Serious Organised Crime Agency v Gale & Ors

a web of lies, false names, multiple passports, nominees and off-shore corporate fronts;

at least 68 bank accounts both on and offshore and in a number of different jurisdictions which together have received millions of pounds from unidentified sources;

needlessly complicated bank transfers and

fleeing his country of residence (from the UK to Spain, from Spain to the USA and from USA to Portugal via the Bahamas) when he feared the authorities were or maybe interested in his criminal activities.

The claimant relies also on evidence of: -

his criminal record from his youth until when he was 32 years old together with his criminal associates;

police intelligence material which reveals that he was suspected of drug trafficking in the United Kingdom before he emigrated to Spain and on his return to the United Kingdom between 2001 and 2005;

an attempt to breach the Interim Receiving Order within days of service by opening a new bank account in the name of Mrs Peel with a transfer of €167,000 from a Solbank account;

the compromise of proceedings bought in Ireland to restrain funds which were the proceeds of crime;

his access to funds, not identified by the Interim Receiver or disclosed to the Interim Receiver, which he has used to fund his living expenses from July 2005 to date.

It is alleged that the absence – in large part due to his deliberate failure to co-operate with the Receiver’s investigation - of any paper trail of records, financial documents, accounts, invoices, receipts, bank statements and tax returns and any detail of business transactions, customers, suppliers and profits establishes that the millions of pounds he acquired could not have been acquired through a legitimate business or businesses.

The case for DG and TG is that DG was at all material times a genuine businessman who acquired wealth by his honest endeavours in building work, property investment and business ventures of varying kinds, which included the sale of cars and boats. It was submitted there is no evidence that DG was in Spain when cannabis was brought on the Hanja to Ampuriabrava; that his acquittal in Portugal is conclusive of his innocence of the offending there alleged and the claimant should not be allowed to re-litigate the criminal proceedings in Portugal without access to all the transcripts (some of which are missing or unavailable) and without hearing from the witnesses who gave evidence in those proceedings; that the evidence relied upon in the proceedings in Portugal does not (in any event) establish any drug trafficking by him; that his criminal record is of no relevance and that the police intelligence reports, the details of which he cannot challenge as they are based on untested hearsay, have no evidential weight. Both DG and TG rely upon the passage of time and delay to explain the absence of documentary business records and their inability to recall details of bank accounts. It was submitted also that if the Court were to be satisfied on the balance of probabilities that DG and/or TG obtained recoverable property from the unlawful conduct alleged, proceedings must be commenced within 12 years of the date on which the Claimant’s cause of action accrued, which by agreement was 28^th July 1993 but the Claimant were aware by 10 March 1992 that DG was suspected of being a drug trafficker and so their action is limitation barred.

THE RELEVANT STATUTORY PROVISIONS

Proceeds of Crime Act 2002: -

This Part has effect for the purposes of—

Conduct which—

The court or sheriff must decide on a balance of probabilities whether it is proved—

that any matters alleged to constitute unlawful conduct have occurred, or

that any person intended to use any cash in unlawful conduct.

In deciding whether any property was obtained through unlawful conduct—

The enforcement authority must serve the claim form—

on the respondent, and

But the court may not make in a recovery order—

the respondent obtained the recoverable property in good faith,

when he took the steps, he had no notice that the property was recoverable,

A recovery order may sever any property.

This section is subject to sections 270 to 278.

Property obtained through unlawful conduct is recoverable property.

the person who through the conduct obtained the property, or

a person into whose hands it may (by virtue of this subsection) be followed.

I shall refer later in the Judgment to the relevant provisions of the Limitation Act 1980.

THE ISSUES

i) Have the claimant proved that DG’s wealth was the product of the unlawful conduct alleged and if so

PART B

THE APPROACH TO THE EVIDENCE

The burden of proof is on the claimant and the standard of proof they must satisfy is the balance of probabilities. While the claimant alleged serious criminal conduct, the criminal standard of proof does not apply, although “cogent evidence is generally required to satisfy a civil tribunal that a person has been fraudulent or behaved in some other reprehensible manner. But the question is always whether the tribunal thinks it more probable than not” – see Secretary of State for the Home Department –v- Rehman [2003] 1 AC 153 at paragraph 55 per Lord Hoffmann. In In Re D [2008] 1 WLR 1499 at paragraph 27 Lord Carswell, with whose speech the other Law Lords agreed, said the proper state of the law on the topic had, subject to one qualification, been summarised by Richards LJ in R(N) –v- Mental Health Review Tribunal (Northern Region) [2006] QB 468 at paragraph 62:-

“Although there is a single civil standard of proof on the balance of probabilities, it is flexible in its application. In particular, the more serious the allegation or the more serious the consequences if the allegation is proved, the stronger must be the evidence before a court will find the allegation proved on the balance of probabilities.

Thus the flexibility of the standard lies not in any adjustment to the degree of probability required for an allegation to be proved (such that a more serious allegation has to be proved to a higher degree of probability, but in the strength or quality of the evidence that will in practise be require for an allegation to be proved on the balance of probabilities”.

While there is no burden on a respondent to provide answers, clearly, if an answer is not provided to an important question, and the court is satisfied that the respondent had the knowledge to answer the question and chose not to, an inference adverse to that respondent may be drawn but any decision as to a failure to answer must have regard to delay, which must be ruled out as a possible explanation for the failure to answer before any adverse inference may be drawn.

Delay

A careful consideration of the evidence will necessarily require a consideration of the fact of delay. The Receiver has investigated matters which go back to the 1980s and in some respects even beyond then. The investigations have been in a number of different jurisdictions with varying degrees of co-operation and there is an inevitable absence of documentary evidence. While these are matters which prejudice all parties, the risk of prejudice may be the greater for the respondents, who may have been deprived of the opportunity of presenting more affirmative evidence or of calling witnesses in support of their respective cases. These are matters which I have had in mind, when deciding whether the claimant have proved their case.

Property obtained through unlawful conduct

In The Queen on the Application of theDirector of Assets Recovery Agency and Ors v Geoffrey David Green and Ors [2005] EWHC (Admin) 3168, Sullivan J (as he then was) considered a preliminary issue - “Whether a claim for civil recovery can be determined on the basis of conduct in relation to property without the identification of any particular unlawful conduct, this first question to include whether the claimant can sustain a case for civil recovery in circumstances where a respondent has no identifiable lawful income to warrant the lifestyle and purchases of that respondent”. He answered it as follows: -

“47…

With the possible qualification in the judgment of Moore-Bick LJ, this was approved by the Court of Appeal in The Director of Assets Recovery Agency v. Szepietowski & Ors [2006] EWHC (Admin) 3228. Moore-Bick LJ said at paragraph 107: -

“… It is sufficient in my view for the director to prove that a criminal offence was committed, even if it is impossible to identify precisely when or by whom or in what circumstances and that the property was obtained by or in return for it. In my view Sullivan J was right therefore to hold that in order to succeed the Director need not prove the commission of any specific criminal offence in the sense of proving that a particular person committed a particular offence on a particular occasion. Nonetheless, I think it is necessary for her to prove that specific property was obtained by or in return for a criminal offence of an identifiable kind (robbery, theft, fraud or whatever) or, if she relies on Section 242 (2), by or in return for one or other of a number of offences of an identifiable kind. If, as I think, that is what the judge meant in paragraph 50 of his judgment, I respectfully agree with him”.

With respect to Sullivan J, I consider his second answer is too restrictive. While a claim for civil recovery may not be sustained solely upon the basis that a respondent has no identifiable lawful income to warrant his lifestyle, the absence of any evidence to explain that lifestyle may provide the answer because the inference may be drawn from the failure to provide an explanation or from an explanation which was untruthful (and deliberately so) that the source was unlawful.

In The Director of the Assets Recovery Agency v. Olupitan [2007] EWHC (QB) 162, Langley J summarised the effect of Green at paragraph 22 of his judgment: -

“Thus, as Section 242 (2) (b) provides, the Director does not have to prove the commission of a specific criminal offence or offences but must identify and prove the matters alleged to constitute the kinds of unlawful conduct by which the property was obtained, and it is not sufficient “solely” (my emphasis), to establish a lifestyle inconsistent with any identified income. It is for the court to decide (on the balance of probabilities) whether the matters alleged to constitute unlawful conduct have been proved: Section 241 (3).”

In The Director of the Assets Recovery Agency v. Jackson [2007] EWHC (QB) 255, King J, having cited that summary, made the following observations: -

“115.

I also echo what Langley J said on the emphasis to be put on the qualifying adverb “solely” in the context of proof of obtaining property through unlawful conduct, by reference to a comparison between lifestyle and identifiable sources of income. Such a comparison will not in itself be sufficient but as in Olupitan so in the present case the claimant is entitled to ask the court to look at the totality of the evidence and the whole picture which emerges. As Langley J said at paragraph 23 “it is one thing to point to unexplained lifestyle, it may be another, if an explanation is offered but rejected as untruthful and taken with other evidence”

…

118.I also consider that the court is entitled to take a commonsense approach to the inferences to be drawn from the manner in which the Respondent chose to store his accumulated cash and from the failure of the respondent to keep any business records in the context of the evidence as a whole.

…

119.Equally, as the Receiver said in evidence, one would expect any successful law abiding businessman to keep some sort of record no matter how simple, of what he was buying, what he was selling and the amounts of his overheads – if only to work out the sort of profit he was making and which were his most profitable items. The criminal dealer in, for example, illicit drugs will of course eschew any record by which his activities might be detectable”.

I respectfully agree with and adopt the above cited observations of Sullivan J, Langley J and King J and if support is needed it is to be found in the decision of the Court of Appeal, Criminal Division in R –v- Anwoir & Others [2008] 2 Cr App R 36 at para 21 at page 539 that there are two ways in which the Crown can prove in money laundering offences that property was derived from crime - either by proving it derived from unlawful conduct of a specific kind or kinds or by evidence of the circumstances in which the property was handled, such as to give rise to the irresistible inference that it could only have been derived from crime (although in criminal proceedings the higher standard of proof is required).

The Portuguese Proceedings

What should the court’s approach be to the decision of the Portuguese Court to acquit DG? It is not contended that the doctrine of issue estoppel applies and clearly the criminal law principle of Autrefois Acquit has no application in civil proceedings. On behalf of DG, it was submitted that the Portuguese charges cannot be re-litigated without hearing from all the relevant witnesses or considering a full transcript which is not available, However, I do not accept this contention. To consider the evidence adduced in the Portuguese proceedings is not to re-litigate because what is in issue in these proceedings is not the commission of the specific offences alleged against DG in Portugal but whether on the evidence before this court of the material considered by the Portuguese Court, together with the evidence available to the Spanish Courts and other material not considered by the courts in either jurisdiction, the claimant has proved on the balance of probabilities that DG’s wealth was obtained through unlawful conduct of a particular kind or of one of a number of kinds, each of which would have been unlawful conduct: see Section 242 (2) (b) of POCA – that is to say drug trafficking, money laundering and tax evasion. It is therefore unnecessary to consider the evidence given in those proceedings by Judith Rigby as to her investigations into the financial affairs of DG or the court’s apparent rejection of that evidence as probative of the matters specifically in issue in those proceedings.

