The sentencing ended one of the most complex investigations undertaken by HM Revenue < Customs (HMRC) and came at the end of seven trials and retrials.
Investigations began in April 2002 into the missing trader fraud, involving the dishonest manipulation of the VAT system through the import and export of computer processing units (CPUs). The gang used highly complex chains of VAT registered companies both here and abroad. One of the missing traders used was Shivani (Limited) – an anagram of I Vanish.
Criminal investigators from HMRC exposed the fraud which has resulted in seven interlinked trials and retrials, codenamed Operation Devout. Reporting restrictions have now been lifted following the conclusion today of the seventh and final trial.
Adrian Farley, Assistant Director of Criminal Investigation for HMRC, said:
This was not some kind of victimless crime, but organised fraud on a massive scale by criminals masquerading as legitimate businessesall bent on making fast and easy profits at the expense of the British taxpayer. Multiple businesses and bank accounts were deliberately set up to carry out the fraud and hide the proceeds of these crimes. However, each defendant knew the purpose of the payments they received were for money laundering and not legitimate trade.
The conspiracy involved the import of CPUs mainly from Ireland, VAT free. The goods would then be sold more cheaply, but with VAT added, through a chain of companies each involved in the plot and sham invoices would be issued. Once the goods had been sold on a number of times they would be exported back to the EU. The exporter would then claim a VAT credit from HMRC for the VAT paid on the purchase of the goods.
The gang would divide the dishonest profits of the fraud and launder them through various bank accounts both in the UK and abroad. The account holders would then withdraw the bulk of the cash and were paid a commission for their dishonest service. Some of the money is believed to have been invested in a third a tonne of gold bullion, substantial property in Dubai and a luxury flat near Harrods.
Twelve bank accounts were set up under the names of Woodland Supplies, Acorn Trading, Aurum Wholesale, Modular Design, Probus Computing, Aslan Creations, Rapid Distribution, GK Telecommunications PLC, GK Telecom (UK) Limited, Gardham Limited, Glaston Limited and NCT Training Limited. A second line money laundering account was also set up in the name of Betta Solutions Limited.
Confiscation proceedings to reclaim the proceeds of the crime are now being pursued.
Notes for editors
1. Strict reporting restrictions have been in place throughout all seven trials. These were removed today 25 May 2010, with the sentencing of the final defendant Harbans Singh Kohli to two years and six months in prison. See Devout 1 Trial two.
2. Photographs of the majority of defendants are available and diagrams charting their role in the fraud.
3. To view the documents associated with this release, please use the link below: