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Investigation into spending

Member: Nifa

A convicted fraudster is having his lifestyle investigated after claiming he is too poor to repay the proceeds of his crimes yet has jetted around the world in the past five years. According to prosecutors, Gerald Smith, who was jailed for eight years in 2006, has spent more than £200,000 on flights alone, despite claiming he is unable to pay a £41 million confiscation order imposed in 2007.

Smith claims he wants to pay the penalty but is unable to do so because his wealth is tied up in assets he cannot access due to ongoing, complex civil litigation. However, the Serious Fraud Office (SFO), which has been trying to get the penalty paid, believes he has the money, is conducting a forensic investigation into his spending.

It has found that he paid out £232,226 over the five-year period on travel to European destinations, Canada, Bermuda and Dubai using private jets as well as business and first-class flights. In many cases, these trips included stays in top class hotels.

As in any forensic investigation, the SFO has produced documentary evidence that highlights a “conspicuously lavish lifestyle” at a time when Smith claims he had no assets. Many of the flights were paid for by his former wife, with whom he remains on good terms, but the SFO has found he “habitually used a variety of devices, including members of his family, corporate structures and nominee or trust arrangements”, which it claims were used to conceal his “true ownership” of property.

The documents also highlight assets the SFO believes were bought with criminal profits, including flats in London, other luxury property in Europe and Canada and other high-value assets. The forensic investigation, led by forensic accountants, is set to continue until the true picture of who owns what is uncovered.

Roger Isaacs, Partner at Milsted Langdon, said: “It is not uncommon for forensic accountants to be called in to assist in these scenarios and ‘follow the money’. Due to the sophistication of the crime and the sums involved, I expect this case will run on for much longer until it reaches its final conclusion.”

Author: Roger Isaacs 1 June 2018

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