The approach to the Receivers’ Report

Pursuant to the extensive powers accorded by POCA and incorporated in the Order, dated 28 July 2005, the Receiver (and those acting for him) carried out thorough investigations into the business and other activities of the respondents over a period of more than 20 years in at least 9 jurisdictions. The Report is in two parts with eleven separate chapters, appendices and 12 charts detailing the acquisition of twelve properties, property funding links and Merrill Lynch funds. It details the Receiver’s investigations and identifies the evidence which supports his findings. Mr Earp gave evidence in support of those findings and was cross-examined by Mr Lederman QC. He was able to hear some of the evidence of DG (which included particulars of additional properties ) and he was provided with transcripts of the remaining parts of his evidence and of all the evidence of TG; he reported by letter dated 19 February 2009 that he has heard nothing to alter the conclusions in his Report.

As to the status and evidential worth of the Report, I observe that the service of the Receiver’s Report is itself notice of the claimant’s intention to rely upon hearsay evidence and so there was no need to serve a separate hearsay notice but as the report contains, in a very large part, hearsay evidence, that is a matter which goes to weight. Therefore I have in mind the criteria in of section 4(2) of the Civil Evidence Act 1995. Mr Lederman QC did not challenge any of the factual detail although he took issue with the emphasis or interpretation placed upon it by the Receiver. In the result, very little turns on the accuracy of the factual content. In my judgment the court’s approach to this evidence is that correctly stated by King J in The Director of the Assets Recovery Agency v. Jackson [2007] EWCA (QB) 2553 at paragraphs 29 and 20, which I respectfully adopt; King J said: -

“29.It is obviously clear from this legislative framework and these statutory provisions governing the appointment of the Receiver and her investigative and reporting functions under the supervision of the court rather than the Director, that the Receiver is not the agent of any of the parties. In my judgment, she is kin to an officer of the court and is reporting and giving evidence to the court in that capacity independent of the parties. It is further obviously right that the Receiver’s report should be used in advance of the final hearing as a means by which to establish such facts as can be agreed between the parties and to identify the matters in dispute in need of resolution by the court. Further, in principle, I am prepared to accept that the Receiver’s findings as to recoverable property should be given considerable persuasive weight by the court and to that extent her report enjoys special status.

30.However, this said, I also agree with the respondent’s submissions that the Receiver’s findings of recoverable property are not binding on the court, that it is the primary evidential material underlying her finding and said by her to justify them, which is of crucial importance together with any additional evidence called before the court and that it is the duty of the court, in determining any area of dispute between the parties carefully to scrutinise and weigh that evidence in order to determine whether the claim to recoverable property is made out…The statutory provisions referred to do not alter either the burden or standard of proof which is upon the claimant to establish the existence of recoverable property on the balance of probabilities by cogent evidence. The findings of the receiver do not in themselves reverse the burden of proof so as to put any onus on the respondent to disprove her findings …”

PART C

KEY INDIVIDUALS

David Gale [DG] was born Garry David Cedric Moore on 19 January 1950. His father was described on the birth certificate as a hotel manager and his mother, June, who was born on 11 June 1927 is there described as a ‘mother’. He was the eldest of three children with younger brothers, Christopher Moore, who was born on 215 September 1951 and Phillip Moore who was born on 25 September 1951. Between 1963 (when he was 13 years old) and 1982 (when he was 32 years old) DG was convicted 18 times of a total of 37 offences, none of which involved drugs. As he has no convictions for a drug trafficking offence, the evidence is not relied upon as demonstrating a propensity to commit drug trafficking offences but rather as a propensity to criminality. The convictions in adult courts include some of violence but a number of offences of dishonesty. In 1969, he was convicted of burglary of a non-dwelling with intent to steal and sentenced to Borstal Training; in 1975, he was convicted of conspiracy to rob and sentenced to 3 years imprisonment and in 1976 he was convicted of conspiracy to pervert the course of justice and sentenced to a consecutive 6 months imprisonment. He changed his name by deed poll on 17 June 1994 to ‘David Gale’ but his police antecedent history records his earlier use of a number of aliases including David Gale and Jack Gale. A feature of the evidence to which reference will be made later was his use in the USA and in Portugal of false names.

June Patricia Peel [“JP”] was born June Law on 11 June 1927. She married Sydney Kenneth Moore by whom she had 3 sons, David, Christopher and Phillip. Following the death of Mr Moore in about 1980, she married Reginald Clifford Peel. He died in or about 1997/1998. The Receiver has found no evidence of any inheritance from either husband. In about 1995, she befriended Henry James Mitchell who, by his will dated 5^th February 1998, made her his residual legatee. When he died his home at 84 Church Road, Rhos-on-Sea was sold and she received £48,543. In 1997, JP contracted encephalitis. Her consultant physician, Dr Ghadiali reported on 14 November 1997: -

“There is clear evidence of cognitive impairment in the 70 year old lady who may have suffered herpes simplex encephalitis. She shows mild generalised intellectual loss, mainly for non-verbal functions. She has a very severe short-term memory impairment for verbal and visual material. She is disoriented, confabulating and confused. She has mild word finding difficulties. Visual special functions were normal, verbal fluency was normal. Assessment of front lobe functioning was limited. She has severe anxieties. There is no depression. She has severe amnesic syndrome, mild intellectual loss, mild word finding difficulties but no dysphasia or visuo-spacial disturbance. This profile points to by-lateral temperal lobe damage and is consistent with the affect of herpes simplex encephalitis”.

In a report dated 4 March 2007, Dr O’Brien reported, by reference to her medical notes, that in December 1997 she was described as having “significant memory blocks going back for a period of 10 months or more” and in February 1998 it was reported “she could not recall memory within 3 years.” The medical records included a letter dated 1 May 1998 which recorded she was living independently with only mild supervision, had “some perseveration, some difficulty with verbal fluency, consistent with frontal lobe impairment. She also has some difficulty naming people and has some mild dysphoria (sic)”. These reports suggest that her condition is variable but her solicitors wrote a letter dated 8^th August 2005 replying to questions from the Receiver about her assets, saying she has no recollection of any active bank accounts in Spain, and in particular a holding of €438,351, but she did live in Spain for a number of years and had accounts there. DG made a statement about her condition on 21^st September 2005 when he said “large parts of her life are now a closed book to her”; he said she could not remember her second husband’s name. In his evidence, DG said she can follow conversations but has an appalling memory. He said that to talk to her you would not believe there is anything wrong with her. I shall return to this later, but the medical view is she lacks capacity, cannot take part in these proceedings and so she is now represented by the Official Solicitor.

Christopher Moore, DG’s brother, has a criminal record of which the earlier convictions in 1966 and 1980 are of no relevance but on 17 June 1997, at the High Court in Bayonne, France, he was convicted of possessing cannabis with intent to supply and sentenced to two years imprisonment – he was released from that sentence on 19 February 1998; I shall refer to the facts giving rise to that conviction later in the judgment. In 2001 and 2005, he was convicted of offences of possession of Ecstasy, Amphetamine and Cannabis. He has not made a witness statement.

Although Phillip Moore made a witness statement dated 26 September 2006, which was served on behalf of DG, he did not give evidence. No application was made under CPR, r.33.2 for his statement to be read and the claimant did not put the statement in as hearsay pursuant to CPR 32.5(5) but by agreement, it is evidence to be considered. A later statement dated 14^th October 2007 [Volume 2/44] was not relied upon. He worked as a landscape gardener in England before he moved to Spain in about 1986 to work for DG. He has no criminal convictions.

DG has a daughter, Elizabeth Rogers, who is married to Robert Ward. Ward was born on 4 May 1970; he has 14 convictions for 42 offences; between 1984 – 1989 his offending was mainly acquisitive and he served a number of sentences of imprisonment. In 1993, he was convicted of firearms offences and sentenced to 18 month’s imprisonment. He was a visitor to DG’s home in Portugal and to the private airstrip built by DG; he did some building work for DG with Kevin Barry, crewed the ‘Eagle’ and was linked forensically to the drug importation at Gale Beach.

Kevin Barry is related somewhat tenuously by marriage to DG – his mother is the sister of a sister-in-law of DG. He was born on 20 September 1960 and has 13 convictions of 18 offences, many of which are offences of violence but he was sentenced to 5 months imprisonment in 1982 for an offence of a dwelling house burglary and 27 months imprisonment in 1986 for offences of dishonesty and violence. On 9 September 1997, he was convicted in his absence in the High Court Bayonne of possessing cannabis with intent to supply and sentenced to 2 years imprisonment (see Christopher Moore above). He was a visitor to DG’s home in Portugal and to the airstrip; he was the purported owner of the ‘Eagle’ and he too was linked forensically to the drug importation at Gale Beach. He did some building work with Ward for DG in Portugal. More significantly, Barry collected a $400,000 draft on behalf of TG from her solicitor and so was regarded as trustworthy by both DG and TG (see paragraph 93 below).

Colin Allen is a friend of DG, who had no convictions in the UK and who lived in Spain; he was convicted by the Spanish High Court of drug trafficking arising out of the ‘Hanja’ incident (see below) and sentenced to 6 years imprisonment. He was the purported owner of the ‘Eagle’ when it docked at Gibraltar on 28 June 1998, and so after his release from prison, demonstrating continuing links with DG.

DG met Teresa Mandy Diffey (TG), who was born on 21 August 1962, in 1979 and so when she was 17 years old. She was born and brought up in Bournemouth; she left school when she was 15 years old but she had been working since she was 12 years old; she has been employed as a chambermaid, cleaner, waitress and hairdresser. There is some support for this in HMRC records; her declared income between 1980/1982 was £1,257.68 and she received some unemployment benefit. On any view, she had no training or experience in matters of finance. She said when she met DG he was working in the building industry, “an entrepreneur able to make money from his skill in the building trade and his judgment in the housing market”. She said she moved in to live with him at 49 King George Avenue, running the home while he looked after the income. She said that when she was 20 years old she became pregnant, and three months into the pregnancy, DG went to Spain while she went to live with her mother. I observe that a solicitor with power of attorney acted for DG in the sale of 49 King George Avenue and so he would have been in Spain then (29 July 1983). TG said their son was born on 15 August 1983 and she took him to join DG in about October 1983. She did not work in Spain.

Jonathan Diffey is the much younger brother of TG; he lives in the Bournemouth area where he has been a postman all his working life. He was the account holder of an Abbey National Gibraltar account and a National Westminster Bank account from which monies were paid towards two property purchases by DG and TG and cheques made payable to him were used to open an Allied Dunbar off-shore account in the joint names of DG and TG. He was also a nominee owner of a property purchased in the USA (see paragraph 80).

