A private affair: Dethroning King Con without the state

On 13 January 2016, an Old Bailey judge made one of the largest confiscation and compensation orders this decade against a defendant he described as a ‘serial and formidable fraudster on a truly Olympian scale’, otherwise dubbed ‘King Con’. 

This landmark case was particularly unusual due to the fact it was brought by a private prosecutor, Murli Mirchandani, and resulted in the defendant, Ketan Somaia, being convicted of nine counts of obtaining a money transfer by deception to the value of £13.5m. 

Confiscation proceedings were commenced at the conclusion of the criminal trial under section 71 of the Criminal Justice Act 1988 and resulted in the defendant being ordered to pay a confiscation order in the sum of £20,434,691 and a compensation order in the sum of £18,420,956, payable within six months, and being handed down a combined sentence in default for both orders, set at 16 years. As the proceeds of the confiscation order will be paid to the state, the benefits of private prosecutions can be shown to stretch to the victims of fraud and the state alike.

Coincidently, this judgment was delivered the day after it was announced that the Serious Fraud Office (SFO), through Solicitor General Robert Buckland, had asked the government for a £21m cash injection to fund a number of large-scale corruption investigations. In Somaia’s case, at the conclusion of the criminal trial, requests were made to the SFO and the Crown Prosecution Service for state prosecuting authorities to commence confiscation proceedings; however, the response received was that they did not have the capacity to deal with the matter. 

Confiscation proceedings were conducted and investigated by the private prosecutor through the instruction of a specialist private prosecution firm, private investigators, a forensic accountant, and a number of experts. While the private prosecutor did not have the powers and resources the police have in the form of production orders and search warrants, there are a number of investigative avenues and powers available that were utilised by the private prosecutor to uncover a truly compelling case against the defendant. 

Olympian-scale fraud

?During the trial and confiscation proceedings, Somaia maintained he did not have a penny to his name, yet the evidence presented a completely different story. 

Despite telling the jury in May 2014 and maintaining throughout the confiscation proceedings that all the money had gone, evidence obtained by the private prosecutor showed Somaia owned two properties, held in the names of third parties and worth over £1m, had spent £100k on his daughter’s wedding, made tens of thousands of pounds in loans to family friends, and was spending huge sums on extravagant restaurants and hotels, as well as making substantial transfers to his family and friends. 

As a result of information obtained during the financial investigation, it further came to light that in the two weeks leading up to his trial in March 2014, when Somaia had informed the court that he could no longer afford his legal fees and as a result had to instruct a legal aid firm, he was spending thousands of pounds on a luxury lifestyle. His modus operandi was to never hold any assets in his own name, but instead hold them in the names of third parties or in offshore accounts, using those third parties as a tool for his own manipulations. 

A further revelation that came to light during the proceedings – to the detriment of HMRC – was that the defendant had never paid a penny in tax in this country or any other jurisdiction in the  last ten years, despite receiving a (taxable) multi-million pound settlement and hundreds of thousands of pounds in earnings. 

The result of this ‘Olympian-scale’ fraud had a devastating effect not only on the victims, but also their families, businesses, and indeed their health. The defendant had avoided prosecution in a number of countries around ?the world and, had it not been for the UK criminal justice system and the historic right ?to privately prosecute, this fraud might have gone unpunished, to the detriment of both the victims, and, in this case, ?the state. 

‘Time of retrenchment’

Notably, in the case of R (Virgin Media) v Zinga [2014] EWCA Crim 52, the Lord Chief Justice commented: ‘There is an increase in private prosecutions at a time of retrenchment of state activity in many areas where the state had previously provided sufficient funds to enable state bodies to conduct such prosecutions.’

In a time of state retrenchment, the words of Lord Wilberforce in Gouriet v Union of Post Office Workers and Others [1978] AC 435 ring true more than ever: the right to bring a private prosecution is ‘… a valuable constitutional safeguard against inertia ?or partiality on the part of authority’.

Tamlyn Edmonds, pictured, is a director of and Ashley Fairbrother a trainee at Edmonds Marshall McMahon, which represented Mr Mirchandani @emmprosecutions www.emmlegal.com