R v Vikas Sharma

LORD JUSTICE WARBY: This is an appeal against conviction and sentence for fraud and money laundering by Vikas Sharma, now aged 48.

On 31 January 2024, after a trial in the Crown Court at Isleworth the appellant was convicted by a jury of five counts of fraud by misrepresentation, contrary to section 1 of the Fraud Act 2006, one count of possessing criminal property, contrary to section 327 of the Proceeds of Crime Act 2002 ("POCA") and one count of transferring criminal property, contrary to section 329 of POCA. He was acquitted of three further counts of fraud. His wife Raminder was acquitted of a money laundering charge.

On 7 February 2024, the appellant was sentenced by the trial judge, Mr Recorder Nathaniel Rudolf KC (as he then was) to four years' imprisonment concurrent on each of the counts on which he had been convicted. We shall refer to Mr Recorder Rudolf as "the judge".

The essential facts of the case are that in 2014 and 2015, while working as an estate agent for a company called Hunters, the appellant encouraged individuals to invest in properties located in Germany and Portugal. He marketed the opportunity using brochures which featured the name of Hunters and that of an investment company called Silburne. The investors paid substantial sums of money to the appellant with a view to purchasing such properties. In the end none of them obtained a property and most of them did not get back the funds that they had paid to the appellant. Complaints were made to the appellant who sought to placate the investors. Reports were made to Action Fraud in 2018 and the appellant was arrested and gave a no comment interview thereafter.

He was eventually arraigned. The indictment was amended on more than one occasion. By the time of trial it contained 11 counts. Eight of these were counts of fraud contrary to the 2006 Act. In each case the allegation was that the appellant had made a false representation to a named investor. The format of each count was the same. We can illustrate by referring to the particulars of count 2 which were as follows:

The remaining counts alleged the possession or transfer of criminal property by the appellant and his wife. The property in question was money derived from the appellant's dealings with the investors. It was alleged that the appellant and his wife knew or suspected this to be the proceeds of fraud and hence criminal property. Proof of the money laundering counts was thus dependent on proof of the frauds.

The prosecution opened the case to the jury in line with the wording of the indictment. Counsel told the jury that the appellant had "encouraged investors to invest into properties abroad". The investors had paid "deposits or funds" that ran into several hundred thousand pounds. It was alleged that "this money was paid on the basis that the defendant would arrange for each of them a property purchased abroad" and that "his claims to investors that he would arrange the purchase of properties overseas was false (it was an untruth). He knew it was untrue and he told that untruth in order to make money for himself." Counsel went on to outline the case to the jury as follows:

The issues the jury would have to consider in relation to the counts of fraud were then identified in this way:

To prove the case, the prosecution called evidence from Nauman Mahmoud, Nick Bhamber and the complainants, together with agreed facts as to the finances and as to the appellant's use of the Hunters brand name. It was in due course accepted by the appellant that under the terms of his franchise agreement with Hunters he had not been entitled to use their name for the foreign property enterprise.

Mahmoud's evidence was that he was the source of all the deals offered by the appellant to the complainants. Mahmoud told the jury that the investments related to properties that were being sold at heavily reduced prices below their valuations. The common elements of the property deals that Mahmoud sourced were as follows. The buyers, for a limited up-front refundable fee in the region of £1,000 to £1,500, would be able to purchase a relevant property with no further outgoing. A mortgage arranged in their name locally in Germany or Portugal would be enough to cover the entire cost of the investment. The deposit required for the mortgage and the "closing costs" would be paid by a "gifted deposit" from the seller. The ongoing mortgage would be covered by rental income. The deals in certain cases also included elements of cash back and money in accounts equivalent to a year's mortgage payments. There were other additional benefits within the scheme such as credit facilities that could be obtained with the opening of bank accounts in the foreign country.

Bhamber's evidence related to his experience of working with the appellant on a self-employed basis at Hunters between 2011 and 2016. He said he would introduce business to Hunters and receive commission. Bhamber spoke of the appellant introducing the complainants to him, of dealing with Mahmoud to source properties, and of visiting Portugal to look at properties there.

The complainant investors stated that they had paid a fee in advance to the applicant in relation to the property purchases that they were told or assumed was a deposit towards the property. Although not put in writing, they all maintained that they were told that this fee was fully refundable if the deal did not complete. They were cross-examined on behalf of the appellant to the effect that he had made plain to them that the monies they were providing were up-front finder fees and that the money was not refundable. The word deposit was used in correspondence by the appellant when communicating with deals to complainants although he did not use the word refundable, nor was that offer to refund recorded anywhere in writing.

