England and Wales Court of Appeal (Criminal Division) Decisions

IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CRIMINAL DIVISION)

		Royal Courts of Justice Strand, London, WC2A 2LL
		30/03/2010

Lord Justice Maurice Kay :

Introduction

1. On 27 October 2008 in the Crown Court at Teesside after a trial lasting about 4 months, the First Appellant, Michael Smallman ("MS") was convicted on three counts of fraudulent trading contrary to s.458 of the Companies Act 1985 and on one count of transferring criminal property contrary to s.327 (1) of the Proceeds of Crime Act 2002. These were Counts 1, 2, 3 and 7 on the indictment.
2. His wife, Angela Smallman ("AS"), the Second Appellant, was convicted on three counts of acquiring property contrary to s.329 of the Proceeds of Crime Act 2002; and on one count of entering into an arrangement to facilitate the acquisition, retention, use or control of criminal property contrary to s.328 (10) of the Proceeds of Crime Act 2002. These were counts 4, 5, 6 and 8 on the indictment.
3. On 11 December 2008 MS was sentenced to a total sentence of 7 years imprisonment and AS was sentenced to a total sentence of 15 months imprisonment. MS was also disqualified for 10 years under section 1 of the Company Directors Disqualification Act 1986. ^[1]
4. Two co-accused, Peter Kenyon ("PK") and John Hornsby ("JH") were acquitted on Count 1. The learned judge acceded to a submission on their behalf at the close of the prosecution case that they had no case to answer on Count 2.
5. MS and AS appeal against conviction and AS appeals against sentence with the leave of the single judge.
6. The prosecution case in summary was this. It was alleged that various companies or entities owned and/or operated by MS, in particular, the National Distance Learning College ("NDLC"), Assert Training Ltd ("ATL") and the Association of Professional Development ("APD") were vehicles for a very substantial fraud, perpetrated by MS, PK and JH. The victims of the fraud were the thousands of students (about 80,000 in all) who signed up for courses offered by NDLC that were essentially worthless, and the Department for Education and Skills ("the DfES") who provided grant funding through what was known as Individual Learning Account Scheme ("ILA") for those courses.
7. In particular it was the prosecution case that MS sold NDLC courses to students by dishonestly pretending to the students that the courses were accredited by BTEC (later Edexcel) and City and Guilds ("CG"), when in fact they were not (apart from one course that was partially accredited by BTEC), and by dishonestly pretending that the students would receive qualifications from BTEC and CG at the end of their prospective courses, when they could not.
8. Of about 80,000 students who enrolled with NDLC between 1999 and 2001, it was common ground that only 18 gained a recognised qualification. NDLC took receipt of approximately £16.4 million during that period directly from students and from the DfES. The prosecution said that MS was the controlling mind of the NDLC and, as the principal beneficiary, siphoned off the money which he squandered on gambling, high living (principally buying and training racehorses) and doomed business ventures.
9. These matters formed the basis for the prosecution case on Count 1. The particulars specified on the indictment were that MS carried on the business of NDLC for a fraudulent purpose, namely with intent to defraud students between 1 January 2009 and 28 February 2002 by dishonestly (i) pretending to the said students that the courses offered by the company were accredited by a recognised educational body; (ii) pretending to the said students that they would receive a recognised qualification upon completion of the course; and (iii) diverting funds from the company which had been paid to the company by, or on behalf of, the students, for the purposes of completion of their course training.
10. The ILA scheme was scrapped by the Government in October/November 2001, after widespread allegations of abuse and of fraud, including in the national media. The prosecution alleged that MS then continued the fraud through APD and Assert Training Ltd.
11. It was said that it was a requirement of the ILA scheme that financial contributions were taken from students for courses for which ILA claims were made by the Learning Provider, and that MS had dishonestly claimed ILA grants without doing this. It was also said that MS, through APD, had dishonestly continued to take payments from students until 2006, for post-course support services, long after NDLC and its associated companies had ceased to provide any services whatever.
12. These matters formed the bases for Counts 2 and 3. The particulars specified on the indictment on Count 2 were that between 1 September 2001 and 28 February 2002 MS had conducted the business of Assert Training Ltd with intent to defraud the DfES in respect of the operation of the ILA by dishonestly making claims under the said scheme for students from which they did not take, nor have any intention of taking, a financial contribution as required by the DfES.
13. The particulars specified on the indictment on Count 3 were that between 1 July 2000 and 18 January 2006 MS carried on the business of APD fraudulently, with intent to defraud such students as were making payments to the APD in respect of membership funds in return for the provision by the APD of "post course" support and advice services.
14. The prosecution also alleged that MS and AS used the APD account as a personal account, taking funds as and when required. These matters formed the bases for Counts 4, 5, 6, 7 and 8 on the indictment. The Counts related to various payments (amounting to about £22,000 in total) made by MS and/or received by AS between September 2003 and July 2005 as well as to what was said to be an arrangement made by AS between October 2004 and November 2006 to facilitate the acquisition, retention, use or control of criminal property by or on behalf of MS.

Grounds of Appeal in summary: MS

15. There are two principal grounds of appeal against conviction advanced by MS and pursued in argument before us. First, that the learned judge's summing up was so deficient in its balance, structure and form, that the verdicts against him are not safe.
16. The second relates to a matter which emerged during the course of the trial, namely that the DfES had provided funding to the Cleveland Police, who conducted the investigation which gave rise to the prosecution. We shall refer to this as "the funding issue".
17. Two of the largest investigations into ILA fraud occurred in the Cleveland area: Operation Anaconda (the present case) and Operation Boa (R v Singh). In June 2003 a funding arrangement was entered into between the Cleveland Police and the DfES the purpose of which was to assist the police with the cost of their investigations. In particular it paid for retired policemen to interview thousands of witnesses. A breakdown of the payments received by the Cleveland police authority shows that £261,000 was paid for the 2 investigations.
18. It is said by MS, relying on the decision of this court in R v Hounsham [2005] EWCA Crim 1366, that this was an ultra vires funding of the prosecution by a named victim on the indictment (the DfES); and that the learned judge erred therefore in refusing to uphold an application made at the close of the prosecution case to stay the proceedings as an abuse of the process.
19. On 4 September 2009 an application to intervene in these proceedings was submitted on behalf of Mr Morsley, a former director of Metamorphosis, who is indicted with 5 others in an alleged ILA fraud against the DfES. The trial was due to start at Teesside Crown Court in early June 2009 but was adjourned for a number of reasons, one of which was to await the outcome of MS's appeal on the funding issue. The matter was referred to the Full Court. On 20 October 2009, the Full Court gave permission for the submission of written submissions only on the funding issue; and these have since been submitted on Mr Morsley's behalf by Mr Barnett of Counsel (who also appeared for PK at the trial under appeal).
20. As to the first ground, the prosecution do not accept that the summing up was deficient but in any event submit that the convictions are safe because it is said the evidence on those counts was extremely compelling, MS had no sensible answer to the matters alleged against him, and the verdicts of the jury were properly returned according to the strength of the evidence.
21. On the funding issue, it is said by the prosecution that the DfES had no involvement with the decision making process. Moreover, the issue of funding was not a matter concealed from the defence and there can be no suggestion of mala fides. The investigation by the police into NDLC began in 2002, before DfES received legal advice on the issue of civil proceedings against MS. Funds were not paid directly to the police but to a police fund established by section 14 of the Police Act 1996, unlike in Hounsham. The issue was raised in a voire dire and in cross-examination and there was no evidential basis for the suggestion that any prejudice occurred.
22. In addition to these grounds, it is said by MS that there were deficiencies in the disclosure made by CG, so that important documents only emerged during the course of the trial. In the result, it is submitted that the learned judge should have acceded to a defence submission to stay the prosecution on this additional ground of abuse. It is also said that the learned judge should have acceded to a submission of no case to answer on Count 1 because there was insufficient evidence to demonstrate a prima facie case of dishonesty.
23. The prosecution response in short is that nothing new was added by the disclosed documents, the defence were able to cross examine the relevant witnesses about these matters and were not prejudiced in any way. As to Count 1, it is said there was ample evidence on all counts to go to the jury, including of dishonesty.

Grounds of Appeal in summary: AS

24. It is common ground that if MS's appeal succeeds on the basis that the summing up was defective, or on the basis that the prosecution should have been stayed as an abuse of the process, it would follow that AS's appeal against conviction on all the counts on which she was convicted should be allowed.
25. There is an additional ground of appeal on Count 8, in respect of which it is said on AS's behalf that there was insufficient evidence to permit the count to be left to the jury.
26. Finally, AS appeals against sentence on the ground that the sentence was manifestly excessive.
27. In the light of these grounds of appeal it is necessary to refer to the facts and evidence relied on by the prosecution at trial and to the events at the trial in some detail.

The facts and the prosecution case at trial

28. In 1997 MS formed a company called Assertraining Ltd ("AL") which was incorporated on 17 February 1998, and traded as NDLC. AL formally changed its name to NDLC on 14 June 2000. MS was a director of AL from the outset. PK and JH became directors in May 2000. 55 per cent of the shares in AL were owed by ATL, a company wholly owned by MS until he transferred ownership of it to AS on 1 September 2001. ATL was dissolved in September 2003. APD was incorporated on 17 March 1999 and was dissolved in January 2006.
29. NDLC was a distance learning college based in Middlesbrough, selling, in the main, computer and business related courses to members of the public on a nationwide basis.

