Afolabi, R. v

LORD JUSTICE ELIAS: The appellant in this case was convicted of three counts of entering into or being concerned in a money laundering arrangement contrary to section 328 of the Proceeds of Crime Act 2002 and also one offence of acquiring criminal property contrary to section 329. She was sentenced to 18 months' imprisonment running concurrently on each count by His Honour Judge Wakefield at the Inner London Crown Court on 14th July 2009. She now appeals against conviction by leave of the single judge. Initially there were eleven grounds of appeal and the judge gave leave on seven. She has renewed her application with respect to two of the other four.

The background is this. The appellant was a solicitor with no previous convictions. She sat up a firm of solicitors called Ann Francis prior to her becoming qualified. Two other persons, Badown Ansar and Peter Herbert, were the two persons running the firm. Her role was that of an employee. She married Ali Afolabi, also known as Ali Abass. He had convictions for fraud dating from 2003, when he had obtained cash payments and money transfers from three victims. He was convicted of a further two offences in 2008. He swindled a Russian couple and then an American, and there were other victims with respect to whom no charges were brought. He led these victims to believe that if certain steps were taken he would obtain for them very significant sums of money. He required significant expenses in advance, saying that he could not acquire the money for them until he had received these expenses. They were paid to him, but of course the victims received nothing.

Evidence was adduced showing that the husband's bank account had monies paid to Ann Francis solicitors to complete the purchase of a property at 25 Danbrook Road. The accounts demonstrated that the money to acquire the property had come from criminal activities.

The appellant was charged on six counts and acquitted on two of them. The first four counts alleged breaches of section 328. Counts 5 and 6 alleged breaches of section 329.

On count 1 it was alleged that the appellant had been involved in purchasing the property at Danbrook Road. It had been bought at auction by a company controlled by Mr Afolabi, Sunrise Properties and Investments Limited, and it is not disputed that the house was properly to be treated as criminal property. As we have said, it was acquired using money which had been obtained by fraud. The allegation was that the appellant had arranged for Peter Herbert to undertake the conveyancing, and he gave evidence to that effect, in circumstances where she must have known or at least have suspected that the money used to purchase the house was criminal property. The jury acquitted her on this ground. It is clear from the questions they put to the judge that this was because they were not sure that she was concerned in the transaction. They did, however, believe that she knew or suspected that the property was bought with funds acquired from criminal activity.

Count 2 arose out of the re-sale of the property at Danbrook Road to Mr Adebowale. This was some three months after Mr Afolabi had been arrested. Mr Adebowale was the appellant's husband's business partner. The evidence was that a large part of the money for the sale was raised by Mr Adebowale by way of mortgage. The conveyancing was dealt with by Mr Herbert. However, evidence from the appellant's bank account showed that prior to completion he transferred £9,500 to Mr Adebowale on 9th October. The Crown asserted that this was to assist Adebowale with funding for completion of the sale. A letter was produced from the appellant's husband to the vendor's solicitor instructing them to pay £15,000 of the proceeds of sale into the account belonging to Mrs Kentebe, which is the maiden name of the appellant, and this was done. The Crown's case again was that the appellant had been involved in the conveyancing of this property, but in addition she had agreed with Afolabi that she would receive some of the proceeds and £15,000 was put into the bank account.

Count 3 concerned the further sale of Danbrook Road, this time from Adebowale to the appellant's son, Winston Kentebe. There was evidence which the appellant did not dispute that she had persuaded her son to buy the property and was personally to be the point of contact should any problems arise with regard to the sale. It was her firm that was carrying out the transfer on his behalf. Again, she received some £20,100 paid direct to her personal bank account from the proceeds of sale.

Count 4 concerned the purchase of another property, namely 108 Purser House, using the proceeds which Adebowale had obtained from the sale of Danbrook Road to Winston Kentebe. The appellant had lent Adebowale £10,000 as a deposit towards the purchase. The property was acquired by Mr Afolabi, who also arranged the mortgage. The appellant was involved in conveying that property to her husband. The Crown's case was that she was involved in the transaction and that the proceeds of the sale of Danbrook Road, which was used to finance it, was itself criminal property.

Count 5 concerned the transfer of monies from the husband's account to hers. There was evidence that almost £93,000 had been transferred from an account in the name of Abass Ali, which is another name used by Mr Afolabi, to the account of the appellant, in an account being in her maiden name. This was over a period from 5th June 2005 until 31st July 2007. Some of this money had come from the victims of the 2008 frauds. The jury were asked to concentrate only on sums over £2,000 which were paid into the appellant's account. The Crown alleged that this was receipt of property contrary to section 329 of the 2002 Act and the judge told the jury that they should convict if they were sure that at least one of the payments had been derived from criminal property and that the appellant knew or suspected this to be the case.

