England and Wales Court of Appeal (Criminal Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM
HARROW CROWN COURT
Lower Court NC number T20047208

		Royal Courts of Justice Strand, London, WC2A 2LL
		10/11/2006

His Honour Judge Loraine-Smith:


 


1. On the 15^th October 2004 at the Crown Court in Harrow this appellant pleaded guilty to a conspiracy to supply drugs of class C namely counterfeit Diazepam (count 1) and two conspiracies to contravene section 92 of the Trade Marks Act 1994 and section 8 of the Medicines Act 1968. Count 2 concerned counterfeit Viagra, count 3 counterfeit steroids.
2. On the 19^th of November 2004 he was sentenced by His Honour Judge Black as follows:

i) Count 2: 5 years imprisonment

ii) Count 1: 3 years imprisonment concurrent

iii) Count 3: 1 year imprisonment concurrent.

3. He also admitted a breach of a suspended sentence imposed at Harrow Crown Court, again by His Honour Judge Black, for selling a medicinal product without a manufacturer's licence and was sentenced to a consecutive term of 6 months imprisonment. The total sentence was thus one of 5½ years imprisonment and there is no appeal as to that part of the sentence.
4. Confiscation proceedings followed and on the 25^th October 2005 His Honour Judge Black made two orders. The first under section 71 of the Criminal Justice Act 1988 (as amended by the Criminal Justice Act 1993 and the Proceeds of Crime Act 1995) was in the sum of £422,460.42p with 3 years imprisonment in default of payment. The second was under section 2 of the Drug Trafficking Act 1994 and was in the sum of £794,480.21p with 4 years imprisonment in default of payment. The combined total of the two orders was thus £1,216,940.63p with a default period of 7 years. It is those two confiscation orders which were the subject of this appeal which we dismissed on 10^th November 2006 when we indicated that we would give reasons on a later date.
5. The facts of the case were as follows:

On the 20^th April 2004 police officers from the pro-active unit in Brent executed drugs warrants at unit 3 in the Wembley Commercial Centre and at 19, Old Close, Talbots Lane, Watford. During searches of the Wembley premises a large scale industrial tablet press was discovered as well as an industrial blister packaging machine and a drying machine. Further, 45 kilograms of Nitrazepam material, large amounts of Diazepam tablets and Stanazol (an anabolic steroid) were also found along with many thousands of Viagra tablets which were embossed with the name "Pfizer". Labels were also found containing the name Rima Diazepam and embosses with the name "Pfizer". At the Watford address pallets and boxes of Viagra pills were found ready for despatch. At the time of the search the factory had been in operation and the appellant and his co-accused were inside the premises.

6. It was the Crown's case that the Wembley factory was capable of producing up to 15,000 tablets per minute and half a million tablets could thus be produced per working day. These figures were calculated from documentation about the press which was found by the police during their search. The tablets contained class C drugs which could not be obtained without a prescription. The appellant and his co-accused ran the factory where the products were produced illegally and then transferred to a warehouse from where they were despatched.
7. The appellant put forward a basis of plea in which he claimed his actual profits had been approximately £81,000. That basis was not accepted by the Crown or the judge and substantially understated the true position.
8. The confiscation hearing took place on the 24^th and 25^th of October 2005 and proceeded under the provisions of both the Criminal Justice Act 1988 and the Drug Trafficking Act 1994. It was the prosecution's submission that the appellant not only had the sum of £7,000 which had been seized from him but also had concealed assets of £1,225,000. That assumption was based on two propositions; first, the scale of the production of the drugs, second, he had engaged in two aborted house purchases the second of which, the day before his arrest, had involved a £1,225,000. cash offer on a property.
9. The most relevant sections of the two Acts in operation in this case were as follows:

i) The Criminal Justice Act 1988

Section 72AA

(3 ) When proceeding under section 71 [of the Act] the court may, if it thinks fit, determine that (subject to sub-section (5) of the Act ) the assumptions specified in sub-section (4) below are to be made for the purpose –

(a) of determining whether the defendant has benefited from relevant criminal conduct; and

(b) if he has, of assessing the value of the defendant's benefit from such conduct

(4) Those assumptions are:-

a) that any property appearing to the court -

i) to be held by the defendant at the date of conviction or at any time in the period between that date and the determination in question, or

ii) to have been transferred to him at any time since the beginning of the relevant period,

was received by him, at the earliest time when he appears to the court to have held it, as a result of or in connection with the commission of offences to which this Part of this Act applies;

b) that any expenditure of his since the beginning of the relevant period was met out of payments received by him as a result of or in connection with the commission of offences to which this Part of this Act applies; and

c) that for the purposes of valuing any benefit which he had or which he is assumed to have had at any time, he received the benefit free of any interests in it.

(5) Where the court has determined that the assumptions specified in subsection (4) above are to be made in any case, it shall not in that case make any such assumption in relation to any particular property or expenditure if -

(a) that assumption, so far as it relates to that property or expenditure, is shown to be incorrect in the defendant's case;

(b) that assumption, so far as it so relates, is shown to be correct in relation to an offence the defendant's benefit from which has been the subject of a previous confiscation order; or

(c) the court is satisfied that there would (for any other reason) be serious risk of injustice in the defendant's case if the assumption were to be made in relation to that property or expenditure.