Count 1: accreditation and qualification

30. It was not in issue at the trial that during the period covered by the indictment MS advertised and sold his courses to the public by representing that the courses were accredited by recognised educational bodies and that students would receive a recognised qualification at the end of the course.
31. In support of the prosecution case on Count 1, statements were taken from more than 450 NDLC students on a random basis. By agreement, about 75 students were either called to give evidence, or had their statements read to the jury. Almost all of the students "spoke with one voice" to express their dissatisfaction about various aspects of the way they had been treated by NDLC: their complaints included misrepresentation as to accreditation, deliberate delays, lack of proper course material, denial of proper cancellation rights or refunds, and inability to make proper contact with the college.
32. The accreditation process was such that qualifications could only be awarded if both the educational establishment (NLDC in this case) and the course it offered were approved by the educational body. It was said that the offer of such qualifications was an important inducement to students to sign up for them; and therefore it was no coincidence that NDLC's successful expansion coincided with its marketing of "accredited" courses.
33. The prosecution on this part of the case relied in the main on MS and NDLC's relationship with educational bodies such as Edexcel and CG. It also relied on a dishonest pattern of conduct by MS before his relationship with those bodies; in particular, the use in AL advertising of qualifications which MS had invented, such as "ABAM" and "IACO" which were not recognised by the Qualifications and Curriculums Authority. These acronyms were, it was said, bogus, and were used to give a spurious credibility to the courses MS was trying to sell. MS's explanation at trial was that he believed he was entitled to create and use such "qualifications" by an European Community Directive – though no evidence was ever put before the jury that such a directive in fact existed, or even (apart from what he said about it) to support MS's belief that it existed.
34. BTEC, however, was a well-recognised and legitimate qualification. NDLC applied to Edexcel (formerly known as BTEC) for accreditation in November 1998. It displayed the Edexcel logo on Assertraining/NDLC's literature from the end of 1998.
35. In February 1999 Edexcel approved Assertraining (that is, NDLC) as an Edexcel centre and confirmed that NDLC could offer BTEC qualifications for modules 7 to 11 of its computer course. Accordingly, NDLC could advertise the fact that students could obtain a BTEC qualification in the specific computing course where there was partial accreditation. However, students were not told that the computer course was only partially accredited; and in evidence MS admitted that even before this partial accreditation, he had sold a variety of courses representing them to be accredited by BTEC when they were not.
36. In addition, students were only registered with Edexcel at the point when they were due to embark on those modules. Mrs Linda Sykes of Edexcel, a witness for the prosecution, said in evidence that MS chose not to seek accreditation for earlier modules on grounds of cost, that is, so NDLC did not have to pay Edexcel's fees until the point at which the student reached module 7.
37. No other course, or part of any other NDLC course, was ever accredited by Edexcel. It was the prosecution case that despite these limitations, the Edexcel logo was used to promote and advertise all of NDLC's courses, leading students and potential students to believe that the course they were signing up to would lead to Edexcel recognised qualifications.
38. In evidence, MS's case in general terms was that he acted honestly and with the express consent of the qualification awarding bodies (such as Edexcel and CG) for the marketing and provision of the services offered by NDLC. MS justified the advertising of Edexcel accreditation on the ground that students could sit BTEC examinations at other local colleges when they concluded NDLC courses, and he knew this, because of the enquiries he had made.
39. The prosecution pointed to the following evidence which, it was said, undermined the honesty of those claims. NDLC literature (examples of which were before the jury) made unqualified representations that courses were Edexcel accredited and that qualifications would be achieved. A letter in evidence from Darlington College made it clear that it was not possible for NLDC students to take exams in this way. MS did not ask an employee of NDLC (Steven Hall) to make enquiries as to the feasibility of NDLC students sitting exams at external colleges until July 2001, long after both Edexcel and CG had severed their association with NDLC.
40. Moreover, Mr Hall's evidence was that their response was such that, even at that stage, this was not a realistic option. Only three out of 100 colleges approached might have been prepared to allow NDLC students to sit exams, and then only in small numbers and on certain conditions. But since the NDLC courses were "tailor made", they would not have been compatible with those of the other colleges in any event.
41. In addition, evidence was given by other witnesses who worked at the college (Steve Calladene, Sidney Hutchinson, Jennifer Vickers, Linda Middlemass and John Garvey) that students were deliberately told that all NDLC courses (for example business studies, as well as computing) were BTEC accredited when – as was accepted – they were not.
42. Mrs Sykes gave evidence that there was (in effect) a running battle between Edexcel and NDLC throughout 1999 over the misleading marketing literature it produced. Edexcel was very concerned because of complaints it had received from students and because of NDLC's failure to withdraw what Edexcel considered to be false and misleading advertising.
43. On 13 March 2000, after repeated warnings to NDLC, Edexcel eventually decided to terminate its association with NDLC and withdraw such limited accreditation as it had given. It asked that its name be removed from all NDLC marketing.
44. About 17,000 students had been enrolled onto the computer course by that stage, of whom only 200 had been registered for modules 7 to 11. As accreditation had been removed, Edexcel decided not to register any further NDLC students but worked with the 200 who were by then registered. In the event, of those 200 only 18 eventually gained a BTEC qualification. These were the only students of the 80,000 who purchased courses from NDLC to gain any accredited or recognised qualification.
45. In October 1999, it was the agreed evidence that NDLC started to try and obtain accreditation from CG. It was not in dispute that CG was never told about the problems that had arisen between NDLC and Edexcel as to marketing or other issues.
46. In November 1999, NDLC obtained CG Approved Centre status. This entitled NDLC to display the Approval certificate and to display the CG logo on their leaflets and literature. However, CG did not (either then or at any stage thereafter) accredit any of the courses offered by NDLC, nor did it offer a CG qualification to students of NDLC.
47. As with Edexcel, it was the prosecution case that the status of "Approved Centre" was used by CG as an interim position whilst NDLC were being assessed for full accreditation of each course.
48. CG explained that the accreditation process was only due to take one month and in a letter dated 19 November 1999 CG set out the rules NDLC had to follow when using the CG logo in advertising.
49. The accreditation process, however, "dragged on" for a year, without resolution. Nonetheless, NDLC circulated marketing leaflets and other sales literature which represented that students would receive a CG qualification on completion of the course, claims which, the prosecution said, MS knew were false and misleading. In the event, the accreditation process was never completed before the relationship between the companies broke down in May 2001.
50. An example of such a flyer or brochure (produced in March 2000) was before the jury. It offered both BTEC and CG qualifications. In particular, it claimed that 3 courses (namely, Business Administration, Computerised Accounts and Manual Book Keeping) were accredited by CG leading to a CG qualification if the exams were passed. Hundreds of thousands of flyers went out in this vein over the ensuing months, and 1.9 million in January 2001 alone.
51. Brian Dowd (a former employee of NDLC who had been responsible for writing some of the courses) gave evidence that, as time went on, he told MS about his concerns about the marketing: he said he did not want the same thing to happen as with Edexcel. MS admitted in evidence that "alarm bells" had started to ring after 6 months.
52. In September 2000 the Government launched the ILA, which was operated by the DfES in order to encourage adults over 19 years old to further their education and improve their qualifications. The scheme operated in this way. Every adult in the country was given a notional ILA account number. Once a person had registered with the scheme, he or she would become entitled to a subsidy to put towards the cost of a training programme or course on which they would enrol. Once a student had signed up for a particular course, the Government would subsidise the cost of that course with an 80 per cent contribution, capped at £200 per year. The Government would pay a portion of the contribution directly to the course provider and the remainder could be used by the student to pay any additional fees for the course itself. NDLC became registered as a learning provider for the scheme.
53. NDLC courses (which were called the longer courses at trial) then cost £800 per year, and there was no limit on the time needed to complete them. It was the agreed evidence at trial that when the ILA scheme became operational, MS decided to reduce the cost of NDLC courses to £250 to make them more saleable to the public, and to reduce their length to "bite size shorter courses".
54. NDLC could thereby claim £200 for the course, and charge the student £50. Mr Dowd's evidence was that this was against his instructions, since it destroyed the content of the courses, and it also meant starting the CG accreditation process (which had already taken a year) afresh.
55. There was evidence before the jury that CG made it clear to MS that he should not advertise or promote the shorter courses as accredited; and that, nonetheless, this is what MS did. One sample brochure, received by a student in November 2000 said: "On completion of your course you can obtain a City and Guilds qualification ... many of our students gain employment even before completion of the course and receipt of qualification".
56. MS admitted in evidence that without the consent of CG he had advertised the shorter courses as accredited, but gave the same explanation as he had in relation to the longer courses, namely that he believed students could sit exams for them at a local college when they concluded their course (an explanation the prosecution invited the jury to reject for the reasons given at paragraph 39 to 41 above).
57. A meeting between CG and MS took place in January 2001. The evidence was that CG reluctantly agreed to allow the distribution of NDLC's current stock of advertising leaflets, but only on condition that this was at NDLC's own risk; and NDLC would change its advertising literature immediately.
58. About 42,000 students signed up for the NDLC shorter courses. As a result, NDLC received £1 million from the students and £5.6 million from the DfES. The students who completed the shorter courses received certificates from APD, a qualification devised in-house by MS and not recognised by any awarding body.
59. After CG withdrew from its association with NDLC in May 2001, it was the agreed evidence that MS approached a third educational body, the Oxford and Cambridge Examination Board (OCR). NDLC was granted centre approval to offer two courses: CLAIT (that is, Computer Literacy and Information Technology) and Information Technologies, stage 1. NDLC literature represented that students would receive an OCR CLAIT qualification at the end of their course. Between May and November 2001, 6000 students signed up for these courses, but it was the agreed evidence that NDLC failed to register any of its students during the period, so an OCR qualification could not be granted. MS's explanation for this in evidence was that the point had not been reached where registration was required.
60. NDLC also promoted and offered students the opportunity to obtain an ECDL (a European Computer Driving Licence) qualification. The agreed evidence was that NDLC was not licensed to promote such a qualification (the sole licensee in the UK being the British Computer Society, "BCS").

