R v Pomfrett (Peter)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Richards |
| Judgment Date | 08 October 2009 |
| Neutral Citation | [2009] EWCA Crim 1939 |
| Docket Number | Case No: 2008/0978/C3 |
| Court | Court of Appeal (Criminal Division) |
| Date | 08 October 2009 |
[2009] EWCA Crim 1939
IN THE COURT OF COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM THE CROWN COURT AT NORTHAMPTON
Before: Lord Justice Richards
Mr Justice Irwin
and
His Honour Judge Bevan QC
Case No: 2008/0978/C3
Nicholas Purnell QC and Joseph Templeton (instructed by Bankside Law) for the Appellant
Sir Derek Spencer, Mark Bryant-Heron and Rebecca Chalkley (instructed by Solicitor to HM Revenue & Customs) for the Respondent
Hearing dates: 28–30 July 2009
Lord Justice Richards:
Peter Pomfrett appeals against his conviction on 23 January 2008, after a 3 1/2 month trial at Northampton Crown Court before His Honour Judge Ian Alexander QC and a jury, on a count of conspiracy to cheat the public revenue. The alleged conspiracy concerned a chain or carousel fraud, referred to as a missing trader intra-Community fraud (or “MTIC” fraud), whereby Her Majesty's Revenue and Customs (“HMRC”) was cheated out of some £25 million of VAT. It was one of a number of frauds and related money laundering offences investigated by HMRC in the period 2002 to 2006 under code-names such as “Operation Vitric” and “Operation Devout”. The prosecution in this case arose out of Operation Devout II. At the forefront of the appeal is an issue of non-disclosure. The prosecution admit that they failed to disclose a large body of material concerning Operation Vitric which ought to have been disclosed for the purposes of the appellant's trial. The question is whether that material, now available to this court, casts doubt on the safety of the appellant's conviction. That issue has to be considered together with a number of grounds of appeal relating to the fairness of the judge's summing up and of the trial process. Leave to appeal in respect of the grounds other than non-disclosure was granted by the single judge. The issue of non-disclosure emerged in its present form at a later stage and is the subject of supplemental grounds for which leave was granted by the full court.
In the event that the appeal against conviction fails, there is a renewed application for leave to appeal against sentence.
The alleged conspiracy and the trial: overview
A chain or carousel fraud of the kind that occurred in this case involves a series of transactions (or nominal transactions) starting with the import of goods into the United Kingdom from a supplier within the European Union, followed by onward supplies through a number of “buffer” traders within the United Kingdom and ending with the re-export of the goods from the United Kingdom. The import and export transactions are zero-rated for VAT, whereas the onward supplies within the United Kingdom are subject to VAT. The importer, however, is a missing or “hijacked” trader who does not account to HMRC for the VAT payable on the supply to the next trader in the chain. The exporter pays VAT on the goods supplied to it by the previous trader in the chain; but since the export is zero-rated, the exporter is able to claim back from HMRC the VAT it has paid. The overall effect is that HMRC incurs a loss, whereas the fiscal position would have been neutral if the trading had been genuine and the VAT had been accounted for properly.
In this case the goods were computer processing units (“CPUs”). The nominal importer was a firm by the name of PJ Spencer, a company which had its identity hijacked for the purposes of the fraud.
The first line buffer was Aurum Jewellery Wholesale Limited (“Aurum”). A man by the name of Pravin Jogia was a director of Aurum. Between 25 June and 19 July 2002 Aurum purportedly made 56 purchases of CPUs from PJ Spencer, at a total price of £169.2 million and a VAT charge of over £25.2 million. The invoices were a sham and the VAT was not accounted for to HMRC.
The second line buffers were Lightcare Limited (“Lightcare”) and Vendon (UK) Limited (“Vendon”). Jonah Adali-Mortty was a director of Lightcare, and Arash Masoumzadeh was a director of Vendon. Aurum's records showed 51 sales to Lightcare and 3 sales to Vendon, at a total price of £169.5 million.