Count 6 concerned other payments into the appellant's bank account amounting to some £132,000 in all. The appellant said these were from receipts for renting properties and the takings from shops she owned. She was acquitted on that charge and no more need be said about it with respect to this appeal.

The appellant's defence was essentially that she did not realise that her husband was involved in fraudulent activities. She thought he was going straight following his earlier release from prison. She accepted she was wrong about that, but her understanding and genuine belief was that her husband was earning an honest living through purchasing and renovating properties and them selling them on.

More specifically, with respect to the counts on which she was convicted her evidence was as follows. As to count 2, she said she had not been involved in the conveyance and the monies paid to her were simply the repayment of a loan she had made to her husband. She had no reason to believe and did not suspect that it was tainted money.

On count 3 she said she had played no role in the conveyancing. She had persuaded her son to buy the property for innocent reasons. That was simply because it was a better investment than the flat that he was then proposing to buy. She did not know that Adebowale was involved in her husband's company and the money she had received from the proceeds of sale she again considered to be the repayment of the loans she had made to her husband. She accepted that she had been involved in the conveyancing in count 4, the transfer of the Purser House, but had considered this to be an entirely innocent transaction. She had lent money to Adebowale to be used as a deposit towards the purchase.

As to count 5, the monies transferred to her were, as she understood, simply repayments on loans she had made to her husband. She had neither known nor suspected that the monies were derived from criminal activities.

Section 328(1) of the Proceeds of Crime Act states:

"Criminal property" is defined in section 340(3) of the Act in the following way:

The purpose of these very wide provisions is principally to put a third party recipient's property which is and which they know or suspect to be acquired from criminal activity to provide information to the relevant authorities. Hence in both section 328 and 329 it is an offence if the defendant makes an authorised disclosure under section 338. That defence was not, however, available here. Under section 328 it is not necessary for a defendant to have been involved in the arrangement from the beginning; it is sufficient that he becomes concerned in the relevant arrangement at some stage. Further, he need not know that the criminal property actually is criminal property; it is enough that it is in fact criminal property and that he suspects that it may be.

In Da Silva [2006] 2 Cr App R 517 the court was concerned with the meaning of the word "suspect" in the context of a predecessor to section 328 found in the Criminal Justice Act 1988. Longmore LJ, giving the judgment of the court, described what the word suspecting means in this context. He said this:

As we have said, there are seven grounds on which leave has been given and Mr Krolick, counsel for the appellant, renews the application in respect of two other grounds. They can, we think, be considered as falling into three categories. First, it is said that the summing-up is defective, and so defective it leaves all the verdicts unsafe. This is covered by original ground 1. Second, it is alleged that there was no proper direction to the jury as to the question whether the appellant knew or suspected that at various stages property was or had been acquired as a result of criminal activities. More specifically, it is said that the judge should have directed the jury as to the very narrow meaning which knowledge has in this field (count 5) and that the directions with respect to suspicion were both inadequate and wrong (counts 4, 6 and 11). Leave was not given in respect of count 4 and 6. The third category of grounds focuses on the judge's analysis of what amounts to criminal property (counts 8 to 10). This links with ground 3, which alleges that the judge wrongly failed to give a direction to the jury that, to put it shortly, neither Mr Adebowale nor Mr Winston Kentebe had any involvement in the criminal activities of Mr Afolabi.

The first ground is that the summing-up was unstructured and made it difficult for the jury to follow what was going on. In particular, the judge is criticised for dealing with the general credibility of the defendant before focussing on the standard directions on burden and onus of proof.

We do not accept this ground. We have read the summing-up carefully. There is no obligation for a judge to deal with matters in any particular way provided overall the jury has accurate directions on the law, a clear understanding of what the issues are and is reminded of material parts of the evidence. Save for some criticisms we have of the directions, we think that was the case here. The prosecution speculate that the trial judge may have begun with the credibility of the defendant because that had just been referred to in the defendant's final speech, and moreover the summing-up on this aspect was favourable to the defendant. That may be the reason, but whether it was or not we are satisfied it would not have confused the jury. It was an essential feature in the case and the judge may have considered that the jury would be existed by focussing on that aspect first. In any event, whilst we would not necessarily have approached the summing-up in the same way, we think there is nothing improper in what the judge did and we reject this ground.