Count 1: diversion of funds

61. As set out above, it was the prosecution case in general terms that NDLC took receipt of approximately £16.4 million during the period of its operation directly from students and from the DfES; and that MS had siphoned off this money, which he had then squandered on gambling, high living (principally buying and training racehorses) and various doomed business ventures. In the result, NDLC was put into administration in November 2001.
62. This was the foundation of the prosecution case under particular (iii) of Count 1 on the indictment (diverting funds from the company which had been paid to the company by, or on behalf of, the students, for the purposes of completion of their course training).
63. It was not in issue at trial that, during the period covered by the indictment, students and the DfES had paid this money to NDLC for the provision of educational courses to the students; or that MS had made or authorised NDLC to make the payments relied on by the prosecution in this part of its case. The issue for the jury was whether MS had dishonestly taken the risk of prejudicing the rights of students, knowing he had no right to do so.
64. MS's case in general terms was this. He maintained he was entitled to invest the money as he did. He said NDLC did not trade while insolvent and that his companies collapsed and he was unable to fulfil his responsibilities to his students as a direct result of the Government's own premature termination of the ILA scheme in November 2001.
65. The background to NDLC's difficulties and the closure of the ILA scheme was the considerable amount of adverse publicity which NDLC and the scheme attracted in the Spring of 2001.
66. On 29 April 2001 Vivienne Parry, a columnist with the News of the World, published an article criticising the quality of computers provided by Fiche and Chips, a company set up by MS to sell reconditioned computers to NDLC students, after receiving complaints about this company from her readers. She then began to investigate NDLC. On 6 May 2001 Ms Parry wrote a follow-up article concerning NDLC. This set out the complaints made by her readers about NDLC. Complaints included disappointment with the courses, not being able to get refunds and not receiving diplomas. This in turn led to a growing number of complaints about NDLC from its students; and was closely followed by CG's termination of its relationship with NDLC.
67. It was not in dispute at trial that in September 2001 MS sought advice and decided to place NDLC into administration.
68. This was before the DfES announced that the ILA scheme was to close, which it did on 24 October 2001. The decision was made because there was widespread evidence of fraud and abuse. About 100 cases were referred to the police and 63 investigations were then conducted around the country, though these were not matters before the jury.
69. NDLC was put into administration on 23 November 2001, the day on which the ILA scheme was finally closed.
70. During this final period, NDLC nonetheless continued to sign students up to courses under the ILA scheme, it continued to take payments from students, and MS continued to make payments from NDLC funds, according to the prosecution, for his own benefit.
71. MS acknowledged in evidence at trial that he was aware of his continuing responsibility to students. He also said he could have provided the services for those students for which they had paid, even if funding stopped abruptly.
72. The jury were therefore entitled to conclude, said the prosecution, that MS recognised his responsibility to provide the students with the courses for which they had paid, and was aware of "the boundaries" within which he should have operated. The evidence at trial, however, demonstrated that the collapse of NDLC and its failure to fulfil its responsibilities to its students were not due to the ending of the ILA scheme, but to the dishonest dissipation of NDLC funds by MS.
73. A great deal of the prosecution evidence called on this part of the case was not in issue. It was clear from its accounts that NDLC was "cash poor" during the relevant period, even though it had received enormous sums from students and through ILA grant funding (sums which were paid "up front" and before the courses began). Audited accounts for NDLC for the year ending 1999 showed a loss of £130,000; and for the year ending 2000 a profit of £212,000 against a turnover of £5.6 million.
74. During that same period, it was also clear that NDLC funds were spent in a variety of ways that had nothing to do with the education of the students. The funds were used to fund a large number of companies set up by MS as part of the Thanx group of companies, representing a diverse range of interests unconnected to NDLC. None of the companies had any other source of funding.
75. MS spent NDLC money in other ways: for example, on gambling (MS placed almost £1 million in bets on horses, losing a total of approximately £300,000); on buying, stabling and training more than 20 racehorses (at trial MS justified this expense by stating that it was effectively self-financing, because the horses ran in the colours of Assertraining and therefore the "advertisements" paid for their upkeep); and on buying and renovating a large dilapidated Victorian house, Yafforth Lodge, for his own use. £1 million passed through MS's bank accounts which was not explained by his stated sources of income. MS serviced a £1 million guarantee to "Fiche and Chips" using NDLC funds. MS also committed NDLC to investing more than £2 million in a media and animations company, Red Balloo. No due diligence was carried out before the investment and his co-directors advised against it. Red Balloo collapsed on 3 December 2002, 3-4 months after the investment was made, so the entirety of the investment was lost.
76. There was also evidence before the jury that MS had sought to manipulate his director's loan account by pretending he had sold Yafforth Lodge to NDLC when, as he admitted in evidence, no such sale had taken place.
77. The prosecution also relied on the timing of some of these payments. These continued from the spring to the autumn of 2001 when, on the undisputed evidence, it was clear that NDLC was in substantial financial difficulty. For example, MS signed a transfer to Red Balloo on 23 March 2001, and other "non NDLC" payments continued to be made until September 2001 when, on the undisputed evidence of those working in the accounts section of NDLC, it was unable to meet its debts as they became due.
78. Andrew Croft from Deloitte Touche, NDLC's receivers, gave evidence that NDLC failed because of the payments made by or at the behest of MS. In particular, there were three major factors: payments to Red Balloo, to Fiche and Chips, and the sums spent on horse racing. The loss to creditors was £4 million, including £3 million to the Post Office, but did not include sums such as £700,000 spent on purchasing racehorses, which was simply written off.
79. Moreover, NDLC underpaid tax and national insurance in 1999 to 2000 and did not pay tax or national insurance at all in 2001. NDLC did not make any payments to CG for the 50,000 students registered to CG; made only a token payment to Edexcel for the 250 students registered out of the 17,000 for whom NDLC received full payment, and made no payment to OCR or to BCS.
80. In the result, the prosecution submit not just that there was ample evidence for the jury to consider on whether MS had dishonestly taken the risk of prejudicing the rights of students upon whose behalf funds had been paid for the provision of courses, but that the evidence of dishonesty was compelling.

Count 2: the financial contribution issue

81. It was an important part of the ILA scheme that students made a personal financial contribution to the course they signed up for. It was considered that this would ensure "self regulation", as a student would be unlikely to make a payment without first being satisfied as to the bona fides of the Learning Provider.
82. The rules and regulations of the scheme therefore provided that DfES funding was only payable against the financial contribution from the student. In other words, a financial contribution from the student was compulsory, and no ILA payment could be made to the Learning Provider without it.
83. On August 15 2001 the DfES sent a circular to Learning Providers explaining the rules and regulations of the scheme. It highlighted that the personal contribution element of the scheme by the student was essential.
84. On 26 October 2001, two days after the DfES announced the ILA scheme was to close, 28,000 letters were sent to NDLC students on MS's instructions, offering a second ATL course, which was free to the student but allowed ATL (hitherto a dormant company) to make a claim from DfES for the purported cost of the course. The cost of the course was not stipulated.
85. It was not in dispute at trial that ATL was owned and controlled by MS during the relevant period, or that he was a signatory to its bank account and provided instructions to his brother-in-law (Anthony Patterson) to carry out the day-to-day running of the business.
86. Patterson's evidence was that MS told him that he should invoice APD Ltd for the student contributions. Patterson also said that MS instructed him to prepare £25 invoices, though none were ever sent, and that MS had told him to claim whatever was left in the student account.
87. MS admitted in evidence that he knew a financial contribution from students was required, and accepted in interview that he did not take a contribution from ATL students. He maintained he was entitled to offer courses without a student contribution because the regulations provided to him by the DfES, with guidance and examples, demonstrated that he could do so.
88. It was the prosecution case in contrast that, recognising a final opportunity to make money before the scheme ended, MS intended to use ATL dishonestly to strip out any remaining funds from the ILA accounts of NDLC students.
89. In the next four weeks the DfES paid ATL about £100,000 under the ILA scheme.
90. On 23 November 2001 the ILA programme was closed permanently. On the same day, notice was given of the appointment of Deloitte & Touche as NDLC's receivers.
91. Within a short time, most of the funds generated by ATL via the ILA were spent by MS, and the company's account was emptied.

Events post the closure of the ILA scheme

92. By the end of February 2002, MS moved to Spain, where he lived in rented accommodation. While there, MS re-purchased some of his racehorses from NDLC's receivers, for a fraction of their cost, using ATL funds. At the end of 2003, MS moved with his family to the USA, and returned to England in 2004. On 14 October 2004 MS and AS were arrested at their home address. MS by now had no funds and was living on benefits.

Counts 3 and 7: payments to APD

93. Most students who signed up for NDLC courses also signed up for the provision of post-course support services from APD. This involved making a payment of £15 per annum to APD, normally by standing order.
94. After the demise of NDLC many students continued to pay standing orders into the APD account (some up until 2006). It was apparent from documents found at MS's house on his arrest that the APD account at the Stockton branch of the Yorkshire Bank was still active and 1800 students were still paying £15 per annum into it by standing order. It was also apparent that the money in the APD account had been used by MS for his own purposes and had not been spent on post-course services.
95. On 20 July 2005 the APD account was closed. MS transferred the remaining balance of £15,144.41 into a recently opened personal savings account in his name. It was this transfer which formed the basis of Count 7 on the indictment. It was said that by making this transfer MS knew he was receiving funds which were stolen from students. When the APD account was closed, the students' standing orders were also transferred to MS's personal account. Had the APD account simply been closed, the standing orders then in place would have been rejected.
96. MS's explanation at trial was that he was unable to stop the direct debits being paid to him when the organisation stalled because he did not have access to the APD database, and he was told the only way to stop direct debits was to contact the students or close the account. The service provided was said to be one quarterly magazine sent out in 2003. He accepted that the payment of APD money into his own account for 1½ years was a mistake, but said he had not been dishonest. He relied on evidence that a small number of students were repaid the sums they had paid to APD.

Counts 4, 5, 6 and: receipt by AS of APD funds and other "tainted" funds from MS

97. It was the prosecution case that AS was involved in MS's unlawful use of the APD account. It was said that AS received certain sums from APD during 2003 and 2004, and could not have believed those payments were legitimate. It was said she knew this because she had been associated with the business of NDLC, she knew the purpose of APD, and yet received APD funds and used them for her own purposes. This gave rise to the charges in Counts 4, 5 and 6 for particular receipts of £2,100, £4,000 and £870 on 18 September 2003, 2 January 2004 and 6 October 2004 respectively. The latter payment was from MS's personal account into an AS account for her company "From Camera to Canvas". It was also the prosecution case that MS had regularly credited other sums to AS's account and that she knew this was done to mask MS's access to, and use of, "tainted" funds. This gave rise to Count 8 on the indictment.
98. At trial, AS gave evidence that she had not known the payments into her account had come from APD. She did not think any of the money transferred into her account by MS was criminal property, and believed it had come legitimately from her husband's businesses and from his gambling winnings. Although she had had some initial involvement with NDLC as a director, and internal verifier, she had then left NDLC and had not been involved with its finances in any way. She said she went back to being a housewife. All the credits into her account had been made by MS. She never checked her bank accounts carefully and could not tell from them where the money had originated from.

The course of the trial

99. The trial began on 9 June 2008 and concluded on 27 October 2008.
100. The prosecution called its evidence in "categories". These categories were NDLC students; NDLC members of staff, from senior management to administrative workers; "educational" witnesses from Edexcel, CG, OCA, and BCS, as well as others who gave evidence about the so-called acronyms used by NDLC in its marketing; DfES; a miscellaneous category (from the News of the World journalist, Trading Standards and the Inland Revenue); Accounts, Finance and Banking; and the police. The defendants all gave evidence on their own behalf, but called no other evidence (apart from character evidence called on behalf of PK, JH and AS).
101. On 19 June 2008, three days into the evidence, an issue regarding disclosure was raised, and which gave rise to the funding issue. An email was found which indicated that the DfES had funded the police investigation into the ILA fraud. The defence said this was not known to them previously. Counsel for the co-defendant PK then sought, and was permitted, to cross-examine the police witnesses on this topic.

Abuse of the Process

102. At the close of the prosecution case, counsel for all the defendants invited the judge to stay the action as an abuse of the process.
103. The first ground upon which he was invited to do so related to the funding issue (see paragraph 16 above). It was submitted by the defendants that the sums paid were significant, and that the Cleveland Police had been placed under pressure by the DfES to progress the inquiry. The investigation had not been independent and had been so tainted as to prevent a fair trial. Particular reliance was placed on Hounsham. It was said that this case was a stronger case than Hounsham because of the significant amount of the funding, and because the DfES had acted in bad faith.
104. The second ground on which the judge was invited to stay the proceedings was because it was said there had been such significant failures in disclosure that the fairness of the proceedings was fundamentally affected and there had been prejudice to the defendants. The defence had still not seen all the files relating to the funding issue. It was said that without this disclosure the defence could not know, for example, who had first alleged that the lack of accreditation amounted to a fraud, or the various influences – whether political or from the media – which had been brought to bear on the investigation; or indeed why it was that the investigation had been conducted on a false basis, viz. that CG had never approved NDLC's advertising. It was said the police had failed to seize all material documents, in particular from CG. It was also said that misleading information had been given to students who were therefore interviewed as part of the investigation on a false basis.
105. The prosecution responded as follows. Cleveland Police had been unable to undertake the investigation for financial reasons, and this was why they had approached the DfES. The funding had been used to pay for retired policemen to interview thousands of witnesses, including 450 students. In evidence at the voir dire, two police officers (Bowman and Matthews) informed the court that the DfES did not and had not at any stage sought to interfere with the investigation. The DfES had had no influence on who would be charged or the timing of the charges. It was conceded by Matthews that different considerations (re funding) applied where the complainant was the Government.
106. So far as disclosure was concerned, the prosecution said they had gone to great lengths to ensure that additional documents and files had been produced and to ensure that all relevant documents had been disclosed. This was a vast enquiry involving millions of documents and thousands of witnesses. There was no basis for the assertion that the defendants could not have a fair trial.
107. On 16 September 2009, the judge ruled in summary that he was not satisfied there had been a breach of duty with regard to disclosure, or that there had been an abuse of the process or prejudice to the defendants. The DfES was a government body, as was the police authority. There had been no material irregularity in the DfES funding the prosecution in part, nor was there evidence that any of the conduct was so abhorrent to the legal system that it would be unfair to try the defendants, even though the funding, in his view, would have been ultra vires had the DfES been a private individual or company.

No case to answer: AS

108. It was submitted on behalf of AS that before she could be convicted on the counts relating to the acquisition of property, Counts 4, 5 and 6, it had to be proved that she knew or suspected that APD money was going into her account unlawfully. It was said the evidence that she did so was very weak because, amongst other reasons, the bank accounts produced in evidence did not show the source of the money paid into her account and specified in the counts on the indictment; she had been in the USA for some of the time; MS had been a signatory to the APD account and all the cheques from the APD account had been signed by him. Other monies had come into her account which had not come from APD and had come from MS's gambling winnings. On Count 8 it was said the prosecution could not prove, as they had to, that all the monies flowing through the accounts had come from APD or that it had been unlawfully removed from APD by MS. There was no direct transfer of monies from the APD accounts into her account.
109. On behalf of the prosecution, it was said that these were matters for the jury to consider. Counts 4, 5 and 6 were simply specimen counts. AS was aware that her husband had the chequebook to the APD account, and she was also aware that things were "far from easy" (financially) for the Smallman family at the relevant time because of the collapse of NDLC. In interview, AS said she knew that MS had closed the APD account and transferred the money to his account, and she also admitted that APD money had been paid into her account.
110. On 17 September 2008 the judge ruled that AS had a case to answer on these counts.

No case to answer: MS

111. MS submitted there was no case to answer against him on Counts 1 and 2. In relation to Count 1, it was submitted that the key allegation was dishonesty in relation to NDLC's marketing of its courses as if they had CG accreditation. However, the evidence from CG witnesses was that they had permitted and encouraged such marketing, had assured NDLC that accreditation would take place and that delays in accreditation were due to CG failings. There was therefore no evidence of dishonesty in this respect on the part of MS. The evidence with regard to the Edexcel courses was that they were of good quality, and the evidence showed lax, rather than dishonest marketing. So far as the contribution issue was concerned, there was no evidence to show any legal or equitable requirement on the part of NDLC to "ring fence" the money it received from the DfES and the students. The inter-company transfers relied on (to show dissipation of assets) were not unlawful, and the jury would be unable to say whether any particular investment made by other companies in the group were lawful or not. The investment in Red Balloo was made in good faith, and the fact it had gone wrong did not support a charge of fraudulent trading. The horse racing was simply a promotional tool.
112. In relation to Count 2, it was submitted that there was no case to answer because the ILA scheme was defective from the outset. NDLC had no contractual liability to the DfES, ATL had been run by Steve Calladene, and prosecution witnesses had given evidence that its operation was bona fide and not dishonest.
113. On behalf of the prosecution it was said MS had been a party to making false representations from which the jury could infer dishonesty (for example the using of bogus accreditations such as IACO and ABAM). The brochures were misleading and staff were told to tell students that courses were accredited when they were not. On Count 2, MS had been in control of ATL, and the fact that so many students had been written to just before the ILA scheme was about to stop and offered a free course in the knowledge it could not be provided, was evidence of fraud. On Count 3, it was said that if funds were accepted for one service and diverted to houses, repairs, horses, training, gambling and the like, it was a matter for the jury to decide whether there had been dishonesty, and whether the students and the DfES had been seriously prejudiced.
114. On 19 September 2008, the Judge ruled that MS (and PK and JH) had a case to answer on Count 1. He ruled that MS also had a case to answer on Count 2 (but PK and JH did not). Having set out the respective contentions in some detail, he said that MS (and PK and JH) were heavily involved in NDLC, and were involved in the activities identified in the particulars on the indictment. As to Count 2, he said MS was also heavily involved in ATL, and there was evidence that some of the money received from students had been used to purchase racehorses from the receiver "and [sic] Michael Smallman Racing."

The Summing Up

115. The summing up began on 14 October 2008. It continued on 15 October, 16 October, and 17 October. After a break for the weekend, the summing up resumed on 20 October and continued until 11.07 a.m. on 21 October. It lasted therefore for about 5 days in total.
116. We turn now to the substance of MS's appeal.

MS's appeal

(i) The funding issue

117. On behalf of MS, Mr Woodall submits that, by reason of the financial contribution made by DfES to the Cleveland Police for the furtherance of the investigation, the prosecution is tainted and abusive. He relies on Hounsham, in which insurance companies had contributed £4500 towards the investigation costs. In this Court it was conceded on behalf of the prosecution in Hounsham that by seeking and accepting payments from the insurance companies, the police were acting ultra vires. Gage LJ said (at paragraphs 31 and 33):

"In our judgment, soliciting by the police of funds from potential victims of fraud, or any other crime, quite apart from being ultra vires police powers, is a practice which is fraught with danger. It may compromise the essential independence and objectivity of the police when carrying out a criminal investigation. It might lead to police officers being selective as to which crimes to investigate and which not to investigate. It might lead to victims persuading a police investigating team to act partially. It might also lead to investigating officers carrying out a more thorough investigation of the evidence in a case of a 'paying' victim, or a less careful preparation of the evidence in the case of a non-contributing victim. In short, it is a practice which, in our judgment, would soon lead to a loss of confidence in a police force's ability to investigate crime objectively and impartially.

…However, in this case, the judge found that PS Wade acted in good faith. He consulted his superior officer, who in turn sought advice. Apart from the issue of disclosure, to which we turn next, none of the appellants' counsel has been able to point to any prejudice caused by the total sum of £4500 from three insurance companies. The conduct of the police … falls far short of the conduct which led the proceedings in ex parte Bennett to be stayed, and the court in Mullen to quash the conviction. On its own, we are not persuaded that this conduct was such that the judge was wrong to refuse a stay."

118. Bennett [1994] 1 AC 42 and Mullen [1999] 2 Cr App R 143 were extreme cases of abuse of state power. In Bennett, Lord Griffiths said (at page 62 ):

"… the judiciary accept a responsibility for the maintenance of the rule of law that embraces a willingness to oversee executive action and to refuse to countenance behaviour that threatens either basic human rights or the rule of law …

… if it comes to the attention of the court that there has been a serious abuse of power it should, in my view, express its disapproval by refusing to act upon it."

119. In Mullen, Rose LJ said (at page 158 ):

"Bennett-type abuse, where it would be offensive to justice and propriety to try the defendant at all, is different both from the type of abuse which renders a fair trial impossible and from all other cases where an exercise of judicial discretion is called for. It arises not from the relationship between the prosecution and the defendant, but from the relationship between the prosecution and the Court. It arises from the Court's need to exercise control over executive involvement in the whole prosecution process, not limited to the trial itself."

