Linegar, R. v

LORD JUSTICE AIKENS: This is an appeal against sentence with the leave of the single judge. On 22nd October 2008 at the Crown Court at Southwark, before His Honour Judge Gledhill QC, the appellant pleaded guilty to two counts of converting criminal property contrary to section 327 of the Proceeds of Crime Act 2002, and to three counts of possession of criminal property contrary to section 329 of the same Act. He was also convicted of one count of engaging in the provision of unlicensed personal credit agreements contrary to section 39(1) of the Consumer Credit Act 1974.

On 19th November 2008 the appellant was sentenced to 15 months' imprisonment for the Consumer Credit Act offence and to 2 years' imprisonment for each of the five Proceeds of Crime Act offences, those latter sentences to be served concurrently the one with the other but consecutively to the Consumer Credit Act offence sentence. The total sentence was thus 3 years and 3 months' imprisonment. The judge made a direction under section 240 of the Criminal Justice Act 2003 that the 146 days spent by the appellant on remand should count towards that total sentence.

The particulars of the section 39 offence under the Consumer Credit Act 1974 were that between 1st April 2003 and 19th August 2005 the appellant engaged in the provision of personal credit agreements when he did not have a licence covering those activities. That count, therefore, is aimed at the failure to have a licence, as is required under the statutory provisions. The essence of the offence is the lack of the licence.

The two section 327 of the Proceeds of Crime Act counts (ie, those of converting criminal property) related respectively to a sum of £15,000 which had been used to buy a Mercedes car, and the sum of £46,055 which had been used in the purchase of a property in Orpington, South London. The particulars of offence identified the criminal conduct in respect of those two counts as "drug trafficking and/or unlicensed money lending". However, there was before the sentencing judge a written basis of plea stating that the money in each case constituted the proceeds of unlicensed money lending only.

The three section 329 counts related to sums of cash, namely £40,510, £3,300 and £29,720. These sums of cash were recovered respectively from the Mercedes car, the address in Orpington and the appellant's mother-in-law. Again, the particulars of offence had identified the relevant criminal conduct as being "drug trafficking and/or unlicensed money lending". The same written basis of plea stated that the money sums were the proceeds of unlicensed money lending only.

These matters came to the attention of the police when the Mercedes car was found abandoned after a crash and had been falsely reported as stolen. In it was not only the £46,520 cash to which we have referred, but also a mobile phone which was linked to the appellant. There were various documents in the car which were consistent with a business of unlicensed money lending. Some of the cash recovered was found to be contaminated with cannabis residue.

In interview, the appellant made admissions. One of those was that he had £780,000 in cash, but he would not reveal the whereabouts of that sum.

When the judge passed sentence, he made a number of comments on the mode of operation of the appellant in carrying out his unlicensed business of providing personal credit agreements. It is clear from those remarks, and from the way that the matter was opened before the judge by the prosecution, that the appellant had used verbal threats (at least) to ensure that he was repaid loans he had made. Texts found on mobile phones that were associated with the appellant showed that he was prepared to threaten thuggish activities and was prepared to use racist verbal threats. It is not surprising, therefore, that the judge characterised the activities of the appellant as those of a "loan shark".

Under Parts II and III of the Consumer Credit Act 1974, certain activities require to be licensed. These include the provision of personal credit agreements whereby an individual provides credit to another individual up to any amount: see section 8(1) defining "personal credit agreement" and section 21 of that Act.

Section 39(1) of that Act states that a person who engages in an activity for which a licence is required when he is not a licensee and under a licence covering those activities, commits an offence. Section 167 and Schedule 1 of the Consumer Credit Act stipulate the penalties for such an offence. The maximum for an offence under section 39(1) is 2 years on indictment, as the judge stated correctly.

By section 327 of the Proceeds of Crime Act 2002, a person commits an offence if he converts criminal property. By section 329 of the same Act, a person commits an offence if he has possession of criminal property. "Criminal property" is defined in section 340(3) of the Act as being a person's benefit from criminal conduct or that which represents such benefits, and the alleged offender knows or suspects that the property constitutes or represents such a benefit.