10. The Drug Trafficking Act 1994

Section 4 (1 )

For the purposes of this Act

a) Any payments or other rewards received by a person at any time (whether before or after the commencements of this Act) in connection with drug trafficking carried on by him or another person are his proceeds of drug trafficking;

b) The value of his proceeds of drug trafficking is the aggregate of the values of the payments or other rewards.

(2) subject to subsection (4) and (5) below the Crown Court shall, for the purpose -

a) of determining whether the defendant has benefited from drug trafficking, and

b) if he has, of assessing the value of his proceeds of drug trafficking, make

the required assumptions.

(3) The required assumptions are:-

a) that any property appearing to the court

i) to have been held by the defendant at any time since his conviction, or

ii) to have been transferred to him at any time since the beginning of the period of 6 years ending when the proceedings were instituted against him,

was received by him, at the earliest time at which he appears to the court to have held it, as a payment or reward in connection with drug trafficking carried on by him;

b) that any expenditure of his since the beginning of that period was met out of payments received by him in connection with drug trafficking carried on by him; and

c) that for the purpose of valuing any property received or assumed to have been received by him at any time as such a reward, he received the property free of any other interests in it.

(4) the court shall not make any required assumption in relation to any particular property or expenditure if-

a) that assumption is shown to be incorrect in that defendant's case; or

b) the court is satisfied that there would be a serious risk of injustice in the defendant's case if the assumption were to be made;

and where by virtue of this subsection the court does not make one or more of the required assumption it shall state the reasons.

11. The appellant did not accept that the scale of the production was as claimed by the Crown and prior to the hearing had served a statement from Roderick Moulding an expert as to the manufacturing and packaging of pharmaceutical tablets. The Crown relied on the documentation which was found by the police and it was their case that this was one of the largest illegal drug and pharmaceutical production factories in Europe.
12. In argument the judge commented that he had not found the Crown's figures entirely persuasive and Mr Topolski has told us that that led him, rightly or wrongly, to decide that it was unnecessary to call Mr Moulding. Furthermore he points out that when Mr Valentine came to give evidence he was asked no questions about the scale of production that was taking place in his factory. That is clearly the case but it seems to us that the real question here was whether the appellant had hidden assets. If he did then those could only have come from his factory. He had offered no other credible explanation. The judge accepted Mr Tolpolski's submissions that he should make a "significant discount" to the figures suggested by the Crown and he did so by reducing them by a third.
13. The central issue in this hearing was whether the appellant's offer of £1,225,000 to purchase a house in Moor Park was evidence that in fact he had a sum of money of that order available at the time. In October 2003 he had made enquiries regarding a property valued at £675,000 but that had not proceeded to sale. In April 2005 he, his wife and daughter looked at number 2 Ormonde Road which was on the market for £1,250,000. On the same day that they visited the house the appellant's second offer of £1,225,000 was accepted by the vendor. The appellant and his wife had told the estate agent that they did not have to sell in order to purchase and nor did they have to take out a mortgage.
14. Both the appellant and his wife gave evidence before the judge and their account was that the appellant intended to make a "back-to-back" to purchase of this property, buying it and selling it on to a second purchaser who had not yet been found. The judge rejected their evidence. He said this:

"It is fair to say that nothing in their evidence caused me to move from the initial impression which I had formed, namely that this was not a "back-to-back" attempt. Anybody to my mind of the acumen in financial matters or business ability of the defendant would not have gambled the house in which his wife and three children lived on a proposal involving over a million pounds in respect of which there was no specific purchaser hovering around. They need not have been identified, they may not have been told of what was going through the defendant's mind at the time, that is the people at the estate agents and the financial advisors. Although I have some concern about his reluctance to level with his financial advisor, upon whom he would have had a great deal of dependency for the provision and for the timing of the transaction proposed. I could go on but I see little point in enlarging upon my hesitation to accept his explanation. The onus is, of course upon him to explain the situation and to satisfy the court as to his actions and as to his financial dealings. He has not done that therefore I am driven to the conclusion that there were hidden assets to an amount upon which he could have called for the purpose of proceeding with that purchase."

15. Mr Tolposki has accepted that he cannot go behind that finding of fact but he submits that there is a substantial injustice in the judge's subsequent finding that the appellant's hidden assets amounted to £800,000. We can see no fault in the judge's reasoning. He had found that the appellant had hidden assets which allowed him to make the offer on that house. He had not found the Crown's figures as to the scale of the factory's production entirely persuasive and so he discounted the figure from £1,225,000 to £800,000. The appellant, as indicated by his basis of plea, had been uncooperative in providing any credible alternative estimate and the judge's choice of a figure of £800,000 while inevitably somewhat arbitrary, could be said to have been generous rather than unjust.
16. The appellant also appeals the terms of imprisonment imposed in default of payment. It is pointed out on his behalf that the effect of all these sentences is that he could be facing a total of 12½ years imprisonment. That is certainly true but would only happen if he failed to pay a sum of money which the court has found was available to him at the relevant time. It is argued that this total sentence would be manifestly excessive. In fact the judge had a power to impose 10 years imprisonment in default and, no doubt with totality in mind, reduced that figure to 7 years. We refuse the appeal on that ground also.
17. Finally there is the question of Mr Valentine's health about which we have been provided with an update from Dr Brown. We have been asked to bear that in mind and have done so but it could not amount now to an arguable ground of appeal. Accordingly we have dismissed this appeal and the two orders remain in the same terms.