120. There are differences between the present case and Hounsham – most obviously in that the amount of contribution here was very much greater. Also, the contributor here is an emanation of the state.
121. In his ruling, the judge said:

"At the time, the Cleveland Police were unable officially to undertake that investigation and … that was the reason for approaching the DfES. It was funded to the terms that I have explained … and it was used for retired policemen to carry out the extensive problem of interviewing thousands of witnesses, no less than 450 students. It was not used by the Cleveland Police to pay the Cleveland Police and it was used for that limited purpose only … DC Bowman … the investigating officer at the latter stages of this case … told me … that the DfES did not interfere with the investigation and at no time ever tried to do so. They had no say in who was charged or when …

DI Matthews … produced various reports and a memorandum and he too assured the court that this prosecution had in no way been influenced by the DfES …

I do not think there has been a material irregularity in the DfES funding this prosecution in part. I do not think there is any evidence … that any of the conduct was so abhorrent to the legal system that it would be unfair to try the defendants … Has there been any real prejudice? Can the defendants have a fair trial? Well, my belief is that they have had a fair trial thus far and they will continue to do so."

122. On this appeal, Mr Woodall submits that (1) there was no lawful basis upon which the DfES could provide and the Cleveland Police could receive a financial contribution towards the investigation; (2) MS has suffered real prejudice as a result of that ultra vires contribution. He seeks to identify such prejudice in a common interest on the part of the DfES and CG in establishing fraud on behalf of MS in order to cover up their own shortcomings, which were accentuated by the inability of DfES to recover its losses by civil action. He describes the relationship between the DfES and CG on the one hand and the Cleveland Police on the other hand as "incestuous", such that it prevented a thorough and independent investigation – or at least that there was a significant risk of such a consequence.
123. Although the ultra vires point was conceded in Hounsham, it has not been conceded before us. As we have not had the benefit of submissions on behalf of the DfES or the Police (Mr Wheeler being instructed on behalf of the Crown Prosecution Service), we do not propose to determine the issue. We shall simply assume without finding that, for the purpose of this appeal, the funding arrangement was ultra vires. However, even on that assumption, the circumstances do not approach the sorts of "serious abuse of power" exemplified by Bennett and Mullen. Indeed, Mr Woodall does not suggest that the ultra vires point is such that the abuse for which he contends reached that level. He concedes that we are in the territory where, for an abuse of process application to succeed, it is necessary to establish on a balance of probabilities that MS could not receive a fair trial and that this requires proof of prejudice.
124. Mr Wheeler submits that there was no significant risk of prejudice in this case. The judge received and accepted evidence that the DfES did not interfere in the investigation. It had no say in who was charged or with what alleged offences. The matter was properly dealt with by the Crown Prosecution Service at headquarters level. We accept these submissions. Moreover, whilst we agree with the observations of Gage LJ in Hounsham about the dangers in the Police entering into funding arrangements with outside bodies, especially those who can be characterised as victims, we are entirely satisfied that no unfairness was occasioned to MS or the other defendants in this case. The judge allowed the matter to be aired at length before the jury. At an early stage of his summing up, having referred to the dangers identified in Hounsham, he said:

"So, if you feel … that as a result of this funding the defendants have been prejudiced then you must take this into account when considering the case against them. If you feel that the investigation has been materially affected by the funding of the DfES then you must take account of it in favour of the defendants. If you feel that, because of the funding, the collection of the evidence has been tainted as a result of it, then again it is something you must consider carefully when considering the evidence as a whole."

125. The judge also reminded the jury of the police evidence about the independence of the investigation and the absence of DfES interference with investigatory and prosecutorial decisions.
126. In our judgment, the judge was correct to reject the application for a stay by reference to the funding issue. He was entitled to find that the independence of the investigation and of the prosecution had not been undermined. He was also entitled to conclude that the defendants had not been exposed to significant prejudice. We entirely agree with his assessment of these matters. He was more than generous in the extent to which he permitted defence counsel to revisit these issues when the witnesses were giving evidence before the jury. His summing up on the issue was entirely fair. Nothing relating to the funding issue causes us to doubt the safety of the convictions.

(ii) The summing up

127. It is submitted on behalf of MS that the summing up was so deficient and inadequate that all convictions consequent upon it are unsafe. In short, it rendered the trial unfair. AS also adopts this ground of appeal. As we have related, the summing up took some five days. The transcript of it extends to 475 pages. Mr Woodall's criticisms of it are not that the judge lacked impartiality but that he failed to provide the jury with a proper framework with which to approach the case and, in some respects, he failed to deal with the defence case.
128. The structure of the summing up can be described in this way. The first 20 pages are taken up with legal directions. They are not criticised as such. The judge then dealt with the prosecution evidence in almost 400 pages. That evidence had been given over about 50 working days. The evidence of MS, who was in the witness box for about a week, was summed up in 15 pages and that of the other three defendants and their witnesses, which also took about a week in total, was summed up in 30 pages. When dealing with the prosecution evidence, the technique adopted by the judge was to work through it in batches – first the students, then the NDLC employees, then the representatives of the accreditation bodies, followed by financial and banking witnesses and the police evidence. This reflected the order in which the evidence had been called. The judge also referred to various schedules which had been produced by the prosecution to assist with the presentation and understanding of the case.
129. Mr Woodall's complaints about the summing up are numerous. The principal ones can be represented as follows. Firstly, the judge failed to provide the jury with a route map, count by count, defendant by defendant, issue by issue, by reference to which they could work their way through a complex case. Secondly, his summing up of the prosecution evidence became disjointed as he responded to requests from defence counsel to revisit witnesses whose evidence he had already summarised. Thirdly, he omitted to deal sufficiently with aspects of the defence case and made no reference to important documents which supported that case and undermined prosecution witnesses, particularly in relation to CG. It seems to us that the complaints, numerous as they are, all fit into one or more of these three categories.
130. The first category can be described as structural or functional. We say at once that the summing up was rather turgid and unimaginative. Although it had a structure, based on the chronology of the evidence, it contained little that was original to facilitate the jury's task. We agree that it would have been more helpful if the judge had presented the evidence more systematically rather than simply chronologically. A summing up, particularly in a long case, should be concerned with architecture, not just bricklaying. However, the question we have to consider is whether, in this particular case, the structure and style of the summing up were such as to impact on the safety of the convictions.
131. A recent example of a case in which convictions were quashed as a result of an inadequate summing up following a long fraud trial is Sampson and others [2007] EWCA Crim 1238. In giving the judgment of the Court, Maurice Kay LJ said (at paragraph 88):

"The central contention is that the summing up at no stage provided the jury with a clear structure for their task … the summary of the evidence was sequential, without a serious effort to relate particular witnesses and passages to specific counts on the indictment or defendants. We adopt a description used by [counsel]. It was a 'dispiriting recitation' ... . Nowhere did the judge draw together any of the multiple strands in the case. He did not take individual counts and summarise the evidence relied upon by the prosecution to support the particular count and the case for the individual defendant against it. In a case of this duration and complexity, it was incumbent upon him to do so. Over three weeks elapsed between the conclusion of the evidence and the commencement of the summing up. In shorter and less complicated cases, the failure of a judge to structure a summing up with the identification of issues and appropriate cross-references may not be fatal. However, in this case we have come to the regretful conclusion that the summing up did not 'properly equip the jury to discharge their task'. One way of testing the sufficiency or otherwise of the summing up is to read it from beginning to end and then ask the question: Did it explain the prosecution and defence cases such that the jury could embark on their task with a clear structure and with issues defined and related to one another? It ought to be possible for an outsider to read a summing up from scratch and to understand the case and the issues. We regret to say that all three members of this Court found it very difficult to do so upon one or even two readings of the summing up. If that was our experience, we have to assume that the jury was not properly assisted by it."

In the present case, Mr Woodall submits that the position is essentially the same as in Sampson.

132. As the passage from Sampson makes clear, the question whether structural shortcomings in a summing up make a conviction unsafe is case-specific. The shortcomings will vary, as will their context. For example, although the evidence in the present case, as in Sampson, was summed up sequentially or chronologically, here the sequence or chronology did have a logical foundation. Moreover, in Sampson there were additional causes for concern such as the three-week delay, the manifest incomprehension of the jury which was evident from the transcripts and the contemporaneous complaints of leading counsel.
133. Turning to the present case, it is necessary to identify what the judge did say by way of clarification of the issues. In relation to Count 1, he began by taking the jury through the Particulars of Offence set out in the Indictment, of which the jury had copies. He explained and emphasised the requirement of dishonesty and he referred to the three pleaded particulars:

"(1) Pretending to the said students that courses offered by the company were accredited by a recognised educational body;

(2) Pretending to the said students that they would receive a recognized qualification upon completion of a course;

(3) Diverting funds from the company which had been paid to the company by, or on behalf of, the students, for the purposes of completion of their course training."

Count 2 was particularised as

"dishonestly making claims under the [ILA] scheme for students from which they did not take, nor have any intention of taking, a financial contribution as required by the DfES."

It is by reference to these two counts that Mr Woodall advances his complaints.

134. It is a striking feature that, as far as Count 1 was concerned, of the 80,000 students who purchased courses from NDLC, only 18 gained an accredited or recognized qualification. Count 2, which was concerned with the period immediately after the DfES closed the ILA scheme, was based on the fact that, notwithstanding its closure, MS caused 28,000 marketing letters to be sent to students, who were not required to pay, but by reference to whom ATL was able to recoup £100,000 from the DfES. The other striking feature is that, in relation to both counts, the income was used in the colourful ways we have described. On any view, the central issue in relation to both Count 1 and Count 2 was dishonesty, which reverberates in the word "pretending". In summing up MS's evidence, the judge said:

"He said in relation to count 1, right at the outset, that he was not acting dishonestly and he did nothing to the detriment of the students. In relation to count 2, he said that he did not act dishonestly."

Dealing with Edexcel, the judge said:

"He didn't intend to deceive people by their marketing … We weren't letting students down, it was Edexcel."