Each complainant agreed that their complaint related to the failure to repay these up-front fees when the deals failed to complete. They all agreed that if the deals had completed there would have been no complaint and no allegation of fraud would have been made through the Action Fraud line.

On 19 December 2023 at the close of the prosecution case, the appellant's counsel Mr Arnold, who also appears for him today, submitted that there was no case to answer and that the case should be withdrawn from the jury. It was argued that there was no evidence that the representation alleged, namely that the appellant "would arrange the purchase of foreign properties" on behalf of the investor was false. The undisputed evidence from Mahmoud was that the appellant did arrange the purchase of foreign properties or sought to do so. As no reasonable jury could find that the counts of fraud established the money laundering counts must also fail.

For the Crown it was submitted that it had never been the prosecution case that the deals overseas were not real. The case was that Mr Sharma had wholly misrepresented the manner in which he would arrange the purchase of foreign properties and the risks involved. The language of the indictment, it was submitted, had to be read as including misrepresentations as to the deposits, and the security and as to using Hunters and Silburne's name and details for marketing purposes. In the alternative, the Crown sought leave to amend the indictment to spell out these points.

The judge took the submission of no case first. He ruled that there was a case to answer. The appellant's counsel then submitted that the jury should be discharged because the judge having ruled there was a case to answer there was prejudice to the defence. Counsel had misunderstood what was being alleged and had conducted the case with a wholly different target in mind, namely the literal meaning of the words about organising the purchase of properties from abroad. If the case had been in the way it was now being presented, counsel would have conducted the case differently. This would have included cross-examining the witnesses in greater detail about the promises as to refunds and other steps. The judge dismissed that application also.

The judge then proceeded to consider and to grant an application by the Crown to amend the indictment so as to "make explicit what was implicit" as the judge put it, by specifying the three representation to which he had referred in his written ruling to which we shall come.

The appellant gave evidence and was cross-examined. The judge summed up the case in a fashion that has attracted no criticism until the latter stages of the argument today and the jury returned the verdicts we have identified.

The appellant appeals against conviction on all counts on two alternative grounds for which the single judge gave leave: (1) The learned judge should have acceded to the submission of no case in relation to each count of fraud. On each count there was no evidence that the representation alleged on the indictment was false. Alternatively (2) following the learned judge's refusal of the submission of no case he should have discharged the jury given the serious prejudice to the defendant caused by his defence having been conducted on the basis of what the learned judge had ruled was a fundamental misunderstanding of the particulars of the fraud counts alleged.

By an application filed today in response to some observations made by the court in the course of preparation for this hearing, Mr Arnold applies for leave to amend to add a third ground to the effect that neither the trial indictment nor the amended version pleaded a representation within the meaning of section 2 of the Fraud Act. We grant leave to amend and we grant leave to appeal on this ground, the basis for which will become apparent.

At the close of his submissions Mr Arnold further submitted that there was reason to doubt whether the case had been left to the jury on a safe basis, given the limited nature of the judge's directions as to what the Crown had to prove to establish their case of fraud. We take account in what we are about to say of those submissions also.

In his written reasons dated 20 December 2023 for rejecting the submission of no case to answer, the judge reasoned that the prosecution case was that three false representations were made, namely that (a) there was a refundable deposit, (b) that deposit was to secure a property and (c) the activity was undertaken under the legitimate auspices of Hunters and Silburne. The judge said that an allegation that those three false representations were made was implicit in the pleaded representation that the appellant "would arrange the purchase of foreign properties on their behalf". Having regard to the way the prosecution had put its case in case summaries and in witness statements provided to the defence, and in the opening note, the position as to what the indictment alleged was, the judge said, "clear". There was, he said, ample evidence before the jury in relation to the three representations relied on.

In his written reasons dated 31 December 2023 for refusing to discharge the jury, the judge said that although none of the relevant authorities dealt with an application of the kind before him, those authorities could be and would be adapted and applied to this case. The judge held that the important issues in the case were (a) the nature of the property, investments and deals available as presented by the appellant, (b) his representations (or misrepresentations) in marketing those investments and deals to the complainants and whether what he had said and did was honest, and (c) how the appellant dealt with the complainants afterwards.

