no sentencing guidelines applicable to this case. The guidelines for statutory offences of fraud (carrying a maximum of 10 years’ imprisonment) do not extend to offences of cheating, or conspiring to cheat, the public revenue, for which the penalty is at large. Such offences are reserved for the most serious cases, where a sentence in excess of the statutory maximum for other offences may be appropriate.” 28.Miss Montgomery suggested that the effect of these and other similar observations (for example in the Sentencing Guidelines Council’s Definitive Guideline on Fraud) would mean that a serious case of cheating the public revenue is necessarily more serious than the most serious case of statutory fraud or conspiracy to defraud. Upholding a 15 year sentence in a case of conspiracy to cheat is tantamount to saying that an offender’s conduct is so serious that it calls for a 50% longer sentence than any conceivable case of fraud. She posed the rhetorical question: surely Kallakis (see Kallakis 2013 EWCA Crim 709) who was involved in the UK’s largest ever mortgage fraud (over £740 million advanced) required a more severe punishment than the offenders here?29.It is for Parliament to decide upon maximum and minimum level of sentences, and Miss Montgomery claimed there is a real possibility of courts encroaching on their territory. Where Parliament has set maximum sentences for particular conduct, it is not for the courts and the executive to decide that those sentences are not enough, and that the statutory limits should be evaded. This is precisely the objectionable course of action that Lord Bingham identified in Rimmington. Conclusions on Ground 1 30.We can dispose of this ground relatively swiftly. As Mr Waddington for the Crown, observed, it is contrary to a consistent line of Court of Appeal authority going back over 25 years. We see no reason to dissent from the proposition in the Sentencing Guidelines Council’s Definitive Guideline on Fraud to the effect that “the common law offence of cheating the public revenue is generally reserved for the most serious and unusual offences and where a sentence in excess of the statutory maximum would be proper”. In our judgment that statement coincides with the law and best practice. We are not surprised, therefore, that the SGC’s successor, the Sentencing Council, has adopted a similar approach in its recently published draft guideline. 31.There is no inconsistency with the decision in Rimmington. Both approaches are based on the will of Parliament. In Rimmington the House held that where Parliament has created a statutory offence and defined its ingredients, (possibly providing for time limits on prosecutions, defences and a maximum penalty), it is not for a prosecutor to thwart Parliament’s clearly expressed intention by charging a common law offence to which none of the restrictions apply. 32.Here, however, Parliament has created statutory offences of fraud and conspiracy to defraud to which maximum penalties apply but it has also expressly retained the common law offence of cheating the revenue. The offence was singled out from the general abolition of common law dishonesty offences by section 32(1)(a) of the Theft Act 1968. Further, despite subsequent reviews of the offences of fraud, Parliament has left not only the offence in existence but the penalty at large. This is entirely consistent with the general approach over decades to major frauds on the revenue. They have always been treated as offences of particular seriousness. 33.Thus, we are entirely confident that as far as Parliament is concerned, the offence of conspiracy to cheat the public revenue retains its established and clearly understood role in the prosecution of revenue cases. It is used to supplement the statutory framework and is recognised as the appropriate charge for the small number of the most serious revenue frauds, where the statutory offences will not adequately reflect the criminality involved and where a sentence at large is more appropriate than one subject to statutory restrictions. These are not ‘ordinary’ cases. 34.Lord Bingham’s assertion of what would “ordinarily” be appropriate is premised on the assumption “that Parliament imposed the restrictions which it did having considered and weighed up what the protection of the public reasonably demanded”. It is reasonably to be assumed that Parliament has deliberately left the common law offence of cheating the revenue untouched by statutory changes in this area because it recognised that it was appropriate to do so for the protection of the public, for all the reasons set out in the authorities. That was clearly Parliament’s intent at the time of the Theft Act and there is no reason to believe that their intent has changed. In any event, Lord Bingham recognised that his general approach may not apply where there was good reason for charging the common law offence. In this case, we agree with Mr Waddington, there is “good reason”. Ground 2 Dosanjh: manifestly excessive 35.In the event that her primary argument fails, Miss Montgomery submits that, even if the courts are, in principle, entitled to pass sentences in common law cases which are greater than the statutory maxima for comparable offences, a sentence of fifteen years is manifestly excessive on the facts of his case. 36.Pardeep Dosanjh played a more important role in the conspiracy. A sentence of 15 years for the Appellant would imply a sentence of 17 years or more for him. A sentence of that length should be reserved for cases where an even larger sum of money is involved. Further, she argued it cannot be right that the Appellant received a sentence that was 50% longer than could be passed for any statutory fraud, however grave. 