Michael McEvoy was described in evidence by DG as a long-term family friend who is totally honest and to whom he loaned money. He owned a taxi business in Christchurch. In evidence, DG said he knew him from his Chester days and loaned him some £40,000 in dollars when he was in the USA for McEvoy to make a property investment in Portugal. He said it was this money, “with some profit on top” that was repaid and used towards the purchase of 1 Glendale Road in 2000 (see paragraph 104 below). McEvoy was given a power of attorney by JP, together with the lawyer Soledad Sanz in respect of the sale of Casa Manana and the opening of an account with Solbank for the proceeds of sale. DG said his mother trusted him. There were three Police intelligence reports rated reliable disclosed to the Receiver – the first dated 11 December 1996 reports that “McEvoy is involved in money laundering and the importation of drugs”, the second dated 23 September 2004 that he had recently met with a man in a pub in the Winchester area and discussed cannabis importation and the third dated 27 June 2006 that he acted for JP when the house in Spain which DG lives in was sold to her.

PART D

MONEY LAUNDERING

The early years

The history of DG’s early financial dealings came almost exclusively from his answers to queries raised by the Receiver, his witness statements and his evidence. He said his interest in building and in property renovation was fostered by his father, who died in about 1980. His father had various employments, which included a police officer, an insurance agent, and working for Cadbury’s, BICC and Rio Tinto Zinc, but he was never unemployed and spent his free time renovating the family home, which would then be sold; between 1953 and 1979, there were 7 family homes.

At an early stage in the Receiver’s inquiries, DG provided a statement dated 19 September 2005, in which he said: “My father was a builder who rebuilt and renovated the various houses in which we lived as well as other properties. As a result I was used to dealing with and working on real estate from a very early age. I bought my first house at the age of twenty and another one eighteen months later. I sold both of them a few years later. During this time I worked as a self-employed builder”. When cross-examined, he was asked about a record of a Client Review by Merrill Lynch dated 19 February 1997 which recorded that he was self-employed in a family business, that he started business with his father, that the source of his current assets was “from the sale of properties he bought, refurbished and sold”. Asked about this, he said when he and his brothers came home from school, they would be given building work to do for pocket money and his father taught him all he knew about building work. He said that when he moved to Bournemouth, his father also went there and he helped him with loft insulation work – hardly, in my judgment the quality of work to be expected of a successful builder - but his father died on December 1979. He said the other properties his father worked on belonged to family and friends. In his witness statement, he said “Given my experience in the building trade, I was confident that relocating to Spain would be a good idea financially and I saw the potential for investment. As a successful developer (my emphasis) in England, I was very interested in moving to Spain and launching a new life there”. For the reasons which follow, I am satisfied he was not then or at any time, a successful developer

Asked by the Receiver for the addresses of the two properties he had bought, he replied on 11 November 2005, identifying:

In his witness statement dated 7 November 2008, he said he had bought 145 Garden Lane for £1,500 with £200 savings from his wages in a building job and with a mortgage for the balance. He was then 20 years old. It was sold for £7,000 with a net equity of about £5,000, giving him “much needed capital”. He said he did not buy 11 Hoole Bank, which was his grandmother’s home but she was living 145 Garden Lane and he rented it out and kept the rent. He said he believed it would be left to him when she died in 1975/1976 but it was not. He said he bought 49 King George Avenue with his then wife, Elaine Moore, about four years after selling 145 Garden Lane for about £10,000, selling it in 1983 for £35,000. This produced, he said, his initial capital when he moved to Spain in 1983.

Land Registry and other records establish that 145 Garden Lane was sold for £7,000 on 18July 1980 and 49 King George Avenue bought on 12September 1979 for £21,000. It was sold on 29 July 1983, by which date DG had the sole beneficial interest, for £32,500 but subject to a mortgage of £14,553, and so the net equity was some £16,000. This is significantly less than the £25,000 he had claimed earlier to the Receiver; my conclusion is he had deliberately exaggerated the profit and would have maintained the claim but for the Land Registry records. Asked how he could buy 49 King George Avenue before he sold 145 Garden Lane, he said he had money from his work as “a jobbing builder” but the Receiver’s checks with HMRC revealed that although he has a national insurance number, he declared no PAYE employment or self-employed earnings in the tax year 1980/1981 or to date. There is also no record of him being paid any state benefits and so from the point of view of HMRC he has no disclosed and visible means of support for himself and his family. When DG gave evidence, he was asked about a night club in Bournemouth – he said he had an interest in a club with others but the premises were rented and the income was limited.

As DG said the £5,000 or so proceeds from the sale of 145 Garden Court provided much needed capital, as he does not claim it formed any part of the capital for his move to Spain, it may be inferred it was applied on other expenditure. He has not identified any other property which he purchased for re-sale and the acquisitions of 145 Garden Lane and the matrimonial home at 49 King George Avenue can hardly be described as a property portfolio. My conclusion is that he has deliberately exaggerated these property interests and that they did not amount to much, if anything.

Business Interests in Spain

There is some uncertainty as to the date when DG moved to Spain. In his witness statement dated 19 September 2005, he said it was “in 1982, at this time the Spanish building boom was getting into full swing and there were plenty of opportunities for builders and property developers. I was also selling cars boats etc”. TG said that he left 3 months into her pregnancy and as DKG was born on 15 August 1983, that would suggest a move in early 1983. Between early 1983 and 1989, the unchallenged evidence is DG acquired approximately £1.4m, the total of the various sums credited to the 8 Allied Dunbar accounts opened in 1989. He said “I operated bars rented apartments, formed the first rapid printing company in Spain (Kwik Print SA) and also built and rented out the first British style fish and chip shop in Marbella. I made a substantial amount of money on these entrepreneurial operations”. He subsequently identified the following business interests: -

In evidence, he claimed he had spent £25,000 to acquire the premises for Kwik Print SA as well as the £40,000 needed to equip it, £10,000 for the Printer’s Drink, £10,000 for Pip’s Bistro, £40,000 for Rosie O’Grady’s and £35-40,000 for the fish and chip shop – a total in some 2 years of £160,000 - £165,000 which he said he funded from his business earnings. The obtaining of the fiscal licence for Kwik Print SA with a commencement date of 9 June 1986 provides some evidence of the date of its acquisition.

In his evidence he said that his brother Philip Moore and his girlfriend ran Kwik Print SA from the start (and so in 1986) but following a split with his girlfriend, Philip went to manage Rosie O’Grady’s bar. DG estimated Philip Moore was making £1,000 per week from Kwik Print and he (DG) was being paid £1,000 a week by way of rent. While TG has not made any statement about the profitability of the business, she did say it was very successful and was sold as a going concern in 1989 for £400,000. According to DG, he bought the Printer’s Drink with the profits from Kwik Print and bought Pip’s Bistro so his brother Phillip could indulge his passion for cooking and subsequently bought Rosie O’Grady’s at Philip’s behest – Philip made no mention of this in his witness statement.

DG’s evidence as to the disposal of Kwik Print SA has changed. In all statements and responses until 7 November 2008, he deliberately avoided providing any detailed information. In his witness statement of 7 November 2008, he mentioned for the first time a partner – he said “In 1989 I sold Kwik Print for a value of around £400,000. I was paid in stages. This was made up of an initial £200,000 payment from my partner James Donnelly and then when he bought me out he transferred ownership of a power boat valued £80,000 to me and transferred £120,000 in cash to me”. TG seems to have known nothing about this because she said in her statement dated 7 November 2008 that Kwik Print was sold as a going concern for £400,000 and the other businesses were disposed of separately. Furthermore, when during the trial DG produced a revised schedule of his assets, he said he had sold Kwik Print, the Printer’s Drink and Pip’s Bistro all together for about £350-400,000. Cross-examined, DG said James Donnelly bought in for £200,000 when Philip Moore left to work in Rosie O’Grady’s. There is no evidence to establish that any of these monies was paid into an identified bank account.

It was not until the sixth day of the trial, when Mr Lederman QC was pressed to confirm the first respondent’s case about his property and business interests, that he took further instructions and, for the first time, DG identified 5 properties which he claimed to have purchased, renovated and resold (see below). It was said by Mr. Lederman that that, together with the purchase of Calle Roma in 1988, to which reference will be made later, was the extent of his property interests. As DG provided little by way of evidence about the cost of these properties, the only safe conclusion is that he must have had access to more capital.

The fish and chip shop is the only business for which there is some form of documentation available in relation to purchase or sale. This came from the lawyer Ms Soledad Carrero Sanz. It was purchased by DG on 11 February 1988 for Ptas 7.5million. According to TG this was £45,000 although the Receiver has calculated a price of something over £40,000 by applying the exchange rates at the time. The property was rented to 4 tenants who paid a refundable deposit of £20,000 but this was not until 8 May 1990. Ms Sanz told the Receiver that there were problems with the tenants from 1992 when she was given a power of attorney by DG to litigate if necessary; it took until 9 November 1995 to get their agreement to vacate the premises on terms that they were paid £7,500 and allowed to retain the fittings and fixtures. The property was sold to Ahmed Bouamar (see below) for £41,580. Ms Sanz told the Receiver that DG and Bouamar had made arrangements for the purchase directly and payment was made to DG directly. As the sale was not until 1995, the proceeds form no part of the investments in the Allied Dunbar accounts. In his evidence, the Receiver expressed the view it was not a successful business, a view with which I agree. My conclusion is it produced little by way of income and was a financial liability.

On DG’s behalf it was submitted that there is support for his evidence as to his legitimate business interests in Spain from the evidence of Gerald McGowan, Gilbert Hunter, Maurice O’Connor, Philip Moore and Soledad Carrero Sanz. DG produced photographs of the fish and chip shop and a photograph of what appears to be the premises of Kwik Print.

DG when asked for financial information regarding his businesses referred the Receiver to his adviser, Gerald McGowan [“McGowan”] to whom he referred as his accountant. In a witness statement, dated 7 November 2008, he said “Eventually, as I got busier, I employed a man, Gerry McGowan to look after my interests” (my emphasis). McGowan has not made a witness statement but DG has exhibited a reference McGowan provided by cover of a letter dated 3 January 2007. When the court was informed he would give evidence, provided the cost of his return flight from and to Spain was met, the necessary funding was authorised and the court was informed he would make a witness statement containing a statement of truth before he was called to give evidence. In the event, he did not attend and it was agreed that the court should consider the contents of both the reference and the letter and form its own view as to its reliability. In the reference, McGowan described himself as “an official translator” who has worked in the Mijas/Fuengirola area since around 1984. He said he provided a variety of professional services employing the services of solicitors, accountants and labour legislation specialists and “therefore offered a variety of professional services to Spanish and non-Spanish nationals”; he said it was in that capacity that he met DG in about 1985/1986. He said he personally handled the conveyancing of most of the property purchases (apartments, villas and commercial) and “the accountants in my firm dealt with his tax returns and his accountancy affairs”. He said DG later purchased businesses in La Carihuela and he assisted him in the formation of a company called Kwik Print SA. He said he “intervened” in DG’s purchase of the Printer’s Drink and Rosie O’Grady’s. He recalled that DG imported prestige vehicles from the USA for resale in Spain and he was involved in “the corresponding tasks of import duty settlement and matriculation of the vehicles”. He said he found DG to be a respectable businessman and so provided him with a personal reference when he opened an account with Allied Dunbar. In the covering letter he said he doubted that there was any paperwork because it is shredded after 4 years. My conclusion is that McGowan deliberately exaggerated his own business and/or professional standing and so any evidence he provides must be viewed with caution.