Those definitions are all important in the context of the argument put forward on behalf of the appellant by Mr Hynes. The argument, which was advanced both in writing and orally in a very attractive and persuasive manner is, in essence, this: the principal offence in this case is the provision of unlicensed credit agreements contrary to section 39(1) of the Consumer Credit Act 1974. That is, as it were, the anchor of the whole indictment. The maximum sentence on indictment for that offence is 2 years. The Proceeds of Crime Act offences are subordinate to the "anchor" offence in this particular case. That is because the criminal property, whether it be the money or the Mercedes or the house in Orpington, are no more than the fruits that the appellant obtained as a result of engaging in the principal offence of carrying on the unlicensed provision of personal credit agreements. Therefore, the Proceeds of Crime Act offences form a part and parcel of the principal offence. Accordingly, on principle, the sentences for the Proceeds of Crime Act offences should not attract consecutive sentences. The sentences for those offences should be concurrent and, what is more, they should be no greater than the sentence passed in respect of the principal offence. As the maximum sentence for the principal offence was only 2 years, therefore the judge should not only have passed concurrent sentences in respect of the Proceeds of Crime Act offences, but he should also have reduced the amount of such sentences to take account of the guilty plea. Accordingly, the total sentence should have been no more than 15 months in this case.

As we say, this is a beguiling argument and was advanced attractively. However, it is, in our view, entirely fallacious. Let us clean away some suggested contrary arguments straight away. First, we emphasise that the appellant was not charged with any offence concerning the manner in which he conducted his unlicensed personal credit business, other than the offence of conducting it without a licence. He was not charged with blackmail or with using threatening words or behaviour, or any like offence. Nor was he charged with any offence of cheating the revenue or such like. Therefore the sentence under section 39(1) of the Consumer Credit Act and the sentence under the two Proceeds of Crime Act offences cannot legitimately take account of any alleged thuggish and racist manner in which the appellant went about collecting loans which he had made to his doubtless desperate customers.

Secondly, we entirely accept the basis of plea for the purpose of our consideration of the proper sentence in this case. The criminal property identified and the particulars of offences on counts 1, 2, 4 and 5 were the result of unlicensed provision of personal credit agreements. They were not the result of drug dealing, whatever the appellant's debtors may themselves have been engaged in. That, for the purposes of this case, is entirely irrelevant, because there is no finding or admission about the appellant's knowledge of that issue.

However, none of this detracts, in our view, from the fact that the Proceeds of Crime Act offences are entirely independent of the Consumer Credit Act offence. As a result of the Consumer Credit Act offence, the appellant was able to obtain from his victims (because that is what they were) both repayment of the principal sum that he had lent and interest on that personal credit that he had advanced to them without a licence. That interest was doubtless charged at "commercial rates", at the very lowest. The returned principal sum and the interest thereon constitutes the criminal property that the appellant obtained as a result of the crime of providing personal credit agreements without a licence. The principal and interest is the criminal property which, by virtue of his guilty pleas to counts 1, 2, 4 and 5, he has admitted that he possessed and converted. Mr Hynes accepted before us that the returned principal sums capital and the interest thereon that was obtained by the appellant constituted the relevant "criminal property" for the purposes of the Proceeds of Crime Act offences.

On this analysis, it would have been possible to have constructed the indictment without having on it count 9 at all; in other words, without having on it the antecedent offence of providing without a licence personal credit agreements. Mr Hynes accepted, as we understood it, that this was so.

However, in our view, this concession entirely undermines his argument. By section 329 of the Proceeds of Crime Act 2002, the simple possession of criminal property is, by itself, a crime. That is quite independent of any anterior offence, in this case of engaging in unlicensed activities concerning the provision of personal credit agreements. The mischief in possessing criminal property is that it enables the criminal to engage further in his criminal activities, whatever they might be. As Cooke J put it in the case of Basra [2002] EWCA Crim 541, it "encourages and nourishes crime in general".

By section 327 of the Proceeds of Crime Act 2002, the converting of criminal property is itself a crime. That again is quite independent of any anterior offence, in this case that of engaging in unlicensed provision of personal criminal agreement. "Converting" involves some kind of action: doing something to something else. Here the appellant converted the cash that he had obtained from his victims into a car and property. These actions were, in common language, laundering the money which was the proceeds of his criminal activity. That process hides those criminal activities. It enables the criminal more easily to escape detection. It provides an apparently innocent cover for the criminal activity. In our view, the acts of possessing and converting criminal property are pernicious. That is why those crimes have a maximum sentence of 4 years.

Accordingly, despite the somewhat charged language of the judge, he was entirely justified in imposing consecutive sentences for what were, on our analysis, entirely independent offences. Moreover, we consider that the sentences of 2 years for the Proceeds of Crime Act offences were themselves entirely justified. Nor can it be said, on the facts, that they are out of proportion to the sentence imposed for the Consumer Credit Act offence. They are consistent with the guilty pleas and the other mitigation advanced on behalf of the appellant. The total of the sentences is not manifestly excessive.

Therefore, this appeal must be dismissed.