The judge accepted Mr Arnold's position that he had misunderstood the indictment but he did not accept that this misunderstanding had any real impact or led to any actual potential unfair prejudice. If that was wrong, the matters were fairly remediable in three ways. First, it was open to the defence to apply to recall any of the prosecution witnesses for further cross-examination. That opportunity had been declined. Secondly, the appellant could be and was given extra time over the Christmas period before the start of his case. Thirdly, the judge would prohibit any cross-examination or comment by the prosecution to the effect that matters that were later relied on in evidence by the appellant had not been put on his behalf to the prosecution witnesses. In the circumstances, the judge concluded there was “nowhere near” a necessity for the discharge of the jury.

We pay tribute to the judge's thorough, clear, and careful rulings. We have however concluded that the first of those rulings was flawed in three ways.

First, in our judgment the trial indictment was significantly deficient. The particulars of an indictment must contain "reasonable information as to the nature of the charge" (Indictments Act 1915, s.3). Paragraph 10.2 of the Criminal Procedure Rules goes, if anything, further. It requires the particulars to "make clear what the prosecutor alleges against the defendant".

It follows that that particulars of a charge of fraud by misrepresentation, contrary to section 2 of the Fraud Act 2006 must clearly identify the representation that is alleged to have been false and to have been made dishonestly with intent to gain or to cause loss or risk of loss. Section 2(3) of the Act defines "representation" to mean "any representation as to fact or law, including a representation as to the state of mind of the person making the representation".

In this case, the trial indictment stated the prosecution case in an inherently ambiguous way. There are two possible analyses of a representation that a person "will" do something. The first and most obvious is to treat it as a representation about what will happen in the future, that is to say either a promise or a prediction. Neither of these amounts to a representation of fact or of law. A representation of that kind falls outside the scope of the Fraud Act. We would have reached that conclusion in any event but we are fortified in our view by the thorough and compelling analysis of the Divisional Court in Government of United Arab Emirates v Allen [2012] EWHC 1712 (Admin), [2012] 1 WLR 3419, with which we entirely agree. We refer in particular to paragraph 42.

The second possible analysis of a statement that a person will do something is that the statement carries with it an implied representation that the speaker presently intends to do that thing. We would accept as a general proposition that the meaning of an indictment may include its implications. The language of the indictment in this case is capable of implying an allegation that the appellant falsely represented that he intended to obtain properties for the investors but such an implication is not obvious or inevitable. The authorities caution against over-readiness to treat a promise as to the future as an assurance about the present, particularly where this may have criminal consequences: see British Airways Board v Taylor [1976] 1 WLR 13. Certainly, if that had been the intended meaning of this trial indictment then it should have been spelled out. If it had been then what would have to be proved to establish its falsity is that the defendant did not at the time he made such representation intend to conclude any property purchases on behalf of the investors. That, on all the evidence and argument before us, is not at all the case that the prosecution wished to advance by the time the case came to trial. But in our judgment it is the only available reasonable interpretation of the express words of the indictment that was presented at the outset of th trial that is consistent with the Fraud Act.

Secondly, in reaching this conclusion we have considered carefully whether it is appropriate to depart from the view of the trial judge on the issue of what was or was not clear from or implicit in the indictment in the trial indictment. We find ourselves however unable to accept his opinion. The pleaded allegation of misrepresentation did not refer to the "manner" in which the scheme had been marketed. In our judgment, it is not possible to conclude that the three specific allegations referred to by the judge were implicit in the express language of the indictment. They are, as Mr Arnold submitted, allegations of a separate and distinct character. We do not believe they can be read into the words employed.

We would add that we cannot agree with the judge's characterisation of the opening note. We have quoted what we consider to be all the key passages. In our judgment these largely mirrored the language of the indictment and reflected the deficiencies that we have identified. To the extent that they did not do so, they were vague and lacking in necessary precision. Having considered the earlier iterations of the indictment and the case summaries mentioned by the judge, we do not consider that these matters of context can support the implications identified by the judge either. They tend rather to confuse than to clarify the intention behind the language used in the trial indictment.

Thirdly, we are satisfied that the evidence adduced by the prosecution was not capable of establishing the falsity of the pleaded representation or that that representation was made dishonestly. That is essentially for the reasons given by Mr Arnold. The effect of the prosecution evidence was, as the judge later held when sentencing the appellant, that there were real properties with a real funding method. The scheme was legitimate. The evidence showed the appellant doing what he could to try to make deals a reality and that he was passing on information he was getting from abroad and indeed that he tried to pay people back.