We turn to the three interlinked grounds relating to the topic of knowledge or suspicion. First, it is said that the judge misdirected the jury with respect to the evidence necessary to show that the appellant suspected that her husband had acquired the funds to purchase Danbrook House dishonestly. It is said that there was no proper evidence to justify the conclusion, and that in any event the judge did not assist the jury by identifying what that evidence might be. Moreover, the judge had referred to the fact that Mr Afolabi had not apparently derived any significant profits from his companies and that there was no evidence that he was carrying out any significant redevelopment activity. That, submits Mr Krolick, is irrelevant. The question was whether the appellant believed he was making his money from lawful activities. Her evidence was that she did believe that and the jury was not asked to consider whether they believed her. It was not fanciful to believe that she might have done so. Her husband had deceived his victims and there was every reason to suppose that he could deceive his wife as well.

We do not accept this submission and we think the judge was right to reject these two inter-related grounds of appeal and to refuse leave. It was a material consideration for the jury to consider whether there was evidence of legitimate business activity since they might reasonably consider that the appellant was likely to have some knowledge of her husband's business affairs. Furthermore, if there had been such evidence the appellant would surely have wanted it put before the jury as evidence why she thought that the monies were lawfully acquired. As we have indicated, there was no proper evidence from which the jury could conclude that the defence suspected that the monies she had received had been derived from criminal activity. This was relied on specifically with respect to count 5.

We wholly reject that submission. There plainly was evidence, including in particular the previous conviction for fraud, the fact that very large sums of money were now available to the husband, that he was not supposed to be working at all under the terms of which he had been allowed to stay in the country, as well as the lack of any evidence demonstrating that there was any significant business of a legitimate kind. The jury also had to make their own assessment of the appellant when giving evidence. In that context she sought to rely upon a document to demonstrate that she considered that her husband was properly working, that is a document identifying his national insurance number, but it transpired during the course of the hearing that this was a false document. Furthermore, as the prosecution point out, if one looks at the funds which went into her bank account in count 5, there was a considerable transfer of monies taking place at very regular intervals into her account. Sometimes there were payments made on one day after another.

In our judgment, it was not necessary for the judge to spell out each and all of these matters; in truth, they would have been obvious facts for the jury to consider. Nor was it necessary for the judge to tell them that they should ask themselves whether they considered that the appellant was telling the truth on these matters. That was obviously what they had to consider and their verdicts indicate that they did not believe that she was. There was ample evidence for them to come to that conclusion.

We specifically reject the contention that the judge was in effect directing the jury that they could infer evidence of suspicion merely because the appellant was the wife of a fraudster. He was simply indicating that she was in a particularly good position to appreciate the nature and extent of her husband's activities. We also note that the judge reiterated on more than one occasion that it was for the prosecution to prove the case, including the need to satisfy the jury that she knew or suspected that the monies she received had been from the proceeds of crime.

The related ground is that the judge failed to direct the jury as to meaning of the word "knowing". That was material, it was said, because the defendant could not possibly know that the relevant money had been derived from criminal activity. Reliance was placed on an observation of Lord Nicholls in the case of R v Saik [2006] 2 Cr App R 368. That case was one concerning a conspiracy to be involved in money laundering, rather than the substantive offence itself, but Mr Krolick submits that it is analogous to our situation. Lord Nicholls at paragraphs 25 to 26 considered what the word "know" would have meant in the context of section 1(2) of the Criminal Law Act. He said it should mean true belief, the prosecution would have to prove that the conspirator knew that the property was the proceeds of criminal conduct. Mr Krolick submits that if this direction had been given to the jury in this case it is plain there was no evidence at all to substantiate an inference that she did know for a fact that any of the property that was involved in these transactions was criminal property.

In connection with this argument he relied on a note from the jury which he said showed that they had an improper understanding of the concept of knowledge, or at least that they may have misunderstood what that word meant in the context of sections 328 and 329.

Suffice it to say that we do not accept that this note assists Mr Krolick's case on this matter one iota. We do not think it was necessary for the judge to identify precisely what "knowing" means, it is a straightforward word which does not need judicial exegesis. More importantly, it is enough in the context of this case, which it would not have been in the case of Saik, that the defendant suspected the criminal provenance of the relevant property. It was the prosecution's case that the appellant must have known that they her husband was making his living by dishonest means, but it was not necessary for them to establish that fact to the satisfaction of the jury. It was enough for the jury to find that they were sure she must have been suspicious. Even if the judge could have directed the jury on this issue, and we do not accept that he should, it takes the appellant nowhere anyway because, as we have said, there was evidence from which the jury could conclude that the appellant suspected that the monies were derived from criminal conduct. We would only add in this context that the judge did in his summing-up deal with the question of what constitutes suspicion and did so in terms which we think were -- contrary to the submission of Mr Krolick -- perfectly in accordance with the analysis given by Longmore LJ in the Da Silva case.