135. As regards CG, he reminded the jury of MS's case that NDLC's marketing had been endorsed by CG and accreditation was "a foregone conclusion". He also referred to MS's evidence that he felt "totally betrayed" by CG. The eventual closure of the ILA scheme by DfES was "the last knife in the back" and that, in relation to Count 2, "to my knowledge every student had made a contribution under the ILA scheme". Turning to what we have described as the "colourful" use of the income, the judge referred to MS's words on re-examination:

"He never thought he was doing anything wrong … He wasn't acting in a dishonest way. The decisions on investment were entirely open … the people he dealt with were entirely professional …he made all the investments honestly … there was no contract, rule or requirement in relation to the ILA money. The money was not ring-fenced."

136. Of course, all this came towards the end of the summing up, reasonably close to the jury's retirement.
137. The question we have to consider is whether the passages to which we have referred sufficiently explained the issues to the jury or whether, being separated by days and hundreds of pages, they failed to equip the jury with the means to discharge their task.
138. We reiterate our criticism of the length and style of the summing up but, in our judgment, it falls on the other side of the line from Sampson when considered by reference to the safety of the convictions. The judge did, eventually, and through the medium of MS's evidence, crystallise the issues. Although the case was complex to a degree, as with many fraud trials in the end it came down to the question of dishonesty. In this, as in many other cases, the length of the trial and much of the complexity was attributable to the way in which the defence case was put – the process of confession and avoidance, involving aspersions on the honesty and good faith of others. That was the character of this trial. Nevertheless, whatever may be said of the acts and omissions of Edexcel, CG, DfES and others, ultimately the spotlight is on the state of mind of the defendant. We do not consider that MS was unfairly disadvantaged by the structure and style of the summing up. The issues, so far as he was concerned, were clear.
139. We turn to the second category of complaint, namely that the summing up became disjointed. Mr Woodall relies in particular on the way in which the judge summed up the evidence of some of the witnesses. In support of this submission he focuses on the evidence of some of the NDLC witnesses, most notably Brian Dowd and Stephen Calladene. Mr Dowd was a senior employee on the educational side who became a director of the company. He was relied upon by the prosecution to give evidence as to how NDLC was run as an educational company. His evidence in chief was summarised on the first day of the summing up in a passage which occupies six pages of the transcript. The cross-examination by Mr Woodall on behalf of MS was then referred to by the judge in about ten lines of transcript in the course of which the judge referred to the defence bundle and in particular to a schedule prepared by Mr Dowd highlighting the various meetings which had been held with CG. In answer to one of Mr Woodall's questions he said that CG "treated us despicably. We were told at one stage it needed three signatures and we would get it". At that stage the judge did not make further reference to the cross-examination on behalf of MS. He did refer to the cross-examination of Mr Dowd on behalf of Kenyon and to a passage in the evidence where Mr Dowd had said "We were let down by Richard Stott of CG as a result of which the students did not get their qualifications … CG themselves were always talking about partnership".
140. At the end of the first day of the summing up junior counsel on behalf of MS, in the absence of the jury, expressed concern that the judge had not included enough of Mr Dowd's evidence in cross-examination. In particular, whilst it was the prosecution case that a documentary exhibit was "a fake BTEC certificate", Mr Dowd had disavowed that. Other counsel for other defendants raised other issues. The judge listened to their observations and the matter was adjourned until the next morning. At the commencement of the hearing on the second day of the summing up the judge heard further submissions from counsel in the absence of the jury. The upshot was that he agreed to revisit the evidence of Mr Dowd. When the jury returned to court the judge told them that he had been asked to remind them of certain aspects of the cross-examination of Mr Dowd and that he would be doing so later in the day. He then picked up the evidence of Mr Calladene which he had begun to summarise on the previous afternoon but had not finished. In the event he did not return to the evidence of Mr Dowd at the end of the second day but at the commencement of the third day. By that time, counsel for MS had also asked for the summary of the evidence of Mr Calladene to be expanded. His job at NDLC was concerned more with the marketing operation. However, he was able to give evidence about numerous aspects of the operation of the company. The judge summarised his evidence in chief over about nine pages of transcript divided between the latter part of the first day and the early part of the second day. In summarising Mr Calladene's answers in cross-examination by Mr Woodall, the judge referred to evidence in which Mr Calladene had agreed that the effect of the News of the World articles and the withdrawal of CD "totally shattered the company and it wasn't assisted by DfES suspending the company from the ILA scheme". The latter "had a disastrous effect not only on NDLC but other providers of education". Mr Calladene said that NDLC had been "treated appallingly". As far as he had been aware, the company was run honestly. The judge then proceeded to summarise the evidence of further witnesses. At the end of that day, in the absence of the jury, reference was made by the judge to a document which counsel had agreed to provide him with, following the earlier exchanges.
141. At the commencement of the hearing on the third day, the judge discussed with counsel when it would be best to introduce the various material he had agreed to relate to the jury as a supplement to what he had already said about the evidence of Mr Dowd and Mr Calladene. When asked when would be the best time to introduce the material, junior counsel for MS said "Whenever your Honour feels it appropriate". Soon after that the jury returned to court and the judge began the resumption of his summing up by referring to the matters which had been requested by defence counsel. This included what Mr Dowd had said about the alleged fake BTEC document. The judge said:

"To clarify this issue, the Crown say that it is a fake BTEC certificate. The defence say it is not masquerading as a BTEC qualification but simply as an interim certificate of achievement designed to encourage students to continue with their studies. … Mr Dowd agreed that the marking system had integrity and that he did not churn out meaningless marks or deliberately mark someone down for convenience. He was again referred to the certificate which I have just referred to and confirmed that he and another tutor signed it confirming what the document meant and that the level of achievement was accurate. He agreed that it was a certificate of achievement, an in-house motivational certificate so students knew that they were getting somewhere … "

142. The judge then dealt with the evidence of Mr Dowd so far as other counsel had requested supplementation before turning returning to the evidence of Mr Calladene. He added that which counsel had asked for. Just a few pages later, the judge was reminding the jury of the cross-examination of Linda Sykes of Edexcel. This included a reference to her evidence to the effect that it was a common occurrence for providers to offer interim certificates of encouragement and her acknowledgement "that she was not saying that NDLC was churning out forged certificates".
143. Mr Woodall's submission is that, coming as they did at the beginning of the third day, Mr Dowd's evidence having been summed up on the first day and Mr Calladene's over the latter part of the first and early part of the second day, and numerous other witnesses having been summarised in the meantime, the correctives caused the summing up to become disjointed to the point where the attempt to remedy the earlier omissions was unsuccessful. He says that the jury would have been confused as to what issues these supplementary passages related to and as to how they fitted in to the overall presentation of the case. He further criticises the judge for not having dealt adequately with these witnesses initially, adding that the eventual remedial steps lacked appropriate focus and direction.
144. We do not accept these submissions. Whether or not the judge was justified in omitting the material when he first summed up the evidence of Mr Dowd and Mr Calladene, counsel were quite entitled to make their representations as they did. The judge received them in an entirely co-operative way and was content to revisit the evidence of the witnesses precisely in the terms requested. We can conceive of circumstances in which a jury might become confused by a sudden and apparently random reference to the evidence of an earlier witness at a later stage of a summing up and without adequate explanation. However, we do not think that this can be said of the judge's treatment of these witnesses. It is true that he had been summarising the evidence of other witnesses during the intervening period and it is also true that the intervening period itself was a little longer than he had anticipated when first telling counsel and the jury when he intended to return to the witnesses. However, we do not think that the delay was significant. Indeed, we think it may have been more helpful to the jury to receive the supplementary material at the commencement rather than at the end of a working day. When one reads the supplementation, it strikes us as being inherently intelligible. We do not consider that the jury would have been in any doubt as to which issues or which aspects of the case it related to. Accordingly, we reject the submission that the summing up became disjointed by this sequence of events.
145. We now turn to the third category of complaint, namely that the summing up failed to deal sufficiently with aspects of the defence case. Although the submission is not limited to Count 1, its emphasis is focused there. Indeed, the issues on the other MS counts were simpler and did not involve attacks by the defence on other persons or bodies in the way that the case on Count 1 did, especially in relation to CG.
146. As we have related, when summing up the evidence of MS, the judge began by telling the jury that his defence was that he had not acted dishonestly and that he had not done anything to the detriment of the students. We have also referred to the passages in which the judge described Ms's case in relation to CG – CG "were 100 per cent aware of our marketing", accreditation "was a foregone conclusion", but later he felt "totally betrayed" by CG and that their withdrawal was "the last knife in the back". We are satisfied that the jury was left in no doubt about how that defence was being put. Mr Woodall's submission is really that the judge did not put sufficient flesh on its bare bones. In particular, he did not remind the jury of some of the documents that reflected badly on CG. The central feature of this criticism is that the judge did not do justice to the cross-examination of Andrew Johnston of CG, the witness to whom Mr Woodall had put much of the CG documentation in order to establish the duplicity or complicity of CG.
147. The judge did read out parts of two of the CG documents, including an internal email of 1 May 2001, in effect inviting the jury to follow it in the bundle produced on behalf of MS and giving the page number. He read out this passage:

"Our stance. I firmly believe that we have no option but to maintain that we allowed them to use our name and logo subject to the course being accredited. We must maintain that they all knew this and that we have told them verbally to stop using the name and logo in this way. This is not a great argument … I have seen the ad that went out on TV but the only one we can realistically run without deviating from the truth is our intentions have not been fraudulent although may be construed to be"