We do not however accept that it follows from the three points we have made so far that the judge should have acceded to the submission of no case to answer. Before reaching that conclusion it is necessary to consider whether the prosecution case could be saved by amending the indictment. The prosecution made an application for that purpose. The judge could have addressed that before ruling on the submission of no case. There was no reason in principle for him not to do so. In our view it would have been better if he had.

We do not accept the submission of Mr Arnold that the effect of our first three conclusions is to create a situation with which this court is hypothetically functus officio. He was not able to point us to any authority to support that proposition. The test for us is simply whether the conviction is safe.

Although, as we have said, the three representations identified by the judge cannot be deduced from the language of the trial indictment, it is clear that they were elements of the prosecution's factual case. We therefore need to address Mr Arnold's new submission that those representations do not fall within the scope of the Fraud Act.

We agree that the formulation of these representations could be better. We agree also that the pleading of the amended indictment is open to a degree of criticism. That is so not least because the amended version also identifies the representations as being that the appellant "would" do certain things.

These features of the case have given us pause for thought. But we are satisfied that when due regard is had to the context in which the amendments came to be made they identified to the defence with sufficient clarity three representations of fact that were alleged to be false. In substance, the case was that the appellant had falsely and dishonestly represented to the investors that the scheme he was promoting was authorised via Hunters and that it included arrangements that were in place for the monies which the investors were being asked to advance to be held as deposits on terms that they would be returned.

Overall, we consider the case was fairly dealt with. In our view the fact that no objection to the language of the amendment was raised at the time it was made or at the time of summing-up lends some weight to that conclusion. There is no dispute that sufficient evidence was before the jury to support the prosecution case of misrepresentation as it was framed in the amended version of the indictment, as interpreted by us. We add that on any view the jury must have been sure that the representation about Hunters was false and fraudulent and that would be sufficient to uphold the convictions in any event.

The critical issues are therefore whether it was unfairly prejudicial to spell out those allegations by amendment of the indictment, to require the appellant to meet that amended case at that late stage of the trial and to leave the case to the jury on that basis. The question of unfair prejudice is the one addressed by the judge in his second ruling and it brings us to the appellant's second ground. There are in principle two questions. The first is whether the way the indictment was pleaded in fact misled the appellant about the nature of the charges he was facing. The judge accepted Mr Arnold's assertion that he had understood the allegation to be as expressly pleaded. We too accept that assertion. There is however a second question, namely whether in the light of that fact it would be fair to allow the case to proceed on an amended basis. On that issue the judge was much better placed than we are to reach a satisfactory conclusion. He had heard the entirety of what was already a very long trial. It is clear that he addressed his mind in a scrupulous fashion to the specific complaints of unfairness advanced by Mr Arnold. He found that there had been no unfairness or, even if there had, that it was remediable by means of the three safeguards that he identified.

We have read with care and listened today to the skilful submissions advanced by Mr Arnold on this aspect of the case. We are however left unpersuaded that the judge was wrong on this issue and that it was unfair or materially prejudicial to the appellant for the case to proceed as it did. It is clear that cross-examination was directed to the factual ingredients of the case as it came to be amended. We acknowledge that the defence case might have been conducted in a slightly different way if the amendments had been made before or at the start of the trial. But we are not satisfied that such differences as there might have been were, or are, material for present purposes. In this context it is relevant to bear in mind again that there was an open offer to recall whichever witnesses the defence wished to have recalled.

For all these reasons we are satisfied that the convictions are safe and the appeal against conviction is dismissed.

The appellant was sentenced by the judge on the basis we have identified. The judge's analysis of the factual position was that the appellant had seen a legitimate scheme that he thought would be failsafe but got greedy and realised he could make money at the start by lying to most of the complainants that a deposit was needed to secure a property which would be refunded if the sale did not go through. He had believed that the complainants would buy their properties and would be none the wiser about the money that they had given him.

The judge decided to impose concurrent sentences on each count at a level which reflected the overall criminality. In determining the offence category for the purposes of the offence-specific guideline he held that the case was one of culpability A (higher) because of the abuse of trust involved in using Hunters as a brand and the sustained period over which the fraudulent activity had taken place. As to harm the total loss caused by the fraud was agreed at £260,900. That was somewhat below the figure of £300,000 on which the Category 2A starting point of five years' imprisonment was based. As to harm B, that is to say the impact on the victims, the judge found that the impact was high which called for the starting point to move up. Whilst the appropriate starting point would otherwise have been one of four years and nine months, that had to be adjusted upwards to six years to reflect what the judge called "the total level of losses".