The Receiver experienced some difficulty in making contact with McGowan but when contact was made little specific information was forthcoming from him. In an email sent on 18 June 2008, those acting for the Receiver set out a series of questions in respect of DG’s asserted business interests. McGowan’s responses are less than illuminating, save that contrary to his claim in the reference, he said he referred his clients to accountants and kept no records of whom he recommended to whom and stated that his involvement was as a translator/interpreter “to translate between Mr Gale and whatever professional he was dealing with”; he said he recalls translating in “multiple business negotiations” as DG “was a very active and adventurous business man”. He said he has no memory of the detail of conversations which he translated over 20 years ago, has no record of the sale of Kwik Print SA but was gifted some letterheadings. He said Rosie O’Grady’s was one of the first Irish “theme bars”, very successful and purchased by DG from the previous owner, an Irishman but he (McGowan) had less contact with DG after its acquisition because his work began to be Madrid based.

Gilbert Hunter, a former managing director of Friends Abroad in Marbella said his company acted as agents for Kwik Print SA “a substantial, modern and efficient printing company” managed by Philip Moore and owned by DG. He stated he knows “for a fact” that DG was involved in several businesses which were dealing in second hand cars, the provision of building services, and ownership of Rosie O’Grady’s, The Printers Drink, Pip’s Bistro and the fish and chip shop. He said DG was a very well known business man who did “very well financially”.

Maurice O’Connor was the bar manager of Rosie O’Grady’s, which he said was owned by DG who also owned the nearby Kwik Print SA and the fish and chip shop. His evidence was that he was employed from approximately June 1986 but he does not state for how long he was employed; he described it as a very popular bar but even though he was the manager, he provided no evidence in his statement as to the level of the bar’s profitability.

Philip Moore said DG has always been entrepreneurial and as a youth his first job was assisting him “on his fruit and vegetable rounds” – DG never referred to this. He said DG subsequently worked as a builder in the UK and later, when he visited DG after he had moved to Spain in 1983, he saw that DG and TG “had become very successful in the property business in Spain”. He said he knew his mother had assisted DG “in getting started” by allowing him to refurbish and sell a property that she had purchased - DG made no mention of this. He said that on one of his visits to Spain, DG raised the idea of opening a printing business financed from his earnings in property and he agreed that he and his then girlfriend would take a 3 week course in the UK and run the business in Spain to be equipped by DG at a cost of £40,000; this business focused on printing menus and flyers for area businesses. He said he ran the business (which was very successful) for two years but he was not the book keeper and cannot cite specific figures; he said that he then handed over the management of the business to two Englishmen “who had started a similar business in the area” with DG remaining the owner of the business. He said he then managed Rosie O’Grady’s bar which he described as a very successful venture.

Ms Sanz provided a statement dated 6 April 2006 in which she said she had known DG since 1986, since when her firm had provided legal advice in respect of the following matters – in 1986 a resident’s card and obtaining a fiscal licence for Kwik Print, the purchase of the fish and chip shop in February 1988, the purchase by JP in 1988 of Casa Manana, the sale under a power of attorney in 1999 of Casa Manana and the opening of a Solbank Account 0296 into which the proceeds of sale were deposited, the sale under a power of attorney in November 1995 of the fish and chip shop and the acquisition in 2002 of Mezquita (see below).

Although the Receiver’s detailed investigations of the area where these businesses were located produced no evidence of their existence, I am satisfied that is probably explained by the passage of time. The Receiver stated there is no Kwik Print SA registered in Spain and enquiries at the address revealed that No.57 is not presently a printing business but there is a printing business called Impreta Paredes nearby. The proprietor of that business was interviewed and he said he had set up his business in 1984 and had never seen or heard of any other printing press in that area. He was not aware of a Kwik Print or any other similar name business, had never heard of Garry Moore or David Moore. I accept this evidence because I would expect a competitor to know of a competing business. The Receiver states the application for the licence, which was approved on 9 June 1986, said there would be 1 worker and 9 Kw electricity supply; furthermore Ms Sanz is silent about any renewal of the fiscal licence, registration for VAT and the like. The proprietor of Impreta Paredes also said he was also unaware of a bar called the Printers Drink but that may well be explained by the fact that he would not have been interested in a tourist bar and the likelihood that the names of such bars change on a regular basis.

The Receiver gave some consideration to what a sale price of £400,000 would require in terms of a business. His approach is detailed at paragraph 5.45 of his Report. He calculated that such a business would have had a turn-over of over £500,000 annually and an annual profit of over £97,000 to warrant a purchase price of £400,000. He acknowledged that these calculations are necessarily inexact but it gives, he asserts “some indication of the type of business that would be required”. He observed that “the application for a business with 1 worker and only a 9 Kw electricity supply (less than many homes) is completely at odds with what would be required for such a business”. Making allowances for the necessarily imprecise calculations, I am satisfied on the balance of probabilities that the business could not have been so successful. A further consideration is that the business was said to have been run by Philip Moore, previously a self employed landscape gardener in the UK, and his girlfriend with together the sole experience of a 3 month printing course. There is no evidence of the girlfriend’s experience but according to DG she was the bookkeeper who kept the accounts for Rosie O’Grady’s as well. According to DG, their two course tutors “ended up working for some time for the business”. If there is any truth in these claims, the business would have been liable for tax and needed accountancy services. DG’s contradictory evidence included the assertions that Philip stopped working for Kwik Print SA when he and his girlfriend split up and he (DG) bought Rosie O’Grady’s with part of the proceeds of sale of Kwik Print. I approached DG’s claims of such high profitability with scepticism, found nothing to support them and have concluded he has lied.

I make the following findings of fact relating to these claimed business interests:-

Spanish Properties

The property over which the Receiver was appointed included Mezquita purchased in 2002 and Las Hortensias purchased in 2004. He concluded that the origin of the funds used to purchase these properties (and 120 Hurn Road, Christchurch, Bournemouth purchased in 2002) can all be traced back to unknown sources. The respondents’ case is that the funds were lawfully obtained and can be traced back to the purchase in 1983 of El Sardinel in Estepona, a house purchased by June and Reginald Peel for £38,000 and the funds for subsequent property purchases were all from the profit of DG’s various business adventures detailed above and the net proceeds of sale of El Sardinel which were given to him by his mother. The following issue arises – is the evidence of the purchase by the Peels of El Sardinel using their own money credible? To find the answer it is necessary to examine at some length the evidence about JP and for the reasons which follow I have concluded that JP did not have the means to purchase any property in Spain; rather, DG has used her name to acquire various properties in which he had the sole beneficial interest, the funding for which came not from her but from unidentified sources, representing the benefits of unlawful conduct.

DG said it is not true that his mother is of modest means; he said she had always been well placed financially and as well as having a substantial bank account, she also owned properties in the UK and Spain in her own right. He said she inherited real estate of a substantial nature from his father, a house and other property from her second husband, Reginald Peel and also a property in North Wales and money from a friend of hers who died. Philip Moore in his statement confirms this but only in the most general of terms, so general as to bring into question whether he, in fact, has any knowledge of his mother’s financial position – my conclusion is that he has no such knowledge.

While JP has undoubtedly many bank accounts, some with substantial credit balances, there is a real issue as to the source monies for those accounts – the claimant’s case is that she has been used by DG effectively as a nominee or a ‘front’ for his money laundering. My conclusion is that the evidence amply supports that inference. There is, for example. the evidence that DG opened accounts in JP’s name with the Alliance & Leicester on the Isle of Man and with Woolwich in Guernsey (about which there is no information) as well as the evidence of the Solbank 0296 account in the name of JP with numerous large and unexplained transactions, including unknown receipts of €1.5 million, which occurred during a period when JP lacked the capacity to run her own affairs. The pattern of transactions on that account is typical of money laundering. There is the evidence of the Banesto Bank account opened by Ms Sanz and DG using a power of attorney on 1 August 2005 specifically to transfer £167,000 from the Solbank account to conceal the monies from the Receiver. The Receiver has found no evidence that she inherited substantial properties from either of her husbands and her inheritance from the friend, Henry James Mitchell (see paragraph 23),was more modest than DG claimed. According to DG, Reginald Peel sold his own property when he married JP and moved to live with her at Lingmel (see paragraph 59 below) but the Land Registry has been unable to provide details of any properties in the name of Reginald Peel.

DG said his mother purchased and sold properties in the UK; he said the source of funds for the initial purchases came from his father’s employment; he said his father handed his mother his pay packets and she took responsibility for the money; this was an arrangement that lasted until his father died. He said the source of funds for subsequent purchases came from his mother’s wages and the profits on the sale of property. The detail DG has provided of his mother’s employment history is that she worked at one time as a nurse, she ran a general store briefly on Anglesey, (with no particulars of the turn-over provided) she worked for a firm called Raymond Plastics in Amlwch and practised aromatherapy. HMRC records revealed her taxable income from employment since the tax year ending 5 April 1981 as follows: 1981, £601.11; 1984 £1,956.12; 1985, £2,053.92; and 1986 £2,177.16; in the 5 years 2002-2006, she paid tax on pension payments which averaged about £10,000 annually. There are no self-assessment tax records and so if she earned any money from her aromatherapy clinic, she failed to declare it. My conclusion is that DG has grossly exaggerated his mother’s earnings in order to untruthfully, both attribute to her the source of the funding for the purchase of the Spanish properties (see below) and to explain the monies to her credit in bank accounts in her name.

The only evidence of her UK property ownership is again that provided by DG with some support from the solicitors who acted for her in respect of the later transactions. The history is as follows:

According to DG, between 1983 and 1988 JP and Reginald Peel purchased properties in Spain (see below) where they lived until following a burglary at their home in Deganwy they returned home. Thereafter, although they continued to visit and holiday in Spain, their main home was in North Wales. Further property purchases in the United Kingdom were -

Following the sale of that property, DG said his mother moved to Flat 6, Stour View Court, 118 Hurn Road, Bournemouth (see paragraph 110 below).