148. Two pages later in the transcript, the judge, in the context of summarising the cross-examination of the same witness on behalf of Kenyon, read out another telling extract from the same document. By then, he had also quoted a concession made by the witness to Mr Woodall to the effect that another CG internal email - in which Michael Osbaldeston had referred a statement to the News of the World journalist: "We have not approved NDLC to offer any CG courses" as "a sparse comment" – in other words, that it was economical with the truth. The judge also referred, by means of giving page numbers, to other emails and letters which Mr Woodall had put to Mr Johnston. When further summarising the cross-examination on behalf of Kenyon, he drew attention to other documents which were equally relevant to the way in which MS's case was being put.
149. We have considered additional documents which Mr Woodall had put in cross-examination but which were not expressly referred to by the judge. We do not consider that the judge sold MS significantly short in this regard. The judge had the difficult task of ensuring that MS's case about CG was left to the jury, whilst always remembering that the jury were trying MS and the other defendants, not CG or its employees. It is not uncommon in fraud trials for the defence to seek to turn the spotlight on others not in the dock. In this case, there was a legitimate interest in probing the acts and omissions of CG to the extent that they might have impacted on the honesty or dishonesty of MS. Mr Woodall achieved some success in that regard. However, we are satisfied that the judge gave the jury a sufficient reminder of this material to equip the jury for their primary task of assessing the state of mind of MS.
150. The relationship with CG was not the only part of the offence comprised in Count 1. As we have related, CG came into the picture after Edexcel and, indeed, the case for the Crown was that, even before the Edexcel period, NDLC was deceiving students by referring to entirely fabricated qualifications – FIACO, MIACO, IACO, ABAM, APD etc. Mr Woodall submits that the judge did not remind the jury of MS's case about them. However, it was not disputed that they were fabricated acronyms. MS's case about them – such as it was – took the form of reliance on an unidentified European Directive. It remains unidentified to this day, which causes us no surprise because it defies credibility that a Directive somehow authorised the fabrication of qualifications or that someone in the business of education might have thought that it did. We do not consider that, on any objective basis, MS was disadvantaged by the judge's omission to refer to this aspect of his defence.
151. It is not necessary for us to deal with each and every one of Mr Woodall's complaints to the effect that MS's defence was not properly left to the jury. We have concentrated on what seem to us to be his main points about Count 1. Count 2 was far simpler, the issue for the jury being MS's state of mind. The judge made that clear to the jury and reminded them of MS's evidence about his state of mind:

"To my knowledge, every student had made a contribution under the ILA scheme."

152. We are satisfied that the jury would have understood both MS's case (that, having once made a £25 contribution, a student did not need to make a further contribution for a further course) and the case for the Crown (which emphasised the circumstances in which MS caused ATL to be used as a vehicle to make a final raid on the ILA scheme between the announcement of its closure and its actual closure, with no ensuing benefits to the students). We form the same view of Count 3, the APD allegations as to which the judge identified the issue as one of dishonesty and went on to summarise MS's evidence of his state of mind. In fact, Mr Woodall has said very little in this appeal about Count 3 or Count 7, which is related to Count 3 and as to which the judge again reminded the jury of MS's evidence.

Conclusion on the summing up

153. We conclude that neither separately nor cumulatively do the criticisms of the summing up establish that the convictions of MS were or are unsafe. However, having said that, we do not conceal our view that the summing up, though adequate, was only marginally so. It was impartial and it contained no legal misdirections – no one suggests to the contrary. However, it would undoubtedly have been improved if it had contained more in the way of signposts and guidance. We have found it useful to compare this case with Sampson (see paragraph 131 above). We consider that this case falls just on the other side of the line. Although this summing up may have lost momentum from time to time, we believe that a reasonable reading of it would enable someone to follow and understand the case. It can fairly be described as compartmentalized, rather than structured, replicating the systematic way in which the Prosecution adduced the evidence. There is nothing on the face of the transcript (as there was in Sampson) to indicate that the jury were confused by it. Moreover, the judge acceded to all requests from counsel to add to it, or to revisit witnesses, broadly in the terms requested. After the early requests and remedial action (see paragraphs 140 to 144, above), counsel did not feel impelled to seek further detail of, in particular, the defence case (as they had done in forceful terms but with little satisfaction in Sampson). Moreover, there was nothing in the length or chronology of the trial here of the kind which caused concern in Sampson.

(iii) Rejection of submission of no case to answer: Counts 1 and 2

154. At the conclusion of the prosecution case, as we have already set out in summary above, submissions of no case to answer were made on behalf of all defendants. So far as MS was concerned, the submission was made in relation to Counts 1 and 2. It was rejected in respect of both counts. In the grounds of appeal, it is contended on behalf of MS that the judge was wrong to reject the submissions. Although this ground of appeal was not abandoned, it is fair to say that Mr Woodall advanced it with the utmost restraint and economy. We can well understand why.
155. Whilst it is true that, in the course of the prosecution case, Mr Woodall had obtained supportive answers to questions in cross-examination of numerous witnesses including NDLC staff and employees of the accreditation bodies, the objective facts which provided the foundation for the prosecution case remained. There was ample evidence upon which the jury could be satisfied that courses were offered on the basis that they were accredited by a recognised educational body and that students would receive a recognised qualification upon completion. Some of the represented qualifications (FIACO, MIACO, IACO, ABAM, APD etc) were simply fabricated by the appellant. Moreover, although the case for MS as explored with the prosecution witnesses in cross-examination was that Edexcel and particularly CG themselves had questions to answer about accreditation, there was undoubtedly evidence that the representations particularised in the indictment were in fact made and were untrue. The issues were ones of intention and dishonesty. They had to be considered not only by reference to the points gained by Mr Woodall in cross-examination, but also against undisputed facts – for example that only 18 out of 80,000 students who were recruited by NDLC between 1999 and 2001 obtained a recognised qualification and that during that period NDLC received over £16 million from the students and DfES. There was evidence from NDLC witnesses that students were being told that all courses were BTEC accredited when in truth they were not. There was evidence of Edexcel expressing concern and eventually withdrawing because of the inaccurate marketing of courses. Moreover, whatever may be said as to CG's approach, the fact remained that there was evidence of marketing by NDLC on a massive scale on a false prospectus. We repeat, the essential issues were as to intention and dishonesty. They were matters for the jury.
156. The position is the same when one considers the element of diversion of funds. The objective evidence established an income of millions, based on upfront payments by students and DfES advances, accompanied by massive disbursements on projects unrelated to the delivery of courses. These included the construction of MS's private residence, the purchase of racehorses and training facilities, and the failed investments in Red Balloo and Fiche and Chips. All this was being done at a time when creditors were not being paid and liability for tax and national insurance was either grossly underpaid or not paid at all. Of course, MS sought to refute that inferences of dishonesty could flow from these facts. On his behalf, it was pointed out that the rules of the ILA scheme did not prevent utilisation of the income derived from it for other purposes; there was no requirement of ring fencing; and, as with any other company, NDLC was entitled to apply its funds to lawful purposes as it saw fit. However, whether these points negatived dishonesty was essentially a matter for the jury. We are in no doubt whatsoever that the judge was correct to reject the submission of no case to answer in relation to Count 1.
157. We turn to Count 2. This alleged dishonesty was in making claims under the ILA for students from whom MS, through ATL, did not take and had no intention of taking a financial contribution as required by the rules. The facts underlying this allegation occurred in October-November 2001. Until then, Assert Training had been a largely dormant company. On 24 October DfES announced that the ILA scheme was to close. MS then instructed Mr Patterson to send out 28,000 letters to NDLC registered students, offering them a free second course. This resulted in ATL receiving about £100,000 from DfES during the four weeks leading up to the closure of the ILA scheme on 21 November. Thus, ATL obtained the money from DfES without any corresponding contribution from the 400 students who accepted the offer from Assert Training. Mr Patterson was instructed to prepare invoices for £25 for the students which he did but none were ever sent. Much of the money received was spent on racehorses. ATL collapsed and the students did not receive any support or training. As with Count 1, the issue for the jury was dishonesty. The case for MS was that, amongst other things, he believed that students who had already paid in relation to a previous course were not required to pay again. Whether that was a genuine belief negativing dishonesty was a matter for the jury. Again, we are in no doubt that the objective facts established by the end of the prosecution case were clearly sufficient to require the judge to leave that count to the jury. The case against the other defendants, Kenyon and Hornsby, was different and the judge acceded to the submission that they had no case to answer on Count 2.
158. In summary, therefore, we are satisfied that the judge was correct to leave Counts 1 and 2 to the jury, so far as MS was concerned.

(iv) Disclosure

159. This ground of appeal is in the form of a complaint of inadequate and/or late disclosure of documents, particularly in relation to CG. It is not alleged that the prosecution or the police failed to disclose documents in their possession. The submission is that CG suppressed material that was illustrative of CG's own misconduct and did so in order to scapegoat MS and his companies. It is common ground that a considerable amount of material from within CG was disclosed in advance of the trial and more came to be disclosed in the course of the prosecution case, with time being given by the judge for consideration of it and, where necessary, the recall of a witness. Mr Woodall's complaints focus on: (1) the way in which the evidence of Andrew Johnston, the main CG witness, was prepared and refined, through a series of draft statements, perhaps as many as 20, which were drafted and amended with the assistance of CG's solicitors; and (2) internal CG documents, said by Mr Woodall to evidence bad faith on the part of CG and an attempt to distance itself from the consequences of its own decisions, thereby enabling it to hang MS out to dry.
160. We accept that there is force in Mr Woodall's submission that CG was being defensive and unforthcoming. However, with the assistance of the significant documentation that was disclosed prior to the trial, augmented by that which became available in the course of the prosecution case, Mr Woodall was able to paint precisely the picture he sought to paint in relation to Mr Johnston and CG. As we have observed earlier when considering the summing up, the judge did not go into great detail about all the documents to which Mr Woodall referred when cross-examining Mr Johnston. However he referred to sufficient to enable the point to be made. For example, his reference to the "our stance" document to which we referred in paragraph 147 above and to the description of another part of the evidence as "a sparse comment", in the sense of being economical with the truth. The judge was able to refer and did refer to the various drafts of Mr Johnston's statements which had been prepared by the solicitors. The judge also referred to Mr Woodall's submission that CG had been "setting NDLC up" as far as The News of the World was concerned. Moreover it was not only Mr Woodall who was treading this path. Other defence counsel, in particular counsel on behalf of Kenyon, explored these same matters.
161. We are left with the clear impression that, notwithstanding the lateness of some of the disclosure and the apparent determination on behalf of CG to limit it, including the instruction of counsel to attend the trial and argue matters of legal professional privilege, the defence were nevertheless able, or at the very least became able, to make the points they wished to make about CG, supported by the disclosed material. They were assisted by the generosity of the judge in allowing time for consideration of the late disclosed documents and for the exploration of these matters in cross-examination. We do not criticise the defence for their approach to these issues at trial. However, it is plain that, whatever was or could be established about CG was more a matter of diversion than defence. Even if CG were as disingenuous as Mr Woodall submits, that does not significantly detract from the strength of the evidence against MS.
162. Before leaving the issue of disclosure, we ought also to refer to a late sub-plot which led to an application to adjourn the hearing of the appeals. Shortly before the hearing, MS's legal representatives were made aware of material that had been disclosed in a pending trial involving other defendants but arising out of the same police investigation. It has nothing to do with MS or any of his companies. It is concerned with the alleged fraudulent activities of others in relation to the ILA scheme. The disclosure in the other case includes DfES material illustrating ways in which DfES witnesses prepared their statements, with the involvement of legal advisers, and were given guidance as to their approach in giving evidence. We refused the application for an adjournment. It seemed and seems to us that the developments which gave rise to the application are of no real significance to the present appeals. To the extent that they may be said to go to the funding issue, we cannot conceive that they could produce a different decision on that issue from the one we have reached.
163. We turn next to the substance of AS's appeal.