There were no aggravating factors. In mitigation, the activity was partly legitimate, the appellant had no relevant previous convictions, and there was evidence of positive good character. Testimonials described the appellant a warm, kind, willing to help out and generous. He was a carer for four children. There was also a degree of remorse which could be taken into account in a limited way given the appellant's not guilty plea. The effect of this mitigation was to reduce the appropriate sentence to one of five years' imprisonment. The judge then made a further reduction of 20 per cent to reflect the long delay in the proceedings which the judge accepted had had “an enormous detrimental impact.” By these means the judge arrived at the sentence of four years' imprisonment concurrent on each count.

The sentence is challenged on two grounds. First, it is said that the judge was wrong to ascribe high culpability to the appellant where a number of indicators of lower culpability were present. Mr Arnold submits that the indicators of culpability A that are listed in the sentencing guideline had limited application to the facts of this case. In his written submissions he addressed each of the bullet points in the guideline, submitting as follows. Theis was not a group activity so the appellant had no leading role. Nobody else was involved through pressure or otherwise. There was admittedly some abuse of trust through the use of the Hunters brand name, but on a proper analysis there was no abuse of power. Although the proposed transactions were relatively sophisticated, the fraud was not; at its heart was a straightforward misrepresentation as to what was to be done with the money paid by way of deposit. It would, he submitted, be wrong to describe this as sustained offending. It was more in the nature of sporadic activity over an 18 month period. The number of victims was not large for the purposes of the guideline and none of the victims had been targeted for their vulnerability. The submission is that although there were no indicators of lesser culpability, the appropriate position on the scale for this offending was medium culpability or culpability B leading to a category starting point of three years.

The second ground of appeal is that it was inappropriate for the judge to increase the sentence by a category on account of the victim harm. Mr Arnold submits that the evidence in the victim personal statements did not justify the judge's finding of high impact. Although there were significant financial losses which caused great inconvenience, that was the main focus of the harm. The frauds did not, as frauds often do, cause other serious consequential harm such as marriage breakdown, alcohol problems, or mental health difficulties. The appropriate descriptor, drawing on the guideline, would be "some detrimental impact on victim whether financial or otherwise". Accordingly the starting point should not have been more than three years.

No criticism being levelled at the judge's approach to the aggravating and mitigating features of the case, the overall effect of these submissions is that the sentence should not have started at more than three years' imprisonment and that the mitigating factors should have brought it down to something below two years on each count which could and should have been suspended. In any event it is said these sentences were manifestly excessive.

We see some force in Mr Arnold's submissions. In our judgment culpability was correctly categorised as A but it was not at the highest level. The features of higher culpability were few and none of them was particularly potent. As for victim impact there was certainly a significant detrimental impact on each of the victims. Their victim personal statements demonstrate that. The question is whether the impact was appropriately assessed as serious. We would not wish to downplay the effect of these frauds on the victims. The judge's sentencing remarks set these out in some detail. But it is fair to observe that the principal and most significant effects were financial rather than psychological or social; and the financial effects did not include, for instance, serious consequences such as the loss of a home or other consequential impacts that are regrettably common in cases of this kind. Having regard to the range of offending of this nature we do consider that the judge positioned this case rather too high on the scale. In the scheme of the guidelines, this element of the harm was in category 2A, albeit towards the upper end of the scale. The appropriate response would have been to move upwards within the category range rather than to move up a category.

Applying these conclusions, although the case was in guideline Category 2A with a starting point of five years' custody, a substantial downward adjustment should have been made to reflect not only the fact that the financial harm was significantly below the indicative figure in the guideline but also the relative paucity of culpability A elements. The victim impact would then merit an uplift but only within the category range of three to six years.

Accordingly, in our judgment the appropriate sentence before adjustment for aggravating and mitigating factors was one of four-and-a-half years' custody not six. Adopting the judge's approach, we consider that this must be reduced by nine months to reflect the strong personal mitigation and by a further 20 per cent to reflect the impact of delay. That yields a sentence of three years, not four. The question of suspension does not arise.

In the result, we quash the sentences imposed below and substitute on each count a sentence of imprisonment of three years. The practical impact of that may be relatively modest given that we are told that this appellant has been released on home detention curfew. But it is nonetheless the just and appropriate sentence to pass.