And so the evidence established that JP owned 13 different properties in the UK between 1953 and 2005, as well as two properties in Spain between 1982 and 1999. The conclusions of the Receiver are that the chronology of the UK property purchases would suggest that each subsequent purchase would have been funded by the proceeds of sale of the previous property. Although 141c, Marine Drive was purchased before 164, Deganwy Road was sold, and so provides the exception, I am satisfied that that analysis is correct. I am satisfied that by at least 1997 JP’s mental condition was such that she could not have understood complex financial transactions. Reginald Peel died at about this time and so there is no question of her continued property purchases being arranged by him. It follows that someone else arranged the sale of 7, Maes-y-Mor, the purchase and sale of 4, Winchester Close and the purchase of 67 Llandudno Road.

In his first witness statement, DG said that JP and Reginald Peel bought a house in Spain, renovated it, sold it, bought another in the Malaga area which they then sold before they bought Casa Manana which he said JP kept for a few years, renting it out; when it was sold the proceeds of sale went into a Solbank account. In his witness statement dated 18 January 2008, DG said his mother’s financial position was then private to a certain extent because Reginald Peel was quite a possessive person and so he was not privy to their investments. When asked by the Receiver he identified the three properties she bought as El Saladillo (“El Sardinell”), Estepona, purchased in 1983, Villa Santa Elena, Torremolinos, purchased in 1986 and Casa Manana, Benalmedea, purchased on 24 November 1988; even though he repeated these details in later statements, he consistently failed to provide the Receiver with any documentary evidence.

He said that JP and Reginald Peel had bought Santa Elena in about 1986 for about £30,000 and sold it for £200,000 and they had bought Casa Manana for £60,000 selling it in 1999 for €360,607.26. Subsequently, the Receiver obtained Spanish land registry documents relating to Villa Santa Elena, which establish that the property had not been purchased by JP but by DG in his sole name on 23 June 1986 for £28,037 (Ptas 6 million) and sold by him in on 23 June 1989 for £40,000 (Ptas 8 million). This contradicts the claim that it was sold for £200,000 but DG said a false price was recorded on the escritura.

TG told the Receiver that DG and she bought Santa Elena in 1986 for £30,000 and sold it in 1991 to a danish couple for £200,000. In cross-examination, DG said he had made a mistake and JP bought only the two properties – El Sardinell and Casa Manana. I am prepared to accept that selling prices recorded in an escrituria may well be inflated for tax reasons but I do not accept that happened on this occasion. The fact that DG has lied about these property acquisitions is sufficient to persuade me that he cannot be believed – he lied in an attempt to explain how JP had the capital.

El Sardinell

DG’s evidence was that JP and Reginald Peel purchased this property in 1983 for £38,000 pooling their resources (which included JP’s capital acquired from her property dealings in the United Kingdom detailed above) – how he knew that when he claimed he was not privy to their investments (see above) was not explained. He said that when JP and Reginald Peel returned to the UK, DG, TG and their son moved in and the ownership was transferred to him on the understanding that when he sold the property, he would repay his mother and Reginald Peel their £38,000 but keep the profit; in the event, he said he sold the property for £80,000, repaid the £38,000 and so kept £42,000 which he said he used as working capital. According to TG the agreement was that DG would keep the proceeds of sale and by a loose arrangement would repay the purchase price at some time; she took it that JP was giving them some assistance. There was no explanation as to why DG, of the three siblings seems to have been especially favoured or why he, a successful property dealer and businessman needed such help. I am satisfied on the balance of probabilities that neither JP or Reginald Peel had the necessary capital to purchase El Sardinell, that the subsequent transfer of the property to DG proves that it was he who funded the purchase in 1983 and that he was at all times the beneficial owner. The use of JP and Reginald Peel as nominees supports the inference, which I draw, that the source of the £38,000 was the proceeds of unlawful conduct (see later).

Casa Manana

DG said in his witness statement of 7 November 2008 that on one of his mother’s trips to Spain she saw Casa Manana which she bought from her own money on 24 November 1988 for Ptas2 million (£60,000). He said he and TG moved in when they sold Santa Elena in 1989. The Spanish land registry documentation established that this property was owned by John Knight who was represented by Ronald Knight and was sold on 15 June 1987 to Mrs Peel for £60,000. The Receiver has found no evidence of the source of that money other than the land registry document records it was paid in London. It was sold in 1999 for €360,607.26. On the evidence, Casa Manana was purchased 20 days after JP had purchased 141c Marine Drive, Rhos-on-Sea (see above) and so there would have had to be available to her some £95,000. I am satisfied there is no evidence from which it may be inferred that she had such a sum of money available to her. There are these additional considerations:

Property Acquisitions by DG in Spain

DG said that when they were living in Casa Manana (and so between 1988 and 1999), they, that is DG and TG, also invested in a local property called Calle Roma in Torremor. He said it was sold for £100,000 to John Doyle. The Receiver has searched the property register and found no record of the property or of any sale. As a search will only be successful if the property is accurately identified, this may not be significant but the Respondents have failed to provide the Receiver with the precise address. DG said he purchased Calle Roma, Torremar Benalmadena in 1988 for £80,000 from his “accumulated wealth” which he held in a local Spanish bank. That bank has not been identified. Asked in evidence to name any Spanish bank in which he had an account, he said he could not remember names, adding “I try my best”. According to TG they never lived there and it was sold at a profit before they left for the USA in 1991. According to DG they never lived there, it was bought as an investment property and the profit was placed in an off-shore account, which he cannot identify because of the passage of time. He said he sold the property twice, the second time on behalf of the owner to whom he had sold it and from whom he received a commission. He said, in answer to a request from Judith Rigby that the £100,000 purchase price for 110, Corhampton Road (see below) was “from the sale of Calle Roma, Feuengirola, a property which I sold to John Doyle”. Cross-examined by Mr Peto, he said he had sold the property to a Spanish lady but said he sold it for the second time to John Doyle. His evidence was that he had been given a power of attorney by the owner to sell it. He had bought the property for £30,000 and sold it to the lady for £60,000 or “it could be more”. When she sold it she wanted £80,000 and he sold it to Doyle for £100,000 paying her £80,000 and keeping £20,000, As all he had received from Doyle was £20,000 Mr Peto asked him to explain his claim that the £100,000 for the purchase of 110 Corhampton Road (see below), had come from Doyle. His reply, as I noted it, was “it could have been partial payment for Calle Roma and for cars he had bought off me”.

There is only DG’s evidence that Calle Roma was sold before he left for the USA - the particulars he provided of the property were insufficient for the Receiver to obtain any Spanish registry particulars. Mr Peto asked DG to look at a power of attorney dated 7 December 1995 made by Maria del Carmen Barcelo (see below) granting him the authority to drive her car in which his address was given as Calle Roma. DG said he had to give an address in Spain because he was living in Portugal and he unthinkingly gave that address. I observe that if he was required to give a Spanish address, he had what he asserted was his mother’s property, Casa Manana. My conclusions are that he has told lies about his acquisition and sale of Calle Roma, that there is uncertainty as to when it was sold but on the balance of probabilities it was not sold until much later and probably when DG was living in Portugal (see paragraph 86 & 103).

In his witness statement dated 19 September 2005, DG said “my wife and myself lived in and renovated houses with a view to selling at a profit” and TG who had said (see above) that DG was an entrepreneur able to make money from his skills in the building trade, said “he was already working in the building trade” when she joined him in Spain. In his application form dated 20 March 1989 to Allied Dunbar, DG described himself as a self-employed developer. In answer to the Receiver’s request for details of the properties purchased, developed and sold in Spain, DG replied by e-mail on 6 October 2005 detailing the three properties, El Sardinell, Santa Elena and Casa Manana. In his witness statement dated 7 November 2008, DG said “At this time, properties in Spain were selling very quickly and the market was experiencing a property boom. Once I had renovated properties, I could simply sell the property on. On occasions I literally sold a property as soon as I had renovated it … My mother’s property , El Sardinel only needed a little work and I then sold it for the equivalent of £80,000”. The clear impression is of a man who was dealing in a significant number of properties but his evidence in the course of the trial was otherwise. He said he had bought, renovated and sold, the following properties: -

I observe that these particulars were provided on 12 February 2009, in the second week of the trial, after I had asked Mr Lederman to provide a definitive list of properties which DG claimed he had owned. Mr Lederman, when providing the particulars, said he had had no prior instructions about them and DG provided no acceptable explanation for the oversight. My conclusion is the failure to mention them earlier cannot have been an oversight. While on behalf of the Claimant, Mr Peto submitted they may not exist and there is no documentary evidence in respect of any of these properties or transaction, there is the evidence of McGowan – “I do recall an apartment in El Coto, Mijas which Mr Gale bought and sold as well as an apartment in the Las Palmeras 4* Hotel complex which he accepted as a guarantee for a loan he made to the owner. He ended up acquiring on the default of repayment: here I do remember that the repayment period was extended once or twice to give the debtor further opportunity to settle but in the end, Mr Gale took possession and I presume he re-sold the apartment. This transaction would have been documented and I probably translated the loan agreement”.

I have concluded there is no reliable evidence that DG had an interest in any of these properties with the exception of the apartment in the Hotel; the absence of any explanation as to the amount of and reason for the loan and the identity of the borrower (all details which I would expect DG to recall, at least in some detail) bring the lawfulness of that transaction into question. Even so, I am prepared to accept there may well have been property ventures but they were very few, very limited and produced modest profit, and certainly nothing by way of capital. There is no evidence that any of that profit formed any part of the deposit in the Allied Dunbar accounts and as with his other business interests, in my judgment they provided nothing more than day to day income and a ‘front’. There is no evidence as to the source of any money for any purchase.

Sales of Cars & Boats

In his first witness statement dated 19 September 2005, DG said nothing about dealing in cars as part of his entrepreneurial activities. In his second statement dated 6 April 2006, he again said nothing about cars. On my reading of the papers, the first reference to DG dealing in cars was by McGowan who said he was involved in “the corresponding tasks of import duty settlement and matriculation” of prestige vehicles imported by DG from the USA for resale in Spain. McGowan added that DG imported “several (my emphasis) luxury vehicles from the US”. In the course of his evidence, DG claimed he had sold “over a hundred cars” but he could not remember the name of the import/export agents he used in Malaga – even if he could not remember, as he lives in Southern Spain, it would require little effort to go to Malaga to find out and he said in evidence he has made no enquiry to find out if they are still in business. The Receiver reported [5.78] he had found no evidence to substantiate any claim that DG traded in cars, motor bikes or boats and there is no evidence to confirm the existence of any legitimate source of income - tax payments, accountancy services, bank accounts and the like. My conclusion is that while DG probably did import some vehicles from the USA, it may well have been when he was living in the USA. I am prepared to accept that DG had some business interests albeit on a very modest scale, sufficient to generate only a modest income for living expenses, and certainly insufficient to generate huge capital sums. In the light of my findings and conclusions, later in this judgment, I am satisfied on the balance of probabilities, that these business ventures had another purpose, that was to provide a “front” and so divert attention from the unlawful conduct of DG and TG.