We turn to the third category of grounds. This concerns the judge's treatment of criminal property which it is said renders the verdicts on each of counts 2, 3 and 4 unsustainable. It is necessary first to refer to the direction to the jury on this point with respect to count 2. This was as follows:

It is alleged that the judge's direction to the jury was defective in two ways. First, the sale to Adebowale was not an arrangement in which 25 Danbrook Road was a criminal benefit within the meaning of section 343 of the 2002 Act and the judge was wrong to say that it was. The argument is that there was no evidence that Adebowale knew of the criminal activities of Afolabi, nor is it suggested that he had failed to pay the proper price for the properties. So he had to be treated as a bona fide purchaser of the property. Once he had acquired it, it could no longer remain criminal property. This submission links with the ground of appeal that the judge failed to make a direction that there was no evidence that either Adebowale or Winston Kentebe were involved in the criminal activities of Mr Afolabi. The real issue perhaps is not that he failed to make a direction to that effect, but rather that it was never suggested to the jury that Adebowale or Winston Kentebe were in any sense parties to that criminal activity.

Mr Krolick submits that without the jury finding that there was some link between Mr Adebowale and Mr Afolabi in particular there is no proper basis for saying that Mr Afolabi was continuing to be in control of the property after the sale. Danbrook House thereafter is in the hands of Mr Adebowale and it ceases to become criminal property.

We recognise the force of these submissions. We accept that once the house is sold to a bona fide purchaser then it does not remain criminal property. Although the purchase money is then criminal property, we think the judge was wrong to say as he did that it remains criminal property as it passes through various hands. As Mr Krolick points out, the effect of that would be that the benefit from the initial criminal conduct would multiply exponentially each time the property was sold on. Both the original property and the proceeds of sale on each subsequent sale would represent criminal property. That cannot be the right analysis.

We think that is further supported by two considerations. First, the definition of criminal property itself refers to property which constitutes a person's benefit from criminal conduct or property which represents such a benefit. Mr Krolick submits that the word "represents" is appropriate only to cover a benefit which takes the place of the original benefit, and we agree. This is essentially the meaning which that concept has in other provisions in the 2002 Act: see, for example, the provisions, admittedly a different context, dealing with recoverable property in civil actions and in particular sections 305 and 308(1).

Second, it would be inconsistent with the protection afforded to purchasers under section 329(2)(c) if the judge's analysis were correct. That provides that someone who acquires or has possession of property for adequate consideration will not commit the offence under section 329. It is plain that that must be even if he otherwise knows or suspects that the property he has acquired is itself criminal property. If the judge's analysis were right, and although there would be a defence to acquiring such property under section 329(2), it would seem to us, though we have had no direct argument on the point, that any subsequent transfer would fall under section 328 or indeed under section 327, which is makes it an offence to transfer criminal property.

In our judgment, however, this does not assist the appellant with respect to the particular charge in count 2. We think, contrary to the submissions of Mr Krolick, that the judge did not err in directing the jury that the appellant would have entered into an arrangement for the purchase of 25 Danbrook Road merely by agreeing to receive a portion of the proceeds of sale. As the judge made plain, it is not merely entering into an arrangement, but also being concerned in it which is caught by the relevant section. In this case the judge was, in our view, right to say that the appellant had become concerned in the arrangement so as to be guilty under section 328 if, with knowledge or suspicion that the house had been acquired from the proceeds of criminal activity, she made some arrangement with Mr Afolabi to take the proceeds of sale, or part of the proceeds, from Mr Adebowale. It is true that the particulars on the indictment refer to her being concerned in the purchase of the Danbrook Road property, but in our judgment the transfer of property involves all aspects of the purchase, including the receipt of purchase monies. It would be artificial to say that the appellant was concerned with the distribution of the proceeds only as though it were something distinct from facilitating the purchase of the property itself. They were all inextricably linked. In any event, on any view the proceeds of the sale themselves were criminal property since they were derived from the sale of criminal property, they represented the property, the original benefit. Accordingly, given that the jury must have found that there was an agreement with Mr Afolabi and the appellant concerning this money, that would itself constitute a crime under section 328. Indeed, the receipt alone without agreement would fall under section 329.

