Confiscation orders and sentences in default

This week two defendants convicted of fraud offences by the Serious Fraud Office were sent back to prison to serve default sentences for failing to pay their confiscation orders. The two defendants were sentenced to six and three and a half years.

The two were found guilty in February 2008 and received sentences of imprisonment. In June 2010, one defendant was ordered to pay a confiscation order in excess of £2m. On 4 February 2016, both were returned to prison

Mark Thompson Head of the Proceeds of the Crime Division at the SFO said:

“The criminals have had ample opportunity to pay the order and broke several promises they gave to the court. The activation of their default sentences should serve as a warning to others of the consequences of failing to comply with confiscation orders.”

Whereas there is of course a need to enforce confiscation orders, any sentence in default means that the overriding purpose of the confiscation regime introduced by Proceeds of Crime Act 2002, to deprive criminals of their profits, has failed.

The SFO, common with all agencies charged with enforcing confiscation proceedings, has a mixed record. In the most recent SFO Annual Report, Confiscation orders totaling £26.5m were obtained, including £13.9m against one defendant. A total of £13.7m was recovered.

In the most recent figures available, dating from June 2015, the Crown Prosecution Service had a total of 1256 confiscation orders outstanding, with a total value of £485, 166, 763. The sum recovered that month was £6,043,328.

The Public Accounts Committee published a report in March 2014 concluding that many criminals who were subject to a confiscation order were choosing to spend extra time in prison rather than paying up.

The report was critical of both the available sanctions and the authorities tasked with putting them into place:

“£490 million is owed by criminals who have served or are serving more time in prison for non-payment. This suggests these sentences provide little deterrence and that the sanctions are not working and need toughening up.

The idea behind confiscation orders is to hit criminals where it hurts – in their pockets – so that serious and organised criminals do not profit from the misery of others. However, poor implementation has meant not enough confiscation orders are being made and not enough is being done to enforce them once they have been made”.

The Home Affairs Committee have recently launched a proceeds of crime inquiry into how effectively the measures introduced in POCA to deprive criminals of any benefit from their crimes are working, including the operation of confiscation orders. This inquiry is covered by the Practical Law Legal update, Proceeds of Crime inquiry launched by the Home Affairs Committee. Responses to the inquiry are due by 25 February 2016.

The confiscation regime introduced under POCA has now been in force for more than a decade. While there have been some successes, it is clearly not achieving the purpose for which it was introduced. The conclusions of the inquiry will be interesting.



Practical Law David Bacon

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