The United States of America

The evidence of DG and TG was that when they moved to the USA in 1991 they acquired the Melbourne Beach property in Florida for $500,000 and invested $1million in a helicopter company [“MHI”]. They stated that their business activities in the USA were legitimate, that MHI was a successful flight school business and that the source of their funding was their legitimate business and property ventures in Spain. Their evidence was that they sold Kwik Print SA in 1989 for £400,000, Santa Elena in 1991 for £200,000 and Calle Roma in 1991 for £100,000, a total of £700,000, which provided the capital for their move to the USA. According to TG, this was transferred as $1,039,660 from their Allied Dunbar account on the Isle of Man.

Enquiries by the Receiver revealed that receipts of £1.3 million, $132,000 and DM137,000 from unknown sources were banked into the Allied Dunbar accounts prior to and after the move to the USA. In respect of the sterling account, there were multiple, round sum credits between May 1989 and March 1992, some from Gibraltar and Channel Island bank accounts. There were single credits of $132,753 and DM125,543 into the dollar and deutschmark accounts respectively. The Receiver was unable to link any one of these credits to any sale (whether of Santa Elena, Calle Roma, Kwik Print SA and other associated business interests) and DG has provided no evidence of any such link. Furthermore, the value of the total credits is much more than the profit DG has identified from his business at the relevant time. I have concluded that the Receiver is correct in his conclusion that there were additional funds from unidentified sources.

The Receiver discovered that MHI, a company registered in Florida was established on 16 September 1991 with a share capital of $1,000 issued jointly to TG and a Brian Parker who are both listed as directors. By 1 October 1991, Brian Parker was no longer listed as a director and DG was described on business cards at MHI as chairman and TG was described as president of the company. According to DG, Brian Parker was his flying instructor who assisted with the setting up of MHI. Although the Receiver investigated at some length the evidence of the acquisition of the helicopters and the fixed wing aircraft through companies, it is unnecessary for the purposes of this judgment to consider that evidence because I am not persuaded that the use of the corporate veil was not for acceptable tax and business reasons. In any event, MHI was voluntarily dissolved on 28 February 1992, less than six months after its formation and less than a month after the fatal accident with one of its helicopters which resulted in two deaths.

I am satisfied on the balance of probabilities that MHI was not a successful business venture and reject any claims to the contrary by DG and TG. Both were registered as taxpayers in the USA and had it been a successful venture, I would have expected DG and/or TG to have co-operated with the Receiver at least to the extent of identifying the lawyer(s), the accountant(s) and the bank(s) which were used and providing details of tax paid. When DG was investigated by the Magistrate in Portugal in September 1998, he claimed he had opened an account in the USA in the name of John Finnerty into which he paid all the income from the flying school to avoid paying tax. He did not identify that bank then and has not identified it since and I consider it highly improbable that a person who was seeking to make a lot of money in the USA with a new business venture would run the risk of criminal tax evasion.

The Receiver found no evidence of the payment of any tax by DG or TG in the USA or any other evidence of gainful employment by any other or both. He conceded in answer to Mr Lederman that computer records in the USA had been destroyed but my recollection of the evidence of DG and TG is that neither claimed to have paid tax in the USA; if they did, neither provided evidence of payment or from which payment may be inferred. Further, the evidence of Anneliese Meinert (see below) in the Portugese proceedings was that DG gave her a business card in the name of John (Monty) Finnerty in respect of a business “Objects D Art – Imports, Exports, Appraisals” with an address at 4850 IA South, Florida - the Receiver discovered that this is a holiday park. Although no tax was paid, that is not to say that DG and TG were without money - the Receiver noted that the US authorities were aware of a Bentley convertible, 2 Ferraris and a motorhome. As there is no evidence of any other business venture, it must follow that the income from MHI was insufficient to fund the acquisition of the cars and so that money came from unidentified sources and was transferred through bank accounts which have not been identified.

The Melbourne Beach property was acquired on 23 September 1991 in the name of Indian River Properties Limited, a Jersey registered company which was dissolved on 21 February 1997 and so there are no longer any records relating to it, although DG admitted it was formed by him. I am prepared to accept the evidence of DG and TG that there was tax reasons for acquiring the property in the name of the company with Jonathan Diffey as the registered owner and that there may also have been good reasons to do so to ‘ring fence the property’ in the event of any litigation arising out of the operations of the flying school, but in my judgment that served the double purpose of hiding the connections of DG with the property. It was sold in due course on 30 October 1995, by which time DG and TG had long since left the USA and the net proceeds of sale ($452,324.48) transferred to the Indian River Properties Limited solicitors’ client account. DG said they left the USA because of lawsuits arising out of the helicopter accident brought by the father of one of the deceased and by an insurance company and also because TG was homesick. TG said she was becoming homesick, wanted to be nearer home and a friend had died in the helicopter accident. I found these explanations wholly unconvincing – as the flying school business was being operated behind a corporate veil and their home was owned by a company and registered in the name of a third party, DG and TG had taken every step to avoid any financial liability for the accident; furthermore, if TG was homesick, her admission that they moved to the Bahamas (where she said she had a job as a netball coach) is somewhat surprising.

On 26 March 1992, the Clerk of the Central Criminal Court in Madrid issued an indictment against DG in relation to the Hanja incident and on 23 June 1992, the Allied Dunbar accounts on the Isle of Man were restrained. The Receiver discovered that on 18 February 1993, the Securities and Exchange Commission in the USA had filed a case against Melbourne Beach for forfeiture. The court papers referred to the Hanja incident but as proper service had not been effected on DG within the 120 day period allowed, the action was dismissed on 2 August 1993.

Mr Richard Smyth of Burton Copeland, who acted in the sale of Melbourne Beach, noted a telephone call he had had with an American lawyer, Mr Miahoffer, on 13 April 1994 regarding outstanding legal fees owed by DG to the American lawyer. The note records that Mr Miahoffer had acted for DG (whom he knew as David Moore) in liaising with the IRS in the America who were investigating David Moore’s drug activities and he persuaded the IRS that the property was owned beneficially by Jonathan Diffey whereas he, Miahoffer, knew that the property was in fact owned by David Moore. Although it is clear from the note that Mr Miahoffer was prepared to inform on DG to the IRS it seems to me that there are no grounds for doubting that the IRS involvement had put DG very much on notice that he was then suspected by the authorities in America of drug trafficking – the inference must be that the US authorities knew only of the Spanish proceedings and not that DG was suspected of drug trafficking in the USA.

In his witness statement of 7 November 2008, DG stated that a sheriff’s officer delivered some papers to TG at the house and he was informed that the property had been restrained - on the evidence this must have been between 18 February and 2August 1993. There is not precise evidence as to when DG moved to Portugal but US Immigration records show he travelled to Portugal on 11 November 1992, using his then name of David Moore. I am satisfied that was probably a visit and that he moved to Portugal to live on some date in 1993. On the evidence I am satisfied on the balance of probabilities that DG and TG had left the USA by some date in 1992 (although they may well have made short return visits subsequently) that they lived in the Bahamas for a period of a year or so until they moved to live in Portugal.

The only evidence of funding in the USA is the transfers from the Allied Dunbar accounts but the Receiver found no evidence to link those monies to the sale of Kwik Print SA, Santa Elena and Calle Roma and so the Allied Dunbar monies were from unidentified sources. The amount transferred was insufficient to fund both the property and aircraft purchases and so other funds must have been transferred to bank accounts which have not been identified. In the absence of evidence, the inference must be that those other funds also came from unidentified sources. I am satisfied on the balance of probabilities that MHI was not a successful business; there is no evidence of any other business venture by DG and/or TG and so their income in the USA (which funded the acquisition of expensive motorcars (see above))must also have come from unidentified sources.

Property & Business Interests in Portugal

In or around 1993, DG moved to Portugal and TG joined him the following year. On 9 August 1993, TG changed her family name, and that of their son, to Gale and on 17 June 1994, David Moore changed his family name to Gale. His explanation was that they did so to prevent them being pursued indefinitely for liability arising out of the helicopter accident. I reject that explanation – if that was his concern, he would have changed his name much sooner. I am satisfied the name changes were to avoid detection by the authorities, particularly in Spain.

Asked by the Portuguese prosecutors for details of the source of his income, he said he had run a flying business, was in partnership with Anneliese Meinert in buying, renovating and selling ‘Fincas’ and had £200,000 by way of profit on the sale of an unidentified house he had built in Spain. If this was a reference to Santa Elena, that was sold, according to DG and TG in 1989 when they realised capital prior to their move to the USA (see above) and so the inference must be that the money was sourced from a property or other capital which DG and TG have not identified. An alternative explanation is that Santa Elena was sold much later than DG claimed – the conclusion which I favour – or the property was Calla Roma.

The Receiver has identified multiple vehicle purchases. The Portuguese prosecutors found evidence that a Mitsubishi was purchased in TG’s name on 29 August 1997 for PTE 5,294,634.00 with two cheques signed by DG from an account with a Portuguese bank. The Receiver reported that the source of the necessary funding for those cheques was a deposit on 8 May 1997 of PTE 19,560,000.00 (£69,836) from an unknown source. A Range Rover was purchased on 28 April 1998, for PTE 10,295,899.00 (£30,000), registered in the name of TG and paid for by TG in cash by five instalments between 4 February and 29 April 1998. DG said the source of the purchase monies was profit from “Finca Trading” with Anneliese Meinert. DG purchased a second fixed wing aircraft; he told the Receiver that it had been purchased in the USA for US$110,000 without finance.

What is the evidence, from sources other than DG as to his income in this period? Anneliese Meinert was interviewed by the Portuguese police on 29 May and 23 June 1998 when she said DG called himself “Monty Gale” and “John ” and used a business card in the name of John (Monty) Finnerty, that he constructed an airstrip on her land using machinery she ordered but which he paid for and constructed a building which was furnished with mattresses, a table and chairs, that he told her the airstrip was for a “hobby” for himself and his friends, that although he usually flew the Aviat Husky, others flew the aircraft and stayed in the building, that she found three passports for him all bearing his photograph but with different identities, one issued in Ireland for a David Finnerty, another in Britain in the name of Jack Gale and another (American) in a name she could not remember, that she also saw a statement from a bank in Morocco with a credit balance of over $30,000, that she converted £10/£20 notes (£25,000) into Escudos and a year later he told her he had some Escudos to launder and on this occasion she issued a cheque in the name of TG (£19,000) – she identified the three deposits into her account on 11 October and 13 October 1994 and 21 April 1996 for amounts in sterling equivalent of £7,900, £19,600, and £25,800 respectively, that she allowed DG to use her mobile phone but he refunded the bills – an analysis of telephone records for her mobile phone carried out by the Portuguese police confirmed that the phone was certainly used in Morocco, Spain and Portugal.