Mr Krolick correctly says that that was not the charge which the appellant was facing: what was identified in the particulars of the offence was the property and not the proceeds. The jury did not find, and were not asked to find, that the proceeds were also criminal property. But, as we have said, on the jury's findings they were bound to be. If the property was, as they found, criminal property, then the proceeds ineluctably had to be also. So it would have been a perfectly legitimate alternative way of putting the case that there was an agreement under section 328 whereby the appellant became concerned in an arrangement concerning the use of criminal property by or on behalf of her husband. Accordingly, we do not think that the verdict on this count was unsafe.

The next ground makes essentially the same points with respect to the direction in count 3. In this connection it is important to note what the judge said about the criminal nature of the property with respect to this transaction. He said this:

Again, it is submitted that 25 Danbrook Road was not a criminal benefit within the meaning of the section by the time it came into the hands of Mr Adebowale and that therefore the receipt of £21,000 from the proceeds of sale involved no improper transaction. Moreover, even if the appellant were involved in the conveyance it would not make any difference.

Again, of course, Mr Krolick relies upon the fact that there was no direction given to the jury concerning the need to discover any links between the criminal activity of Mr Afolabi and Mr Adebowale. Since Mr Adebowale was not in possession of criminal property, the proceeds of sale could not be either, and nor could therefore the recipient of the part of those proceeds by the appellant.

We accept that submission. We recognise that in reality, as Mr Halsey for the Crown points out, there was significant evidence to the effect that Mr Adebowale, as an employee of Mr Afolabi or one of his companies, was in practice very closely linked with these transactions and may well have been acting effectively under the direction of Mr Afolabi. Further, Mr Afolabi gave money to Winston Kentebe in order to assist him purchase the property, and it may well be that that itself was the proceeds of criminal activity. The appellant understood Mr Afolabi and Mr Adebowale were business partners.

The Crown say in these circumstances we can be satisfied that, even if the summing-up by the judge on this point was defective, nonetheless there was enough evidence to justify the conclusion that the property in the hands of Mr Adebowale was still criminal property, it was all part of a single money laundering exercise.

We do not think we can properly take that step. It would be to allow the conviction to stand on a ground which was never properly put to the jury. However strongly we may think the jury may have reached certain conclusions had these matters been put to them, it would be quite wrong for us to anticipate how they would have assessed the evidence. The basis of the judge's analysis was that the house remained criminal property throughout, apparently whoever the purchaser was, merely because it had originally been bought with tainted money. As we say, we think that was wrong and that other issues would have to be put before the jury before it could be said that the property remained criminal property in the hands of Mr Adebowale.

The same error, in our view, permeates count 4. Again, the appellant makes essentially the same point. The judge directed the jury that the Danbrook Road property was criminal property and therefore the proceeds of its sale to Mr Kentebe were also criminal property, which tainted the acquisition of the house in Purser Street. If the premise was false then so was the conclusion. We accept this argument as we did the one relating to count 3. Again, while there is powerful evidence that Adebowale and Afolabi were working in harmony, that was not the basis on which the case was put to the jury. The appellant was plainly involved in this transaction, which she accepted, but she would have committed no offence if this was not criminal property to start with.

The final ground relates to the verdict on count 5. This was a separate offence, as we have indicated, of acquiring criminal property contrary to section 329. Money was transferred from Mr Adebowale's account into Mrs Afolabi's account, each using different names in the relevant bank accounts concerned. The question the jury had to consider was whether it was criminal property and whether the appellant knew or suspected that it was. There was extensive documentation about this matter that we have seen that was placed before the jury showing the way in which monies were transferred into and out of the wife's account.

In our judgment, and essentially for reasons we have already given, we think there plainly was evidence from which the jury could infer both that this was criminal property and that these large sums would not have been the result of legitimate business activity, and also that the appellant must at least have suspected that it was. The judge told the jury that they had to be satisfied that it was an irresistible inference that the money represented the benefit from criminal conduct, that was a proper direction and the jury convicted with respect to this count. As we say, there was evidence from which they could properly reach that conclusion. It follows that as far as this aspect is concerned, we consider that the verdict of the jury should be upheld and that part of the appeal fails.

For reasons we have given we would quash the convictions with respect to counts 3 and 4, but leave in place the convictions with respect to counts 2 and 5.