37.The sentence also looks excessive when compared with previous decisions of this court and with the draft guideline from the Sentencing Council. For a category 2 offence (which this would be) and for an organiser (which the appellant was) the range of 8-13 years is proposed with a starting point of 10 years. The starting point is based on the fraud being worth over £30 million pounds. A sentencing range of 10 to 17 years is reserved for frauds of over £50 million. Miss Montgomery did not suggest the draft Guideline is binding but drew to our attention the fact that it is based on a thorough review of current sentencing practice. On that basis, it does provide a useful guide.38.The submissions of both Gill and Chahal repeat and depend to some extent on the success of Miss Montgomery’s submissions. If the benchmark of 15 years for Dosanjh is reduced for any reason they would hope to take advantage of a similar reduction. Ground 3 Gill: disparity 39.Additionally Mr Richard Christie QC for Gill sought to persuade us that the judge wrongly attributed to Gill a greater degree of involvement and culpability than he did to Chahal. He took us to the judge’s sentencing remarks in which the judge observed that there was “very clear and cogent evidence that both Mr Gill and Mr Chahal had an involvement which went over and beyond the managing of the buffer companies that they fronted.” 40.However, there was no evidence to suggest Gill had any involvement in the operation of the missing trader by way of issuing invoices, transferring EUAs on the register or controlling monies through their bank accounts. 41.Without wishing to make the situation for Chahal worse, Mr Christie suggested the evidence against him was more extensive than against Gill, for example Pritpal Singh was put under very considerable pressure by Chahal and the Dosanjh family to become involved. Gill, on the other hand, may have facilitated the introduction of others like his wife and Himat Singh to the running of the companies but he used no pressure. They were each willing participants. On that basis the judge was wrong to reflect the involvement of others as an aggravating feature. 42.Mr Christie addressed the glaring difference between the two cases of Gill and Chahal (the benefit they received) in this way: much of the difference in monies each man received is explicable by the fact that Infiniti traded from 20 January to 8 April 2009 and Allianz only traded from 2 April to 6 May 2009. The longer trading period meant that Infiniti had time to trade a higher volume of EUAs, which necessarily meant a greater income. Whilst Infiniti traded 19,478,000 EUAs, Allianz only traded 5,283,000 EUAs. Chahal intended to obtain far more but was stopped from doing so. 43.Furthermore, the Crown’s case (accepted by the judge for sentencing purposes) was that chain two was ended by the involvement of Her Majesty’s Revenue and Customs and the de-registration of AGH. Hence, but for the involvement of HMRC, chain two would have continued for far longer and Allianz’s receipts from the fraud would have matched (if not exceeded) those of Infiniti. 44.In any event, the judge recognised that “when one is sentencing for fraud, it is always impossible to know exactly how much people have ‘made’ out of a fraud”. The mere fact that Allianz received a lesser sum than Infiniti received, does not mean that Mr Chahal received (or was going to receive) less than Mr Gill. Ground 4 Gill: manifestly excessive 45.Mr Christie questioned whether the judge placed undue reliance on Attorney Generals Reference (88, 89, 90 & 91 of 2006) (Meehan & Others) [2006] EWCA Crim 3254. In Meehan the prosecution appealed against 4 sentences on the basis that they were unduly lenient. All of the defendants had been “buffer” traders in MTIC frauds with losses to HMRC of between £24 and 28 million. Giving the judgment of the Court at paragraph 18, Latham L.J. stated that:“Very substantial sums of money have been obtained in cases such as these, and were obtained in these cases. Those who organise such fraudulent activity can and should now expect, in our view, sentences well into double figures after trial.” 46.In relation to those who fell to be sentenced on the basis that they ran “buffer” companies, he continued: “In our judgment the right bracket for this type of offending, with the amount of money involved in these cases, after a plea of not guilty, would have been six to eight years. That would seem to us to reflect more adequately the seriousness of the activity and the need to deter people from being involved in such activity which is temptingly easy to become involved in.” 47.Mr Christie hoped to persuade us that Gill fell far more into the “buffer” than the main organiser category. Unlike the appellants in Randhawa who were main organisers and committed other offences, Gill was lower down the chain and a man of previously positively good character. Not only had he never been convicted or cautioned (or even arrested) for any criminal offence, he was able to call eight character witnesses to testify to his reputation for hard work, integrity, trustworthiness, generosity and willingness to put himself out to help others. Ground 5 Chahal: manifestly excessive 48.Mr Hammond for Chahal acknowledged that conspirators of this kind may often boast a previous good character and to little avail. Having adopted the general arguments of others, his individual argument was straightforward: given the appellant’s role in and benefit from the fraud, 9 years was manifestly excessive, even having regard to the high deterrent sentences upheld by the Court of Appeal for this type of MTIC fraud. Conclusions on grounds 2- 5 49.In assessing whether or not the sentences were manifestly excessive, the draft Guideline makes a useful starting point. It is not binding but it does accurately reflect current sentencing practice as represented by the tables of decisions helpfully put before us by counsel. 