Anneliese Meinert said nothing to the Portuguese police about any business interests with DG regarding the purchase, renovation and sale of ‘Fincas’ but according to DG she gave evidence at his trial confirming that there was such a partnership. There is not available any transcript or record of her evidence at the trial but I reject DG’s evidence to that effect because while the Portuguese Court acquitted DG of the three offences to traffic drugs, drug trafficking and making a false declaration, in its judgment it expressly accepted the evidence of Anneliese Meinert that he had used her mobile telephone to establish telephone contacts to and from Spain, Gibraltar and Morocco, that he had told her that he was the owner of electronic game shops, also an importer and exporter of works of art in the USA where he called himself John (Monty) Finnerty and told her that he was a business man identifying himself as Monty Gale. The court also found proved that he had used Anneliese Meinert on the three occasions to convert English money into escudos. I am satisfied that as DG’s lifestyle was an issue in those proceedings, any evidence of hers about Finca trading would have been material and mentioned in the judgment.

I am satisfied also there are no grounds for concluding that Anneliese Meinert was not a reliable witness or had any interest of her own to serve – indeed DG has not suggested otherwise and so I reject his claim that he was in partnership with her in Finca trading – that is not to say that he may not have traded in Fincas but that would have been on a very modest scale and sufficient only to divert attention from his unlawful conduct. As to his flying business, I am satisfied on the balance of probabilities that there was never a business as such. The airfield was constructed illegally in an out-of-the-way place and unlicensed; there is no evidence that it was ever used as a club for “microlights” – Anneliese Meinert did not mentioned that, and DG told the Portugese authorities on 11 September 1998 that the club was never started; the Portugese police intelligence reports to the effect that the airfield was being used for drug importation or conduct associated with drug trafficking are not contradicted by other evidence.

Casa Alturias

DG and TG purchased Casa Alturas, a three bedroomed villa in Carvoeiro in the name of Houri Estates Limited, a company incorporated in Gibraltar on 3 December 1991 with DG and TG the beneficial owners in equal shares of the issued share capital of 1,000 £1 shares held by nominees. According to DG it was purchased for £80,000 when they were still living in the USA and according to TG it was purchased with the proceeds of the sale of all their assets in the USA (including the house and aircraft). I observe that as the Melbourne Beach House was not sold until October 1995, the source of the purchase cannot have been the proceeds of sale of that property. DG has provided no information as to the source of the £80,000 and the Receiver has found no evidence of a source or sources for the money. It should be borne in mind that at this time the freezing orders at the behest of the Spanish Courts were in force in respect of their known bank accounts in Spain and the Isle of Man.

The Receiver was provided with the purchase agreement dated 6 April 1995 from documents from the Court in Silves. They establish that the purchase price was PTE15million with a sterling equivalent of £64,295. The property was sold by way of a share purchase agreement dated July 1998 in which the shares and ownership of Houri Estates Limited were transferred to the purchasers for £167,000 (to include the shares and the property contents). The purchase monies were paid to DG and TG’s lawyer in Gibraltar, Eric Ellul who paid them into DG and TG’s Jyske bank account in Gibraltar – the amount credited was £154,381, the shortfall of £12,619 probably explained by retention monies and costs.

I interpose in the chronology the events of early 1996, when DG and TG were in Portugal. TG corresponded with their solicitors, Burton Copeland about the issue of a bankers’ draft for $400,000. The solicitors were prepared to send it by courier but DHL refused, on insurance grounds. Alternative arrangements had to be made and so it was that TG faxed an instruction on 23 January that the draft was to be handed over to Kevin Barry, instructions which Burton Copeland accepted and on 24 January 1996, Barry collected the draft payable to TG. The evidence of TG was that this would have been arranged by DG. DG’s evidence was that he asked his brother to pick up the draft and he delegated the task to Barry because he was going to Portugal; he said he could not remember asking Barry to collect the draft – he said it was “such a trivial thing”, and added “maybe I am too trusting”. The evidence of Merrill Lynch (which I accept) was that all their dealings were with TG. As to the source of those monies, DG and TG both assert that they derive from their US assets but the Receiver was unable to confirm that. The monies did not represent the proceeds of sale of Melbourne Beach because of that $400,000, $388,000 was paid into a Merrill Lynch account and applied, inter alia in the acquisition of 1 Glendale Road (see below). My conclusion on the balance of probabilities is that those funds were sourced from unlawful conduct. The Receiver has identified what happened to that draft.

On 15 February 1996, Bayman, a financial consultant in Portimao met with DG; following that meeting, he provided investment advice in a letter dated 19 February 1996, which included this comment – “I know that you are mainly interested in capital growth and not income and therefore I will give standard instructions for all dividends declared to be reinvested”. In my judgment, that is highly significant because it supports the inference, which I make, that DG and TG were not reliant upon investment income. On 7 March 1996, Bayman attempted to invest the money in an account with Robert Fleming (Isle of Man) but the funds were transferred on 14 March 1996 to Copeland’s Singer & Friedlander account in London. Bayman then invested $170,000 on behalf of DG in LGT Global. On 18 February 1999 (and so when DG was in custody), DG and TG wrote to “cash in” their shares and a cheque for $224,926.77 was issued. Before that cheque was banked, the authorities in Ireland obtained a restraint order in respect of those monies. On 24 July 2004, following court proceedings, there was a consent order by which 50% of that sum, less legal costs was paid to DG and TG. On 28 May 1996, Bayman invested £90,000 in the GT Europe fund and there was also an investment into Jardine Fleming ASEAN – on 14 January 1997, that was worth $45,950.07.

Colina Branca

According to DG, Colina Branca in Lagoa was purchased in 1997 in the name of Naimatic Estates Limited, a Gibraltarian company incorporated on 5 March 1990 (with the shareholding held by nominees and DG and TG the beneficial owners) for £60,000, utilising assets he had acquired before 1993 and so including the assets in the USA which he had realised. However, a land registry entry shows the purchaser to have been Huwel Investments which was incorporated in Gibraltar on 27 February 1996 with DG and TG having equal shareholdings held by nominees. Whatever the identity of the purchaser, the Receiver has not been able to verify the assertions of DG that the purchase monies originated from his accounts in the UK with Lloyds TSB – with cheque payments of £28,000, £20,000 and £10,000. As DG has also asserted that the purchase monies came partly from a Lloyds Bank account and partly from a Portuguese bank account there is uncertainty as to the source of the purchase monies. The Receiver has been unable to reconcile any such payments to any bank account (including accounts in Portugal) known to him. Although there was a credit of £28,000 on 4 June 1996 to the only Lloyds TSB account open at that time and a payment out of that account of £24,000 on 12 September 1996, the Receiver has concluded, and I agree, that these would seem to be unrelated to any Portuguese property purchase.

The Receiver has seen a “promissory contract” relating to the purchase of the property which is undated and not signed. It details a purchase price of £65,000 with a deposit of £6,500 and the balance of £58,500 to be drawn on a British bank in pounds sterling to be paid within 30 days, with TG being allowed access to the property from 15 May 1996 subject to the honouring of various rental commitments by the vendor from July to October 1996. There is evidence that a former teacher of DG and a tutor to DKG was living at the property – he paid £1,000 into the Jykse account on 4 February 1997 but despite requests, no particulars have been provided to the Receiver. According to DG the property was sold in 1999 for £95,000 but again the Receiver has not been able to trace where that payment was deposited.

Casa Paraiso

On 28 June 1998, DG and TG purchased Casa Parasio in the name Naimatic Estates for PTE 50million, a sterling equivalent of £164,853. The source of the funding is shown on chart 7; it breaks down as follows: -

DG was arrested on 9 September 1998 and remanded in custody. TG remained in Portugal until 30 September 1998 when she returned to the UK where she remained. TG was charged by the Portuguese Authorities with offences of conversion and transfer of goods for profit from drug trafficking. An attempt to extradite her failed and she and Kevin Barry were tried and subsequently acquitted in their absence. There are three important details in the evidence which relate to her conduct when DG was in custody in Portugal, demonstrating her knowledge of and participation in the money laundering.

First, on her return to the UK, TG rented 24 Rimbury Way on a 6 month lease from 17 October 1998, moving in on 25 October 1998, paying the £4,800 in advance. In May 1999, the owner of that property, Jennifer Lawrenson, in the course of cleaning it, found a tiny piece of paper which had been lodged between the top of a candlestick and the base of a candle. She later handed it to the police, together with what she took to be a Portugese bank statement which she found hidden behind a wall mirror. I am satisfied, on the balance of probabilities that TG had deliberately concealed these documents. When she was asked about this, TG said she was in the habit of using bits of paper to secure candles in candlesticks. When she was asked to look at the paper which had been folded several times and which had clearly not been used to wedge or secure a candle in position, she said she had no explanation for it, that she was going through her own nervous problems at the time, her son was difficult and she was acting irrationally. The piece of paper contained the details of an Abbey National Gibraltar [ANG] account. Enquiries of that bank revealed that while the account it is connected with DG and TG, it is held in another’s name. The bank has said until the Receiver can identify the account holder, they can release no information. Both DG and TG have refused to provide the information, saying they are unable to assist. The Receiver stated (4.72) - “It is not unreasonable to conclude that accounts held at ANG contain significant transactions not disclosed to me in the course of the investigation. As set out at section 7 of this report, DG and TG used Gibraltar based companies in relation to certain property transactions. Hence it appears possible that the ANG accounts were used in relation to property transactions both known and so far undisclosed to me”. I agree; further, my conclusions, on the balance of probabilities are that the ANG account was used for money laundering, that TG knew that and while DG was in custody, she assumed responsibility for the management of the funds obtained from unlawful conduct.

Secondly, during March and April 1999, TG negotiated for the purchase of two properties, 11, Priory Quay, and 5, Rossiter’s Quay, both in Christchurch, the former in the name of JP, the latter in the name of EREB Ltd, an off-shore company, with the address of the Gibraltar lawyer, Ellul.

Thirdly, the Receiver had access to the files of the Gibraltarian lawyer Ellul which establish that in December 1998 (when he was in custody), DG transferred his beneficial interest in Naimatic Estates to TG who then set up what, on the face of things, appeared to be a genuine sale of her shares to Heather Wild – the Receiver’s investigations suggest that she may be the sister of Elizabeth Rogers who is DG’s daughter by his first marriage, but DG said that she is a friend. On 29 December 1998, TG entered into a memorandum of sale with Heather Wild by which Heather Wild would pay £300,000 to TG on completion but there is no evidence that the sale ever took place and the Ellul file indicates that TG continued to deal with the property and company as if there had been no sale. According to DG, he asked Heather Wild to be a director of Naimatic Estates as a temporary measure during his separation from TG, no money changed hands and the shares were transferred back on 28 June 2001. The Receiver commented (9.118) “this was therefore a deliberate attempt to make the property appear to be in a name other than DG or TG when in fact it remained under their control”.