The third line buffers were Globalactive Technologies Limited (“Globalactive”) and Beronvine Limited (“Beronvine”). The appellant was a director and company secretary of Globalactive; Mustafa Mehmet was another director of the company; and Timur Mehmet, the nephew of Mustafa, was an employee of the company. Globalactive is considered in greater detail below. Babak Cherazi was a director of Beronvine; Khalid Hamidi took over the role of company secretary of Beronvine on about 11 July 2002. According to the invoices found, Lightcare made 46 sales to Globalactive at a total price of £135.6 million (with a VAT charge of £20.2 million) and 4 sales to Beronvine at a total price of £13 million (with a VAT charge of £1.9 million); and Vendon made 3 sales to Globalactive at a total price of £14 million (with a VAT charge of £2 million).
Of the individuals identified above, Jogia pleaded guilty at an early stage to the conspiracy alleged. Mustafa Mehmet changed his plea to guilty at the beginning of the trial. Masoumzadeh was outside the jurisdiction, in Dubai, and was not tried. Adali-Mortty, the appellant, Timur Mehmet, Hamidi and Cherazi faced trial on an indictment alleging, in the particulars of the offence charged, that “between the 1 st April 2002 and the 23 rd July 2002 … [they] conspired together and with Pravin Jogia, Mustafa Mehmet, Arash Masoumzadeh and other persons to cheat Her Majesty the Queen and The Commissioners of public revenue, namely monies being or purporting to be Value Added Tax payable …”. Timur Mehmet did not answer to his bail at the commencement of the trial and was tried in his absence but was represented throughout by counsel. The remaining four defendants were present and represented at the trial. All those who were tried were found guilty by the jury.
On 28 January 2008 the appellant was sentenced to 10 years' imprisonment (with 4 days in custody on remand to count towards sentence) and was disqualified under section 2 of the Company Directors Disqualification Act 1986 for 14 years. Adali-Mortty was sentenced to 6 years' imprisonment and disqualified for 10 years. Mustafa Mehmet was sentenced to 4 years' imprisonment and disqualified for 10 years. Timur Mehmet was sentenced in his absence to 8 years' imprisonment and disqualified for 12 years. Hamidi and Cherazi were each sentenced to 4 years' imprisonment and disqualified for 8 years. Sentencing of Jogia was adjourned because he had recently had a serious medical operation, and we do not have details of the sentence later imposed on him.
The case against and for the appellant at trial
Although the indictment referred to the period from 1 April to 23 July 2002, the prosecution put its case at trial on the basis of a conspiracy to carry out a dishonest scheme during 20 days of trading between 25 June and 22 July 2002. The entire trade was said to have been rigged.
The position of each of the defendants at trial, and what the prosecution said about them, was explained as follows in the prosecution's opening note:
“3. The defendants do not dispute there was a conspiracy to cheat. The defendants Adali-Mortty, Timur Mehmet and Babak Cherazi admit they did acts which furthered the conspiracy because they carried out the deals. But they say they did not know of any VAT fraud and acted honestly. They say they are the victims of other people's dishonesty. They were used or hoodwinked by others who were dishonest, such as Jogia and Mustafa Mehmet. In the case of any defendant where that may be so you will acquit. The prosecution say these are lying defences, each of these defendants was dishonest because he too had agreed to help what he knew was a VAT fraud. The central issue in the case, therefore, is whether any of these defendants had a dishonest state of mind. You will decide that by looking at all the evidence including what they did or did not do or said.
4. In the case of Peter Pomfrett he denies any knowledge of the fraud and participation in the deals. If that might be so you will acquit. The prosecution contend that this is also a lying defence because he agreed to and did assist what he knew to be fraud by financing it, supervising it and receiving a substantial dishonest profit. In the case of Hamidi he denies being involved in any way whatsoever. If that might be so you will acquit. The prosecution say this is a lying defence ….
49. … The prosecution contend that the only sensible inference from all the evidence is that each defendant who was involved in the day to day operation of Aurum, Lightcare, Globalactive and Beronvine must have been aware that they were participating in an MTIC carousel fraud because such a fraud requires that movements and pricing of goods, and transfers of money are carefully synchronised and that each party has a pre-ordained and agreed role to achieve the dishonest objective. The goods have to be sold to the right people at the right price at the right time ….”
Thus the appellant's essential defence was a denial of knowing participation in the fraud. He said that he was the innocent victim of the dishonesty of others, who had used Globalactive without his knowledge for the purposes of their fraud; and in particular, he had been duped by Mustafa and Timur Mehmet.
On the evidence at trial the genesis of the fraud charged in the indictment was obscure, though the suggestion before the jury was that it originated in, or had its epicentre in, Dubai. Certain...
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