R v Fryer, Nichol and Lawrie

Introduction.

Between November 1993 and June 1994 Ellis Anthony Martin operated a diversion fraud which resulted in the large-scale evasion of duty on beer sold in this country. Martin was arrested as were a number of persons said to be his accomplices, namely James White, Julie White, Sukvinder Singh, and Julie Court. All five were charged with conspiracy to cheat Customs and Excise and stood their trial at Southwark Crown Court in January 1996. Only Martin and White were convicted. Martin was sentenced to a term of imprisonment of 6 years 10 months which was later reduced on appeal to ⁵/₁₂; years.

Once in prison Martin had the consummate cheek to resurrect the fraud on an even larger scale including what have been called the inward and outward diversions of dutiable goods this time including beer, wine, spirits and cigarettes with the result that over the period 1 ^st October 1994 to 31 ^st January 1997 approximately £18,000,000 was lost to the revenue. He was enabled to do this by reason of help received from his solicitor, Louis Glatt, who himself accepted and carried Martin's instructions to accomplices on the outside and arranged for others posing as clerks in his practice to do the same. These included Jason Wainwright, Jon Hutchinson, Maurice Aarons, Walter Alfrey, Graham John Morgan Went and Brian Walton. It also seems that Martin had almost unrestricted access to the telephone as a result of Wainwright bribing a prison officer to supply him with prison phone cards.

The Fraud.

i) Inward diversion. Beers wines and spirits were obtained in the United Kingdom and then exported to the continent either to Calais or to Belgium. The documents showed sales to various companies based on the continent which included CDK Catering, L'Entrepot and Antwerp Ship Supplies. As the goods were being exported they did not attract duty in this country. Once the goods had been landed they were swiftly returned to the United Kingdom accompanied by documents which were designed to show that the goods had been purchased by some customer or other and sent to a bonded warehouse in London. In fact the customers were all bogus. The goods were then diverted to what was termed a "cooling off warehouse" before being sold on the United Kingdom market. The fraud was termed an "inward diversion" because the goods were diverted on the inward journey.

ii) Outward diversion. Wines, spirits and cigarettes were obtained either in this country or from abroad and held in a bonded warehouse in the United Kingdom in a duty suspended state. Documents were then raised which purported to show the sale of the goods to an Irish company, G H Lett and Co. In truth the goods never left this country. They were taken from the bonded warehouse and delivered to an un-bonded warehouse from where they were diverted to a cash and carry outlet. The term "outward diversion" simply indicates that the diversion occurred during the purported outward journey.

As can be seen there was in fact very little difference between the two methods of carrying out the fraud.

The conspirators.

i) Ellis Anthony Martin was the organiser and mastermind of the conspiracy. With the help of Louis Glatt together with Gardner and Hutchinson, he was responsible for laundering the proceeds which involved buying properties in the United Kingdom and abroad, setting up off shore companies and bank accounts and investing overseas.

ii) Jason Wainwright had been working for Martin prior to Martin's arrest in 1994. After Martin had been sent to prison in April 1996 Wainwright acted as his go-between attending prison perhaps two or three times a week usually pretending to be a clerk in the firm of Louis Glatt and Co. By that means he was able to take messages from Martin to the other conspirators and vice versa. He was also a director of Fairbrook and Parker Trading which was one of the "front" companies employed in the fraud.

iii) Jon Hutchinson was Martin's bookkeeper from 1994 onwards. He was a director of L'Entrepot and played an active part in running the operation from the other side of the English channel. He helped in the laundering of money by buying properties in France and had dealings with French lawyers whenever necessary. He too visited Martin in prison posing as one of Louis Glatt's clerks.

iv) Walter Alfrey had been a witness for the defence at Martin's trial in 1996. In fact he had been trading with Martin since the early 1990s and it was he who obtained cigarettes ostensibly destined for Ireland but in fact diverted and sold by him and others on the United Kingdom market.

v) Alastair Macleod also gave evidence for Martin in 1996. He opened up offices in Dublin and helped produce the false documents purporting to show that the diverted goods had been sent to bond.

vi) Graham Went set up GW Export Sales, a company which supplied Martin with dutiable goods throughout the period of the fraud. He was also involved in the setting up and ownership of a warehouse in Calais. He was one of the main suppliers of goods sent out to CDK in Belgium and one of the main suppliers of loads shown as going out to GH Lett in Ireland. He was one of those to attend the first meeting with Martin in prison when discussion took place as to how the fraud was to continue with Martin behind bars.

vii) Peter John Brown supplied beer to the Martin organisation through companies controlled by him, namely Tower Health Products, and later Westminster Trading. As he had been a witness at Martin's trial in 1996 he was well aware of what had been going on and that Martin was in prison. The total value of goods supplied during the period was £10.5 M.

viii) Brian Walton played a vital role as it was his company, Goldseal Logistics, which was used to transport the loads from the bonded warehouse shown on the documents to an un-bonded warehouse. Or, if not being observed, to take the dutiable goods straight to un-bonded premises.

ix) Sukvinder Singh was Martin's principal salesman. He arranged for the dutiable goods to be sold to cash and carries after they had been diverted. He was responsible for the sham documents purporting to show sales to what have been called "front" companies or "buffers".

x) Maurice Aarons acted as Martin's eyes and ears in the outside world keeping him abreast of what was going on in relation to the activities of co-conspirators and Customs and Excise. He made use of a warehouse run by his brother to receive diverted loads of dutiable goods and was responsible for giving instructions to Walton's drivers as to where loads should be taken.

xi) Terrance Amschwand was responsible for receiving goods at a warehouse known as AR & T. That role came to end in September 1996 when AR & T was raided by Customs but Amschwand continued to play a part in the creation of false documents showing the purchase of diverted goods from front companies and sales on to cash and carries.

xii) John Gardner was mainly involved in laundering the proceeds of the fraud by purchasing properties for Martin and managing them once they had been acquired. This he did very largely through off shore companies. He also acted as Martin's agent in receiving cash and distributing it as required to others involved in the conspiracy. Some of the cash was paid into off shore bank accounts and some into Louis Glatt's client account.

That is no more than an overview of the fraud but probably is sufficient for present purposes. A more detailed account may be found in the judgment of this court handed down on 27 ^th July 2001.

Previous proceedings.

In due course all those mentioned were indicted on a charge of conspiring together and with others between 1 ^st October 1994 and 31 ^st January 1997 to cheat Her Majesty The Queen and The Public Revenue by the evasion of duty payable in respect of dutiable goods, namely beers, wines, spirits and cigarettes. There was another named conspirator, one Richard Hercules. The indictment contained two further counts. Count 2 charged Martin alone with a substantive count of cheating the revenue and count 3 charged Martin, Glatt, Gardner and Hutchinson with conspiring together and others to contravene the provisions of section 93A of the Criminal Justice Act 1988 or in other words to the launder the proceeds of the conspiracy. In due course, and the dates are not unimportant, Martin, Aarons, Alfrey, Macleod, Hutchinson, and Wainwright pleaded guilty to the charge of conspiracy. Martin and Hutchinson also pleaded guilty to the charge of money laundering. Gardner's plea of not guilty to the charge of conspiracy was accepted, he having pleaded guilty to count 3. In his case the conspiracy charge was ordered to lie on the file on the usual terms.

The trial of the others took place in the summer of 1999 at...