HMRC) £6 Million Money Launderer jailed in £68 Million Fraud
(Operation Shepherd)

A Staffordshire man who pleaded guilty to conspiracy to laundering
£6.3 million from the proceeds of crime has been given a two year
jail sentence at Birmingham Crown Court.

Craig Johnson was the seventh member of a criminal gang to be jailed
in connection with a £68 million VAT fraud, following an
investigation by HM Revenue & Customs (HMRC). In June 2006, six men
were sentenced to a total of 51 years for defrauding HMRC by means of
a complicated fraud involving the non-payment of VAT on mobile
telephones. Some sentences are running concurrently meaning a
combined total of 39 years in jail for the six men.

Known as 'missing trader' or carousel fraud, the scam exploits the EU
VAT system in which VAT is not charged on the sale of goods between
VAT registered companies in different EU member states. The
subsequent sale of goods in the UK created a VAT liability due from
companies that 'disappeared'. These companies are known as 'missing
traders'.

Craig Johnson's role was to launder the proceeds of the 'missing
trader' fraud. He received in excess of £6 million of laundered funds
in the form of racehorses, business assets, high value vehicles and
property. The funds had come from accounts in Hong Kong, into which
the proceeds of the missing traders' transactions - usually the
stolen VAT - had been transferred.

Chris Harrison, Deputy Director of Operations, Criminal
Investigation, for HMRC said:
"Tackling 'missing trader' fraud is one of HMRC's top priorities. It
is theft of essential public revenue by organised criminal gangs, and
is a Europe-wide problem. We are committed to pursuing those involved
no matter how complex the crime and no matter where in the world the
money trails take us. We will also actively pursue confiscation
proceedings in order to strip the guilty of their assets, illegally
derived from the proceeds of these frauds. The sentences being handed
down demonstrate the gravity with which the courts view this crime."

He added: "We would particularly like to acknowledge the excellent
support we have received from Staffordshire Police and West Midlands
Police in bringing this case successfully to conclusion."
The fraud began with a company called Crownlink Networks Limited,
which was registered for VAT by the company director Charles Hackney,
who ran the company with his son in law Michael West. In the course
of two months in 2001, £27 million pounds worth of mobile telephones
were bought and sold by their company. Hackney and West were
sentenced to five and four years in prison respectively.

Another missing trader called Gyraland UK Limited was run by Phillip
Hague of Stoke on Trent, Staffordshire. In January and February 2002,
his Bristol-based company sold £7 million worth of mobile telephones.
Hague was sentenced to five years in prison.

Clive Everton Saunders of Uttoxeter, Staffordshire, had previously
been involved in violent crime and ran a security company which
provided doormen to pubs and clubs in the North Staffordshire area.
At the time of the trial Saunders was serving five years in prison
for violent affray in which a man was shot outside a busy restaurant
in Stoke-on-Trent.

Saunders used his security business to recruit willing 'front men'
for missing traders including Hackney and West along with his right
hand man, ex soldier Craig Jones, who effectively controlled the
companies ensuring that the money passed through the bank accounts.
For this he received high value vehicles and property abroad. After
forensic evidence led to Jones being charged with being involved in
the fraud, he approached the authorities and gave evidence in court
against his co-accused. Taking this into account HHJ Orme sentenced
Jones to five years in prison.

Enquiries abroad established a web of accounts into which proceeds of
the fraud were paid. Saunders' bookkeeper David Routledge funnelled
hundreds of thousands of pounds through his bank accounts to
Saunders' accounts in Hong Kong, Switzerland and Spain. Saunders used
this money to fund the building of a million pound mansion in
Staffordshire, purchases of many high value vehicles including
Ferraris and Bentleys and a helicopter that he kept on a helipad in
the grounds of his property. He also owned a Spanish villa, a boat
moored on the Costa Blanca and several Rolex watches.

David Routledge pleaded guilty to his involvement part way through
the trial and was sentenced to seven years in prison for Cheating the
Revenue and five years for money laundering to be served
concurrently. Saunders was found guilty on two counts of cheating the
public revenue and was sentenced to eleven and nine years
imprisonment also to be served concurrently.

Assets to the value of £6 million have been seized under the Criminal
Justice Act 1988 - including 4.5 million in a related investigation
(Operation Emersed). Confiscation Orders are being secured to reclaim
this money for the public purse. These assets comprise of a
helicopter, a yacht, two properties including Meaford Hall, Stoke,
performance vehicles - a Ducati, Aston Martin, Ferrari and two
Bentleys, Rolex watches and diamonds.

Matthew Wagstaff, Head of the Commercial Division of Revenue &
Customs Prosecution Office (RCPO) said:
"Missing Trader prosecutions are the most challenging area of RCPO's
casework. This case was particularly challenging to prosecute
because of the large number of trading companies and defendants -
their complex web of associations and activities were difficult to
unravel and present to the jury. RCPO are pleased to have secured
such a high number of convictions in the face of these difficulties
and will build on these successes in future prosecutions."