Defending Hidden Assets in Confiscation Proceedings

There is no formal definition of hidden assets in the Proceeds of Crime Act. The language behind it is in section 7, which states:

The recoverable amount for the purposes of section 6 is an amount equal to the defendant’s benefit from the conduct concerned.

But if the defendant shows that the available amount is less than the benefit the recoverable amount is:

(a)    The available amount, or

(b)    A nominal amount, if the available amount is nil.

This is a catch all definition, because unless the defendant proves he does not have available assets, the Court is entitled to make an order for the value of the benefit. If there is any suggestion that the defendant has hidden any of his ill-gotten gains, the prosecution is likely to increase the value of the available amount to the value of the benefit.

This leaves the defendant in the unenviable position of having to try and prove a negative.

The case of R v Barnham [2005], underscores the importance of the burden of proof in confiscation proceedings. The court examined how the criminal lifestyle assumption could lead to the presumption that assets are derived from criminal conduct. The Court of Appeal stated that “to hold that the Prosecution must, in some way, show a prima facie case that the defendant has hidden assets in our judgement would defeat the object of the legislation. It is designed to enable the court to confiscate a criminal’s ill-gotten gains. The expression “hidden assets” is indicative of the fact that the prosecution can have no means of knowing how and where a defendant may have dealt with or disposed of the proceeds of his criminal activities.”

It further states “Once the Prosecution has established the benefit there is no requirement on it to provide a prima facie case. At that stage the burden of proof shifts to a defendant to establish, if he can, his realisable assets to the satisfaction of the Court.”

The case highlights the importance of the defendant proving that assets do not exist, but it makes it very difficult for the defence.

As a consequence of this ruling (and others), there have been numerous cases where the Prosecution makes the assumption that the full benefit is hidden. I call this the “lazy Section 16”.

This highlights the importance of the defence team’s focus on the benefit, not just the available amount.

In most cases, the benefit is not representative of the defendant’s actual benefit, so it is important to assess what the true benefit might have been.

In the Barnham case, the Court stated:

“He [the appellant] produced no evidence, documentary or otherwise, of any sort that he no longer retained any proceeds of his criminal activities or what had happened to them. His evidence amounted to a bare denial that he had any realisable assets other than his house.”

This further highlights the importance of evidence. So what can be done in these situations?

Step 1 – Examine the benefit from particular criminal conduct:

There are a number of questions which should be considered:

a)      Is the value of the particular benefit correct? For a drugs case this would involve instructing a drug valuation expert to review the evidence provided and assess whether the valuation assessed by the prosecution is fair.

b)      What is the likelihood that the defendant physically received all of the benefit? – Often the particular benefit is turnover and excludes the costs which would have been incurred to generate that turnover.

c)      Does the particular benefit actually represent money in the defendant’s hands?

Step 2 – Examine the assumptions:

Unexplained credits into the defendant’s bank account cannot be a hidden assets. They have been identified by the prosecution and are in plain sight.

Property held can rarely be a hidden asset. The prosecution has identified them in its assessment of the benefit.

Expenditure incurred after the relevant date cannot be a hidden asset, unless that expenditure has been used to purchase assets which have not been found.

Step 3 – Examine the defendant’s lifestyle:

Often the defendant’s only major income is the proceeds from his criminal conduct. It is common that this money has been used for living.

Did the defendant live an extravagant lifestyle and how was this funded?

Are there any living costs being paid out of the defendant’s bank accounts? If not, it is possible that these expenses have been paid for in cash, for example.

At Inquesta Forensic, we are experts in defending hidden assets allegations. For a no obligation quote, please contact Rob Miller at rob.miller@inquestaforensic.co.uk or call 0161 243 0595

Hidden Assets can be a major issue for Defendants and it can be difficult to prove that they do not exist