Accountancy Daily brings you a selection of cases involving members of the accounting profession – and a few others – who did not escape the long arm of the law during 2018
Ferrari-owning businessman jailed for £9.8m VAT fraud
A businessman who masterminded a £9.8m international VAT fraud to fund his lavish lifestyle has been jailed for nine years.
Jason Butler, formerly of Leeds, created hundreds of false invoices to claim millions of pounds in VAT and tried to hide the scam in a complicated trading chain involving companies in the UK, Gibraltar, Spain and the US.
Butler, who now lives in Spain, told HMRC he bought almost £60m worth of personal data, but checks revealed this was a lie. In reality he was forging purchase invoices to falsely reclaim VAT and trading very cheap raw data through a complex international supply chain in a bid to hide his crimes.
He controlled a company called Multi Level Media (MLM), based at Britannia House in Leeds. Butler said he bought and sold Payment Protection Insurance (PPI) customer data from nine UK companies via an international agency which he also controlled.
However, checks with the companies revealed that no trade ever took place and Butler had created hundreds of phoney invoices.
Instead he was buying and selling raw data to a series of firms in the UK, who then sold it to a respectable data company in Gibraltar. The data was sold by them to a company in the US, which was also controlled by Butler.
On paper it appeared Butler had paid substantial amounts of VAT. But the purchases were fake and backed up by forged invoices, which he used to falsely reclaim £9,875,806 in VAT.
Butler was arrested by police at Manchester International Airport when he arrived in the UK from Malaga in January 2015. In March 2018 he was found guilty at Leeds Crown Court and was sentenced to nine years in prison.
Ex-BDO Jersey director in £2.6m fraud
A former managing director with BDO in Jersey has been jailed for defrauding clients of £2.6m, with the court told he used the money to fund an ‘extravagant lifestyle’.
Richard Arthur pleaded guilty at Jersey’s Royal court to 10 counts of fraud and fraudulent activity which took place between 2002 and 2009.
The court heard Arthur convinced several older clients of the firm to transfer money by falsely representing how it would be used and, in some cases, moving it into bank accounts which he controlled.
In total, Arthur admitted obtaining and using £2,637,401, of which only £709,000 was repaid.
Arthur, who is ICAEW-qualified but whose membership had lapsed, was sentenced to seven years in prison and disqualified from holding a management position for 12 years.
In a statement, BDO in Jersey said: ‘Arthur was, until early 2009, a director of a predecessor BDO firm operating in Jersey. He has never been connected with the current firm of BDO in Jersey.
‘The predecessor firm was itself one of the victims of certain offences that Arthur was charged with and had an active and positive engagement with the authorities in their investigation and prosecution of Arthur.’
Church leader jailed for £150k Gift Aid fraud
A church leader from Luton, who lied about charity donations to fraudulently claim £150,000 Gift Aid repayments, has been jailed for four years.
Teslim Johnson used his position as a preacher and trustee at Luton’s Agape Church to process Gift Aid repayment claims. HMRC investigations found that as Johnson was the only person named on the church’s bank accounts, he was able to divert money from these fraudulent claims into his personal bank account.
He received repayments of £103,154 and attempted a further £52,686, bringing the total value of the fraud to £155,840.
As a registered charity, Agape Church could claim gift aid on donations to the church. But in 2016, HMRC officers contacted donors listed on the charity’s records after they became suspicious of a series of claims that were submitted. They found that most of the donations had not been made and many of the donors had never heard of the church.
During a search of Johnson’s property investigators found documents relating to Agape Church. Gift Aid envelopes were found, but donor names and amounts did not match gift aid records submitted to HMRC.
Johnson was found guilty after a trial at Luton Crown Court and sentenced to four years imprisonment.
Boss jailed for fraudulently moving £51k in funds
The boss of a personal injury claims business has been jailed for 21 months and banned for seven years after fraudulently removing company funds in the months before the courts would make a winding-up order resulting in the closure of the business.
Bury-based Darren Bullough appeared at Bolton Crown Court on 14 November 2018 after he pleaded guilty to one count of fraudulently removing funds and another count of failing to provide company books and records to the liquidator.
Bullough was the sole director of Direct Assist Ltd but seven years later the company struggled financially after they lost a client who was their main source of business. This resulted in a petition being lodged at court to wind up Direct Assist in September 2014 in relation to a £658,000 unpaid tax bill.
However, following the petition to wind up the company, a substantial amount of money was removed from the company’s accounts.
The company bank account was frozen to stop any more funds being removed, as well as preventing creditors losing out further, and after Direct Assist formally entered into compulsory liquidation in March 2015, an investigation was launched by the Insolvency Service.
Investigators were able to discover that in the months before a winding-up order was made by the court Bullough fraudulently removed close to £51,000 between September and December 2014.
Director sentenced for £320k VAT fraud
A company director from Walsall who developed a system to replace cash payments in the scrap metal industry has been found guilty of a £320,000 VAT fraud and given a suspended prison sentence.
Muazam Sarfaraz, set up Bullioncard (UK) Ltd in March 2013 to manage the new debit card and customer identity system for the scrap metal trade. The following year he tried to register for VAT using his father’s name. HMRC rejected the registration as all the contact and accounts for the company were in Sarfaraz's name.
A subsequent investigation discovered Sarfaraz had been faking records and invoices and inflating the company income to support fraudulent VAT repayment claims.
Sarfaraz filed his first VAT claim for a £320,679 repayment in May 2015. Investigators discovered that there was no evidence of any substantial business activity.
At Wolverhampton Crown Court Sarfaraz pleaded guilty to being knowingly concerned in the fraudulent evasion of VAT. He admitted inflating the company income, overstating a loan from a local charity and falsifying bank statements, business records and invoices from a supplier.
Sarfaraz was given 20 months imprisonment, suspended for two years and was banned from being a director of any company registered in the UK for 15 years.
Trainee accountant sentenced for £30K VAT fraud
An HMRC investigation has found that a trainee accountant produced fake invoices between two businesses to fraudulently reclaim more than £30,000 in VAT.
HMRC discovered that Keiron Edmondson submitted 12 invoices for VAT for transfers from his company, Blocks Toy Store, to his wife’s businesses, submitting the forms through the company he was working for while he was working towards accountancy qualifications. He then reclaimed £30,952 in VAT.
In an attempt to disguise the fraud, he then moved money between his and his wife’s bank accounts on multiple occasions.
Edmondson admitted VAT fraud and money laundering at Preston Crown Court and was sentenced on 11 October 2018 to 12 months for VAT offences and eight months for money laundering, suspended for 18 months.
Motor scrap company director off the road for fraud
The director of a Manchester car spare parts company has been disqualified for 12 years after he spent money from company's bank account using funds that were dishonestly obtained via a fraud on customers.
Modussur Khan was the sole director of Manchester Autospares Ltd (MAL) throughout the life of the company. The company was incorporated in December 2011 and sold scrap parts for the motor industry from premises in Failsworth, Manchester.
MAL ceased trading in May 2016 and went into liquidation owing creditors £61,374. A subsequent Insolvency Service investigation found that MAL operated a merchant services account whereby it received card payments from customers.
However, the company took unauthorised payments from customers’ cards between 5 April and 25 April 2016 totalling at least £72,887. These payments were not related to genuine purchases and led to increased receipts into the company’s bank account.
In addition, between 8 April and 22 April 2016, the company made payments totalling at least £71,816 from its bank account using the fraudulently obtained funds, which Khan used to make personal purchases, a bureau de change withdrawal and other cash withdrawals.