Brazil: Fake environmental project
A solicitor who “sold himself to greed” was last week sentenced to 10 years in prison for his part in a crime gang which committed a £108m tax fraud.
Rodney Whiston-Dew, 66, of south-east London, was found guilty of conspiracy to cheat the public revenue and cheating the public revenue.
Mr Justice Edis said he was used as general counsel to the scheme, “in particular to deal with the parts which were too dishonest to be shown to any honest solicitor”.
In all, six men were handed sentences totalling 45 years for devising a fake eco-investment scheme as a tax break for wealthy investors. One of them had already pleaded guilty.
The men – led by Cambridge-educated engineer Michael Richards, 55, from East Sussex, who was jailed for 11 years – lured wealthy individuals to invest in largely fake environmental projects with the promise of a tax break.
A decade-long investigation revealed that the scheme was nothing more than a fraud based on a complex series of contrived bank and paper transactions.
Investors believed they would receive significant tax benefits through the “green” investment scheme, which involved the reforestation of large areas of land in Brazil and China.
A total of 730 investors signed up to the scheme, induced by the offer of an immediate large return – a £20,000 investment would result in a successful claim for £32,000 in tax relief.
According to the Crown Prosecution Service, a number of companies were set up by the defendants around the world and all were marketed on the basis they were independent of each other and acting in their own interests.
They were actually all under control of the defendants, who were cycling cash between them to create an illusion of lending.
Much of the structure was deliberately incorporated in offshore jurisdictions, such as the British Virgin Islands and the Island of Nevis, often through the agency of infamous Panama law firm Mossack Fonseca, with the intention of ensuring its secrecy.
The scheme attempted to deceive HM Revenue & Customs (HMRC) into believing that the overall project was much larger than it was, and into granting tax relief when it was not due.
The schemes generated apparent ‘losses’ of £270m, which the defendants said had been spent on research and development, Southwark Crown Court heard during a nine-month trial.
This put HMRC at risk of losing approximately £107m in tax while the defendants siphoned off large sums of money through offshore trusts to then spend on expensive properties in the UK, Dubai and Australia.
The defendants lied about the nature of their companies – first to HMRC and professional financial advisers, and then to a judge of the First-tier Tax Tribunal.
Whiston-Dew – a former president of the Rotary Club of London – set up the complex offshore structures to disguise the true nature of the fraud and hide the money, none of which was declared to HMRC.
Mr Justice Edis, said Whiston-Dew had lived an “exemplary” life until the scam drew him in, but when it did so he entirely lost his “moral compass” and “sold [himself] to greed”.
He said Whiston-Dew “had a very important role in the fraud, but was not its controller”.
Simon York, HMRC’s director of fraud investigation service, said: “This was an audacious and cynical fraud on an astonishing scale, characterised by greed and a complete disregard for the ecological causes the perpetrators claimed to be supporting. Instead the group spent investors’ money on their own lavish lifestyles.
“These individuals thought they had worked out the perfect fraud. At every step they used contrived offshore structures, complex transactions and blatant lies in an attempt to hide their tracks and derail our criminal investigation… Work has now begun to recover the proceeds of this crime in order to fund vital public services.”
The trial began in February 2017 after the CPS successfully appealed a decision by a High Court judge to stop the case. In its ruling, the Court of Appeal gave important guidance on the proper approach to disclosure in cases involving large volumes of hard-copy and digital material and concluded that the prosecution had complied with its disclosure duties.
The digital material seized as part of the investigation comprised of approximately seven terabytes of data which equates to around five million electronic documents and files.
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