AS's appeal

164. As we have said, AS was convicted by the jury on Counts 4, 5, 6 and 8, these being money laundering offences contrary to sections 328 and 329 of the Proceeds of Crime Act 2002. Counts 4, 5 and 6 were offences of acquiring criminal property, each being based on the receipt into her bank account of a particular sum of money originating in the APD bank account, respectively £2,100, £4,000 and £870. The prosecution case was that each of these sums constituted criminal property within the meaning of that Act. Count 8 was an allegation of entering into an arrangement contrary to s.328(1) of the Act, being an arrangement to facilitate the acquisition, retention, use or control of criminal property.
165. It should be noted at once that AS was not charged with any offence of fraudulent trading or of any offence arising from any part played in the running of the companies concerned. It was further made clear to the jury, in legal directions which (we were told) were substantially drafted for the judge by AS's counsel Mr Nicholas Johnson and were agreed by the Crown, that her convictions on any count were contingent on the convictions of her husband ("MS"), the first defendant at trial and the principal appellant before us. Thus, she could not be convicted on Counts 4-6 unless MS was convicted on Count 3, and she should not be convicted on Count 8 unless he was convicted on Count 7.
166. AS pursues three grounds of appeal with leave of the single judge. Two of these grounds can be dealt with very shortly. By ground 2 she argues that the judge erred in rejecting the abuse of process argument based on the funding issue. She does no more than to adopt the argument advanced by her husband, supplemented as it is by the written argument of Mr Barnett on behalf of the intervener. By ground 3 she adopts the arguments of Mr Woodall for MS in relation to the quality and structure of the summing-up. Mr Johnson on her behalf advances no additional or separate argument to the lengthy and detailed submissions of Mr Woodall; understandably so, since Mr Johnson disarmingly told us that the legal directions at pp.16:23 to 20:22, and a further (very much later) passage at pp 464:1 to 464:15, were drafted by him for the judge and were read to the jury without alteration. Thus, the outcome of AS's appeal on grounds 2 and 3 is dependent on the outcome of MS's appeal. His appeal having failed, hers does too.
167. Count 8 related to the sum of £15,144.41 which was the credit balance in the APD account when MS closed it. Having transferred that closing balance into an account of his own (this being the offence of transferring criminal property for which he was convicted on Count 7), the prosecution case was that he thereafter indirectly transferred it to AS's account by arrangement with her, and that she knew or suspected that the money which thereby reached her account constituted criminal property.
168. There was before the jury a graphic diagram, prepared by the Crown, illustrating the movement of funds to and from accounts operated by MS and AS during the relevant period. This diagram illustrates that the sum of £15,144, together with sums totalling £5,625 constituting a large number of payments of £15 made by students, reached MS's savings account held at Yorkshire Bank. MS then made large cash withdrawals from that account, totalling £29,590, which far exceeds the incoming amounts to which we have referred, which were used in gambling. Sums totalling £20,450, including one cheque for £12,000, were credited to the account in the same period. These represented gambling winnings, as is confirmed by the documents to which our attention was drawn. Substantial sums, captioned on the diagram "believed to be gambling winnings", were paid into a number of accounts in the name of AS.
169. This material was before the court at the time the Crown closed the prosecution case. Ground 1 is a contention that the judge ought then to have acceded to AS's submission that there was no case for her to answer on Count 8, on the basis that the money reaching her accounts constituted MS's gambling winnings and that there was no evidence that the money used for gambling in the relevant period was criminal property, there being no evidence that it was or represented part of the funds originally transferred by MS from the APD account to his own.
170. There were of course other arguments available to AS as regards her knowledge or suspicion as to the origin of these funds. These also were advanced in support of the submission of no case to answer but were not renewed before us. The appeal is argued only on the basis that the judge should have ruled that there was no evidence that these sums reaching the Appellant's accounts constituted criminal property. It is, however, worth noticing, since counsel himself later drafted the relevant passage of the summing up to assist the judge, that he there formulated the question for the jury as follows:

"The Defence argue that you can not be sure that APD money was transferred into any of Angela's accounts and in any event because it is accepted that deposits came into her account from gambling winnings and other legitimate sources, not directly from APD or Mike's personal account. They say that the gambling was successful enough at that stage to pay for itself so you can not be sure that the money going into her accounts had its origins at all in APD money. The Prosecution say you can safely draw that inference from all the facts."

171. The judge ruled against the submission on 17 September 2008. Having dealt with the submission that there was no evidence of the relevant knowledge or suspicion on her part, he went on:

"As far as Count 8 is concerned, they have to prove that the monies flowing through the accounts all came from APD and that the monies had been unlawfully removed from APD as a result of her husband's criminal conduct. It is submitted that the Crown cannot prove the requirements for Count 8 as there were no direct transfers of money from the APD to that of Angela Smallman's.

It is clear to me that gambling monies were paid into her account from time to time and it is also clear from the documents I have seen that during the relevant period the gambling made a profit of £2,000.

It is submitted that all those points go towards negating the suggestion that the alleged arrangement was entered into at all.

It is interesting that in the course of the interview she was not asked about any of the withdrawals or credits to her account, but it is contended by Mr Wheeler that the points which have been raised by Mr Johnson are, in essence, jury points and matters which the jury will have to decide in due course.

He has reminded me that Counts 4, 5 and 6 are simply specimen counts because the total receipts into her account amounted to £20,000. She was aware that her husband had the cheque book and it was quite clear that at the relevant time things were far from easy for the Smallman family because of the collapse of NDLC.

As far as Count 8 is concerned, the arrangement charge, in interview she said that she knew that her husband had closed the APD account and transferred the monies to his savings account and she also admitted that APD monies had been paid into her account.

I think on balance, listening to the respective arguments, hat there is a case to answer against Angela Smallman and that the issues which have been raised in the skeleton argument will have to be decided in due course by the jury."

172. Mr Johnson submits that the judge erred in this conclusion. There was no evidence that the sums which reached AS's accounts had their origin in APD at all. AS's acknowledgement in interview, that she knew that having closed the APD account her husband had transferred funds into his account and into her accounts, was made without reference to any documents. Once she had made her own enquiries and examined the available bank statements and other documents, she was interviewed again on 24 January 2007 and was able to confirm (in a prepared statement supplied to the police) the payments into her accounts and their source as MS's proceeds of gambling. MS was already in profit in his gambling activities by the time that any APD money (criminal property) was withdrawn. Thus he had no need to have recourse to APD money to fund his gambling, and there was accordingly no evidence from which the jury could conclude that the winnings which were in due course transferred to AS's accounts arose from using APD money to place his bets.
173. In our judgment this takes too narrow a view. Section 340(3) of the Act provides as follows:

"Property is criminal property if –

(a) it constitutes a person's benefit from criminal conduct or it represents such a benefit (in whole or in part and whether directly or indirectly), and

(b) the alleged offender knows or suspects that it constitutes or represents such a benefit."

(As we have explained, (b) does not now arise for the purposes of this appeal, but it is to be noted that in due course the jury found the relevant mental element proved against AS on all the four counts which she faced.)

174. The breadth of the definition of (a) must be given its full weight. MS's gambling winnings were part of his general wealth and were intermingled with his criminal property derived from APD by the time the relevant transfers to AS's accounts were effected. In oral argument Mr Johnson effectively conceded that if the evidence has been that MS was a net loser in his gambling activities, the court would have been entitled to draw the inference that the payments to AS must have included APD money. This concession was rightly made, but it does not follow that because he was in profit as a gambler the transfers to AS did not consist of or represent APD funds in whole or in part. Subject to proof that AS knew or suspected that his overall funds included APD money and that the transfers into her accounts were made from those funds, notwithstanding that the transfers were made as and when he won at gambling, it was open to the jury to conclude that the money transferred represented, in part at least, MS's benefit from criminal conduct.
175. AS's appeal against conviction is therefore dismissed.
176. Mr Johnson also pursues an appeal against sentence on behalf of AS. He does so with a degree of restraint, no doubt bearing in mind that she had already been released from her 15 month sentence at the time of the hearing in this Court. In our judgment, it cannot be said that a sentence of immediate custody was wrong in principle. We consider that its duration was severe in view of her limited participation, previous good character and family commitments. However, we do not feel able to say that it was manifestly excessive following a trial in which the judge had ample opportunity to assess her culpability. Accordingly, we also dismiss her appeal against sentence.

Conclusion

177. It follows from what we have said that we do not consider any of the convictions of either MS or AS to be unsafe and we therefore dismiss their appeals against conviction. AS's appeal against sentence is also dismissed.

Note 1   The sentences on each count on which they were convicted were as follows. MS: Count 1, 6 years imprisonment and disqualified for 10 years under section 1 of the Company Directors Disqualification Act 1986; Count 2, 1 year imprisonment consecutive to Count 1; Counts 3 and 7, 1 year imprisonment and 9 months imprisonment respectively, concurrent to the other sentences passed. AS: Count 8, 9 months imprisonment; Count 5, 6 months imprisonment, consecutive to Count 8; Counts 4 and 6, 3 months imprisonment and 2 months imprisonment respectively both of which sentences were concurrent to the other sentences passed.    [Back]