Lee & Anor, R. v

LORD JUSTICE RICHARDS: Darren Lee and Martin Williams appeal against sentences of five years nine months' imprisonment imposed on each of them by His Honour Judge Pitts at Southwark Crown Court on 4th March 2008 following their conviction on a count of conspiracy to defraud. Lee appeals with leave of the single judge, Williams with leave of this court to which his application was referred by the Registrar. Both men were also disqualified from being a company director for eight years, but there is no appeal against that aspect of the sentence.

The appellants were two of a large number of defendants charged in connection with an elaborate fraud, the nature of which we will describe in a moment. The original indictment was severed and the appellants were in the first group to be tried. One of their co-defendants, Lee Quincey, pleaded guilty shortly before the trial. He was sentenced to five years 11 months' imprisonment. Another co-defendant, Ian Clark, was convicted and was sentenced to three years' imprisonment. A further co-defendant, Duncan Adamson, was acquitted. There was also a defendant by the name of Jonathan Quinn who pleaded guilty on rearraignment to conspiracy to launder the proceeds of crime and was sentenced separately to three years' imprisonment consecutive to a sentence already being served.

A second trial, of the remaining defendants, is in progress at the moment but relates, as we understand it, to a different part of the conspiracy.

The relevant facts may be summarised as follows. Lee and Williams were business partners who controlled and were directors of Britanniacity UK Limited, a Liverpool based company specialising in the brokering of trades in mobile phones. The company banked at the St. Helens branch of the Nat West Bank.

Between 28th April and 1st May 2004 a total of nine cheques with a combined face value of over £20 million were paid in over the counter at the St. Helens branch of the bank into Britanniacity's bank account. The first six were paid in by Clark. All nine cheques had been written out by Quincey. They were drawn on the closed account of a company called Charlotte Browne Limited. Owing to what the Crown attributed after investigation to a fundamental weakness in the banking system and inadequate control by bank staff, the first six cheques paid in, totalling more than £15 million, were treated as cleared. This resulted in authorisation by the bank of transfers totalling just over £15 million from the account of Britanniacity. The money so transferred was swiftly forwarded through a series of different company bank accounts, each company taking a commission. The defendants in the second trial are generally directors of companies through which the funds flowed or of other companies said to be connected to the fraud.

By May 2004 over £13.5 million out of those funds had reached the account of Alverton Finance Limited in Latvia, apparently en route for the intended final destination in Dubai. By then, however, Nat West had realised that it had been defrauded. It was able to trace most of the money, obtain a freezing order and take civil action against a number of the companies in the chain. It eventually succeeded in recovering getting on for £14 million. The bank's total loss in the end was £1,340,000.

To make the movement of monies between the various bank accounts appear lawful, paperwork had been created purporting to show that payments were being made between companies in relation to the supply of 38,500 mobile phones brokered over six trades and that the ultimate purchaser was Charlotte Browne Limited, the company on whose closed account the cheques had been issued. In reality the phones that were the subject of these defrauded supplies had never existed. The documents created formed part of the business records of many different companies and included purchase orders, invoices and inspection reports for the phones.

Lee and Williams withdrew the total sum of £210,000 in cash from the monies that had been paid into the Nat West account. That sum purported to be a brokerage fee for Britanniacity's involvement in the trades. The cash was shared between them -- that is to say they received £105,000 each. It was not suggested that either of them profited personally beyond that sum from the conspiracy.

The appellants' defence, which was rejected by the jury, was that the company had been targeted by fraudsters as a vehicle through which the fraud could be perpetrated.

In his sentencing remarks the judge referred at the outset to the scale of the conspiracy, the attempt to take over £20 million of Nat West's money and the successful transfer of over £15 million. He described the operation of the fraud at a considerable length. He said that the organisers and planners of the fraud found the perfect partners in Lee and Williams as directors of Britanniacity. That company had traded extensively in 2003 with a number of the companies controlled by the fraudsters. The judge was prepared to assume that that had been legitimate trading. Later in his sentencing remarks he said that the turnover of Britanniacity in 2003 apparently from honest mobile phone trading was staggering -- it amounted to tens of millions of pounds. The judge said that Lee and Williams were well known to the business managers at the St. Helens branch of Nat West and regularly paid huge sums into and out of the company's account there. They were good business customers with a massive turnover.

The fraudsters chose Clark to pay in the cheques over the counter at the bank. He had a long and close association with one of the key principals and organisers of the fraud, Mr Sohail Ackrim. The judge went on to describe the writing of the cheques, the payments in and the subsequent transfers and withdrawals from Brittaniacity's account and onward movement of the money. He referred to Quincey as one of the major players in the fraud, one of the planners along with Mr Ackrim. Quincey was involved in every aspect of the fraud at a very senior level, planning the putting into effect and transit of the funds to Latvia and, as it had been hoped, on to Dubai. The judge gave various details of his involvement including the writing out of the nine cheques and handing them to Clark for payment in. Quincey's plea followed very shortly after service of handwriting evidence in respect of the cheques which indicated that he was their author. It was shortly before the trial but the judge said that he stood by the remarks he had made at the time about giving significant credit for the plea. He indicated that his starting point for sentencing Quincey was eight years but he would give 25 per cent discount for the plea, resulting in a sentence of six years less one month to take account of the time spent in custody both in Spain and in this country.

In relation to Lee, the judge said he was taking into account that he was a man of good character, 35 years of age with a wife and young children. He referred to the very large turnover of Britanniacity in 2003 and described Lee and also Williams as living the good life on the back of profits generated by the company. He continued as follows:

Turning specifically to Williams, he said that Williams was now aged 29 and was also of good character. He was better qualified and better educated than Lee, having some real expertise in computers. He knew how to operate the Nat West banking system which had been exploited to enable uncleared funds to be transferred and he actually did the transfers. That was the Bank Line Payment Manager facility to which the judge had referred in the passage we have quoted. Although Williams had resigned from Britanniacity in October 2003 he still retained an interest in it and played a full part with Darren Lee in "the boiler room ... of this fraud that was Britanniacity."

