Frank - civil recovery - Part 5, Proceeds of Crime Act 2002
A few days after an armed robbery in which a gang had made off with cash of over £1 million, Frank was arrested and his home was searched. Cash of over £100,000 was found in Frank's house and this was seized by the police. Frank offered no explanation to the police for the presence of this cash. But the police could find no evidence of any involvement by Frank in the armed robbery, although he was a prime suspect.
However during the search of his house the police had found documents that suggested that Frank owned various residential properties, or at least had received rent from them, and that he had purchased a villa on a Mediterranean holiday island. They also found various bank statements and vehicle registration documents.
Frank was charged with conspiracy to commit armed robbery, a charge of which he was acquitted when the matter came to court the following year.
The file was then passed to the Assets Recovery Agency. They obtained a Court Order restraining Frank's assets and appointing an interim receiver under civil recovery powers contained in Chapter 2 of Part 5 of the Proceeds of Crime Act 2002. The Court Order referred, in particular, to the cash seized from Frank's home, to the various residential properties and the Mediterranean villa which the police had identified, and to certain other assets including bank accounts and motor vehicles.
The interim receiver was obliged, under the terms of the Court Order, to establish whether these assets were 'recoverable property', in other words whether they were assets that had been obtained by unlawful conduct (in effect, proceeds of crime) or assets that represented such proceeds.
Ten months later the interim receiver reported to the Court that he had indeed established to his own satisfaction that the residential properties (including the Mediterranean villa) and other assets itemised in the Court Order had been acquired by Frank, and that Frank had no legitimate income which would have enabled his purchase of them. In short, the interim receiver concluded that all the itemised residential properties and assets were 'recoverable property'.
In reaching this conclusion the interim receiver had considered all the information he had been able to obtain concerning Frank's financial affairs in the 12 year period up to the date upon which the Court Order had been made.
The interim receiver alluded to Frank's receipt of state benefits, including income support, in earlier years at a time when he clearly had assets of an amount which made him ineligible for those benefits, and to the armed robbery which had occurred 18 months prior to his appointment under the Court Order.
Frank did not wish to contest the interim receiver's conclusion regarding the cash seized at his home, nor in respect of certain other assets which were not of significant value.
However Frank did wish to challenge the interim receiver's conclusion that the residential properties, including the Mediterranean villa, were 'recoverable property'.
We were instructed to critically review the interim receiver's report and conclusions in respect of the residential properties.
We had a number of criticisms of the interim receiver's conclusions.
The residential properties, including the Mediterranean villa, had been purchased by Frank on various dates, but all of these property purchases were made prior to the date of the armed robbery in relation to which Frank had been charged. Therefore the armed robbery could not, in any event, have been the source of the funds used to purchase these properties.
The sums alleged to have been received in income support and other state benefits were relatively trivial when compared with the purchase costs of the residential properties. Therefore this source, even if unlawful, could not have contributed significantly to the purchase of these properties.
The Mediterranean villa had been purchased with monies drawn from a bank account in Spain. Monies deposited in that account had been in relatively large lump sums. It appeared inherently unlikely that these lump sums represented monies originally received as income support or other payments of state benefits.
Whilst the interim receiver had shown that the source of the purchase monies was unexplained it could be argued as a point of law that he had not satisfied the test in section 242(2) Proceeds of Crime Act 2002 that it be shown that "the property was obtained through conduct of one of a number of kinds, each of which would have been unlawful conduct". We referred Frank's solicitor to the decided case of Director of Assets Recovery Agency - v - Green  EWHC 3168 (Admin). We also drew the solicitor's attention to the policy of the Assets Recovery Agency with regard to negotiated settlements.
Following our report Frank entered into negotiations with the Assets Recovery Agency to agree a lump sum payment to bring matters to an acceptable conclusion.