50.The only decision, which might, at first blush, appear out of step with the Guideline and the tables, is Randhawa. However, on a careful reading of the judgment, it became apparent to us that the Randhawa decision is easily explicable and no exception to a general rule. The long sentences imposed on Randhawa’s co-accused Bhabdeep Chahal and Charanjit Chahal were justified by their overall criminality. This included the significantly aggravating feature of their having committed offences of money laundering and deception, for which they were on bail at the time of the conspiracy to cheat. This is not a feature in this case.51.Nevertheless, the appellants face a steep hurdle in persuading us to reduce their sentences to the levels they suggest. There is nothing in the draft Guideline, or in the cases put before us, that causes us to doubt the observation in Meehan that sentences into double figures may well be merited where an organiser is convicted of this type and level of fraud. Cheating the revenue in this way is a major drain on the public purse with the taxpayer ultimately picking up the bill. These are not, therefore, victimless crimes. In the draft guidance from the Sentencing Council this statement appears: “Fraud is estimated to cost the UK economy £73 billion each year. It is a hugely diverse area of crime and one that is constantly evolving. At the most serious level of offending, the offences are often sophisticated and involve huge sums of money being defrauded over long periods.” 52.This fraud fits squarely within those observations. It was at a serious level of offending. The plan was extremely sophisticated and resulted in huge gains to the conspirators. On average over £500,000 a day was obtained and sent off to the other side of the world with what the judge described as breathtaking speed. It was an integral part of the conspiracy that the offending took place across borders. This must have required an enormous amount of planning. 53.The chains and the money laundering arrangements were all set up in advance so that new companies and new banking arrangements could be used as and when required without causing any disruption to the fraud. In his sentencing remarks, the judge mentioned the prospect of a third chain being established (about which there is an ongoing prosecution). The fraud continued in different forms until the law was changed on 31 July 2009. Further, there was a concerted effort to create documents and mislead the authorities as to what had been going on and there was evidence of pressure applied to recruit at least one member of the group, Pritpal Singh. 54.In those circumstances, there can be no doubt that if one takes the draft Definitive Guideline as a helpful starting point, the case is fairly near the top of category 2 for harm. A lengthy prison sentence was inevitable. 55.As for roles, Dosanjh played a leading role in a large organised group of offenders. He was “at or near the top of the hierarchy”. Both Gill and Chahal played an organisational role under the orders of Dosanjh and others. The extent of their participation went far beyond mere “buffers”. In the context of the draft Guideline, their participation was more than “significant”. They too played a leading role, albeit at a lower level than Dosanjh. 56.Arguably, the judge was generous towards Chahal in reducing the sentence imposed upon him. It does not follow, however, that he was harsh on Gill. We reject the disparity point. It is apparent from the trial judge’s thorough and careful sentencing remarks that he agonised over whether or not to make any distinction between the two men. Having done so he reached conclusions that, in our view, are unassailable. As the trial judge, he was far better placed to assess roles and culpability than we are. He was fully entitled, for example, to give considerable weight to the level of benefit obtained by each man. There was a significant difference between Gill and Chahal in this respect. 57.However, we are more sympathetic to the argument, common to all three appellants, that HHJ Testar chose too high a starting point for Dosanjh. This may be because he placed too great a reliance on the result in Randhawa. As we have already observed, there were differences in the level of criminality between the main organisers in Randhawa and the main organisers here. On our analysis of previous decisions, this court appears to have set the bar for offending of this kind by someone in Dosanjh’s position, without the aggravating features of Randhawa, at or about 13 years. That analysis finds support in the draft Guideline. If so, conscious as we are of the trial judge’s considerable experience in these matters, we see some force in the argument that the sentence of 15 years imposed upon Dosanjh was somewhat too high. It follows that we feel we have no choice but to reflect the trial judge’s approach and make some adjustments to the sentences of the other two as well. 58.In the result, we reduce the sentence imposed upon Dosanjh to one of 13 years, the sentence imposed upon Gill to one of 10 years and the sentence imposed upon Chahal to 8 years. To that extent the appeals succeed. 59.We conclude with our thanks to all counsel especially Miss Montgomery and Mr Waddington, upon whom the burden mostly fell, for eloquent and extremely helpful submissions.