The judge pointed to the fact that they both fought the case vigorously and earned no credit for a plea and that neither of them showed any real remorse. He also said this:

The main submissions on behalf of the appellants have been advanced by Mr Mansell, counsel for Lee. They have been adopted by Mr Stables, counsel for Williams.

Mr Mansell submitted first that the judge took too high a starting point against a maximum sentence of 10 years for conspiracy to defraud in the sentences that he imposed. In particular the starting point of eight years for Quincey was too high, bearing in mind Quincey's position as described by the judge in the hierarchy. It is submitted that a sentence of that level for somebody playing the role played by Quincey in this fraud does not give sufficient room to distinguish between this case and other even more serious cases of conspiracy to defraud, bearing in mind the ten year maximum.

It is further submitted that the judge was wrong to treat the offence in this case as aggravated by a breach of trust. Whilst there should be a relationship of trust between a bank and its customers it is said that a breach of that trust is not sufficient or was not sufficient in this case to aggravate the offence. The point is also made that the success of the fraud depended on exploiting a loop hole in the bank's automated procedures rather than on a direct exploitation of the relationship established with bank staff. Therefore it is submitted that the guidelines in Barrick (1985) 81 Cr.App.R (S) 78 relating to breach of trust do not have a direct application to this case.

Nonetheless, attention is drawn to the range of factors said to be relevant in Barrick and various points concerning this case are made by reference to those factors. Mr Mansell says that in this case the fraud was perpetrated over a relatively limited period. It was planned in January 2004 and executed in late April and May. He also points out that the appellants were not involved in the initial planning but were recruited at some stage after January. The point is made that the actual ultimate loss to the bank was only some £1.3 million, the rest having been recovered. It is suggested that the judge was unduly influenced in his approach to seriousness by the fact that £15 million had been transferred and the target was to obtain over £20 million. A more balanced approach, it is submitted, would have been to focus on the actual loss and to treat it as aggravated by the unsuccessful attempt to obtain a larger amount. It is further said that the benefit obtained by the individual appellants, amounting to £105,000 each, should be viewed as an additional factor in that context.

It is submitted that there is in this case no evidence as to the use to which the money taken was put. The victim in the case was the bank, a large bank, rather than a large number of individuals, as in the case for example of investor frauds. Indeed, Mr Mansell has also taken the court to the guidelines in a case involving investor fraud, namely Feld [1999] 1 Cr.App.R (S) 1. He has referred by reference to the factors there identified to the amount in issue here, the way in which the fraud was carried out, the period over which it was carried out and the consequences, again focusing upon the fact that it was the bank alone that was adversely affected rather than a large number of small investors having suffered as a result of the fraud.

In his brief submissions Mr Stables drew our attention to a further case of investor fraud, that of Palmer [2002] EWCA Crim. 2683 and submitted that the sentence of seven years' imprisonment in that case suggests that a sentence of just under six years in the present case was too high.

As to those various submissions we conclude as follows. First, this was in our judgment a case involving a degree of breach of trust, taking advantage of the relationship built up with the bank. It is not an aspect of the case upon which we would place great weight, but we do not read the judge's sentencing remarks as suggesting that he placed more weight on it than he was entitled to do. It seems to us that the submissions made in relation to breach of trust do not assist the appellants materially in this appeal.

We note that if this were treated as a standard case of breach of trust then on the guidelines in Barrick, as updated in Clark [1998] 2 Cr.App.R 137 and further considered in Hepplestone [2007] EWCA Crim. 1882, the starting point of eight years for Quincey in the present case was plainly within acceptable limits and no conceivable objection could be taken to it.

As to the various factors described as relevant in Barrick it seems to us that the important point on which to focus here is the size of this conspiracy. True it is that Nat West's loss was limited to £1.3 million because of the prompt steps it took to freeze and recover monies once the fraud was detected, but it is plainly material that over £15 million had been dishonestly transferred and that the target was a sum in excess of £20 million. Nor should one minimise the amount gained personally by each of the appellants, a sum of over £100,000. They fall to be punished not just by reference to their personal gain but by reference to the overall scale and effect of the conspiracy in which they played so central a part. The fact that the victim here was a bank rather than a series of individual investors does not seem to us to provide a great deal of assistance to the appellants, given the nature and scale of the fraud sought to be perpetrated.

As to the difference in sentence between the appellants and Quincey, plainly the true comparison is between the eight year starting point for Quincey before credit was given for his plea and the sentences of five years nine months imposed on each of the appellants who fought the case and earned no credit for a plea. We see nothing in that difference to give rise to any objectionable disparity. It is a fair reflection of the differences in their roles and in particular of the fact that the appellants were not the original architects of the plan but were approached by others to participate in it. The fact remains that having been approached and having agreed to participate in it they played a key role in the conspiracy, as the judge found. They were vital to its success.

In all the circumstances, we not only reject the contention that the starting point for Quincey was too high, but also reject the contention, whether advanced consequentially upon the point relating to Quincey or as an independent point, that the sentences imposed upon each of these appellants were too high. Plainly it was right to impose the same sentence on each of them. It has not been suggested otherwise.

We take the view that the sentences were not in any way excessive but were amply justified for this offence on conviction after trial, even when all due allowance is made for the various matters pressed on us by counsel, both in the oral submissions and in their written submissions, to which we refer simply to indicate that we have taken due account also of matters of personal mitigation which have not been the main focus of the oral submissions before us this morning.

Accordingly, we see no substance in these appeals, which are dismissed.