The property was in due course sold by Wordsell of the International Property Centre, Lagoa under a power of attorney on behalf of Naimatic Estates. By letter dated 18 September 2003, TG instructed Ellul to pay the proceeds of sale of €375,000 less £150,000 into the Nat West Euro Account No. 1187. That sum (€223,747 after deduction of fees and disbursements) was in due course transferred from the Nat West account into the Solbank account in the name of JP on 5 May 2004 and used in the purchase of Las Hortensias (see below). I return to the history of property acquisition in the UK.

110 Corhampton Road

This freehold house in Boscombe, East Bournemouth was purchased by DG and TG on 11 June 1990 for £100,000 outright (and so not subject to mortgage) in the name of Naimatic Estates Limited; a further £500 was paid for chattels. Naimatic, an off-shore company with a registered address in Gibraltar, had no bank account; 50% of the shares were held on trust for DKG (who was then 10 years old) by an employee of the Gibraltarian lawyer, Eric Ellul. TG acted for the company under a power of attorney but neither DG or TG has offered any explanation for the mechanism employed to purchase it. At the time, it was purchased as a home for TG and her son because there seemed to be no future in the marriage and it was close to DKG’s school. Chart 3 details the sources of the purchase monies. According to DG the purchase monies came from the proceeds of sale of Calle Roma in 1989 to John Doyle but as a power of attorney signed by DG in November 1995 (see above) gave his address as Calle Roma, the Receiver questions ( and I agree) whether it had in fact been sold in 1989. I am satisfied on the balance of probabilities that it was sold later than 1989. The Receiver’s investigations revealed that the purchase monies paid to the solicitors (Oscar Whittingham) who acted for Naimatic Estates Limited were made up of two cheques for an unknown Midland International account in the names of TG and DG for £31,860, a cheque from a E James for £600, a cheque from a W H Smith for £9,560 and 3 cheques from John Doyle together worth £60,000. The solicitor’s file contains a note which records that the solicitor who had conduct of the purchase remembers “Mrs Moore brought in cash to start with which he refused. Note cheques in different names of drawer”. When asked by the Receiver DG said he did not think TG ever had £100,000 in cash and TG said that any claim that she walked into the solicitor’s offices with £100,000 in cash is rejected. DG in his statement dated 7 November 2008 said that it was John Doyle who attended at the offices with the purchase monies in cash and then paid with personal cheques whereas TG has no recollection of who John Doyle is. I reject the evidence of DG and TG – I am satisfied there is no reason why a solicitor (mindful of his professional and legal duties) should make a mistake and so the file note must be accurate. The property was sold on 9 July 1997 for £95,000 with the net funds being remitted to Eric Ellul in Gibraltar, who remitted £92,847 to the Jyske account on 3 October 1997.

Glendale Road, Southbourne, Bournemouth

This was purchased by DG and TG on 29 November 2000 for £175,000 outright and so without mortgage. The limited documentary evidence available to the Receiver establishes (chart 8) that £230,000 was paid to the solicitors, Preston and Redman from DG and TG’s Merrill Lynch account 909-1SXE7 which had itself been funded by transfers of $380,000 (£250.000) from the proceeds of sale from Melbourne Beach paid to Burton Copeland, a further £52,324 from the proceeds of sale of Melbourne Beach paid to Morgan Whitehead, Solicitors and £45,157 from an unknown source paid to Morgan Whitehead and £52,000 from Michael McEvoy which the Receiver could not trace to any source but which DG in evidence said was the repayment of a loan which he had made to McEvoy, a family friend from the Chester area; he said the loan was for £40,000 which was used by McEvoy for property investment in Portugal; he said the £52,000 represented repayment with “a gift of some profit on top”. Asked when he had made the loan, he said he couldn’t remember when and said it was when he was in the USA in the early 1990’s. My conclusion is that his evidence in this regard is incredible. The Receiver could not find out why Preston and Redman were provided with £55,000 more than was needed for the purchase but the £230,000 was expended as follows: £177,277 for the purchase of 1 Glendale Road, £48,723 towards the purchase of 120 Hurn Road (see below); £4,000 paid on 8 December to JP. Neither DG or TG could remember why £4,000 was paid to JP. The property was sold on 13 September 2001 and the net proceeds of sale of £212,248 remitted to Northern Rock Guernsey Limited on 3 September 2001 on the instruction of TG. The Receiver has reported that as DG and TG’s primary residence at that time was 120 Hurn Road (see below) there was a capital gain liability but no monies were paid to HMRC.

120 Hurn Road, West Christchurch

This freehold property was purchased by DG and TG on 2 February 2001 for £250,000 with an additional £7,000 for chattels. Preston and Redman were again their solicitors. Chart 10 shows the sources of the funds. Apart from the £48,723 originally from the Merrill Lynch account over and above that need for 1 Glendale Road (see above) the Receiver was unable to trace the original sources of the remainder of the funding. There was £164,501 from account with the Alliance and Leicester with the reference “Mrs J Peel”, £64,955.21 by way of a draft drawn on an Abbey National Account in Gibraltar in the name of Jonathan Diffey and £44,788.70 from a Woolwich account in Guernsey in the name of JP to which there had been remitted $60,000 in draft from the Banque Indosuez account in Gibraltar which had itself been funded from an unknown source or sources – this was the account which had provided £10,000 to the Allied Dunbar account on 8 May 1989.

There is an Attendance Note dated 18 January 2001 in the solicitors’ file which refers to a telephone call with DG with reference to the £64,955.21 from the Abbey National, Gibraltar account; it records “He confirmed that the monies received today were the proceeds from a sale of property in Spain ... Check with his bank in Gibraltar that the transfer has gone correctly”. Asked by Mr Peto about that, DG said “I don’t remember saying that. If I did, it was a casual comment”. He said his mention of ‘his bank’ was no more than “a general term”. He agreed the solicitors had made a money laundering enquiry and that he had told them “don’t worry everything is above board”. As the proceeds of the sale of Casa Manana sold in 1999 were kept on deposit in a Solbank account until they were used in the purchases of Mezquita and Las Hortensias in 2002 and 2004 respectively (see below) that cannot have been the source. It follows either that there was another property or that there was another source which DG would not disclose. DG said, in answer to Mr Peto that the £59,180 used to open the Abbey National Gibraltar account was TG’s money and he does not know its source. As TG gave no evidence of any independent business interests or sources of wealth, her money must have come from DG.

In her evidence, TG said the Banque Indosuez account was originally in her name but DG was added as an account holder. She said she had no recollection of the draft for $60,000, had nothing to do with the purchase and was working in a wedding shop at the time. She presumably also had no knowledge of the £10,000 transferred from the account on 8 May 1989 to one of the Allied Dunbar accounts on the Isle of Man. She said DG had opened the Abbey National Gibraltar account in her brother’s (Jonathan Diffey) name with her money; she said that at that time (January 1999) she was vulnerable and he took control of everything. Cross-examined by Mr Peto, she said she did not know from where the £59,180 used to open the account came, that it could have come from any account she and DG had but she could not remember. She said it did not come from her Lloyds Bank account. The monies from the Woolwich account in the name of JP were paid following an instruction received on 7 January 2001 to close the account and to transfer the credit balance to the client account of Preston and Redman. TG agreed she had written the letter dated 17 January 2001 closing the Woolwich, Guernsey account for JP to sign but on that date JP lacked the capacity to run her own affairs and so, if it is her signature, she would have done as she was told.

On 26 April 2005, DG transferred his interest in 120 Hurn Road to TG as part of the divorce settlement. On 1^st July 2005, TG sold the property for £465,000 and in due course £457,000 after payment of legal fees and disbursements was paid into TG’s LTSB account. Ultimately £449,785.64 was transferred to the Grant Thornton Receivership account. The Receiver considered whether there is evidence that the monies held in the Receivership account represents the proceeds of unlawful conduct and so are recoverable. He concluded: -

“9.214.

I have advised DG and TG that their current responses to our queries in respect of 120 Hurn Road are unacceptable, given that the property was purchased during the last 7 years and was bought for £250,000, I do not find it credible or acceptable that they cannot recall where the money used to purchase this property was derived from (exhibit 2-41, page 6 and 2-49, page 5). In the absence of this information I am unable to ascertain the origin of these funds.”

9.215.

To summarise the proceeding paragraphs, 120 Hurn Road was funded by way of four transfers into Preston’s client account during January 2001, two from JP in the amount of £209,289.70, £48,723 from Merrill Lynch and £64,955 from an unknown bank account at Abbey National Gibraltar. This funding provided an excess payment of £60,941.17 which was refunded to DG’s Nat West account on 22 February 2001 (exhibit 9 – 104).

9.216

It has not been possible to verify the origin of the funds remitted by DG and TG nor have I been able to ascertain the origin of the funds provided by JP as set out in paragraphs 9.189-9.197.”

I am satisfied that the analysis conducted by the Receiver is factually accurate and that the purchase monies for 120 Hurn Road represent the proceeds of unlawful conduct and that there is clear evidence of both DG and TG playing their parts in the money laundering necessary to fund the purchase: -

This is a flat, purchased in the name of DKG on 22 January 2002 for £134,500. At this date, DG and TG owned and lived at the neighbouring 120, Hurn Road. The solicitors’ file establishes that the property was purchased by DG and TG – see Prestons letter dated 13 December 2001. A file note dated 14 October 2002 records a conversation with TG who said they were selling the property because DG’s mother “did not like it here”; the inference that JP lived in the property is confirmed by utilities invoices held on Prestons’ files, sent to JP. It was sold by DG and TG on 10 February 2004 and the net proceeds of sale (£192,696.43) were transferred to DG and TG’s Alliance & Leicester 0117 account. These were to provide part of the funding for the purchase of Las Hortensias (see below). The Receiver tried to find out why the property was purchased in the name of DKG; DG and TG in separate answers said JP bought the property for DKG but he did not receive the benefit of the proceeds of sale because of his age. DKG has not responded to queries raised by the Receiver.

The Receiver states that the tracing exercise required in order to determine the original source of these funds is complex. This is demonstrated on Chart 10, which is appended to the judgment. The Receiver has identified that the £134,500 was funded from the following sources:

The sources of the funding demonstrate that the property was not purchased by JP. Furthermore, DG and TG were advised by Prestons on 15 January 2001 that the purchase of number 118 would incur a capital gains liability on sale. My conclusion in respect of the purchase of these properties (110, Corhampton Road, Glendale Road, 118 and 120 Hurn Road) is that each was purchased by DG and TG and that the funding for each purchase can be traced to unknown sources, which on the balance of probabilities were the proceeds of unlawful conduct.

Mezquita

This apartment with a garage and storage room was purchased in the name of JP on 9 April 2002 for €171,168.25 (approximately £105,000) although Ms Sanz acted for her under a power of attorney. The Receiver’s investigations as to the sources of the purchase monies revealed that they came from a Solbank account No.0938 in the name of JP which had been credited with €16,748 on 7 September 2001, €25,000 on 26 February 2002 and various amounts, possibly bank interest, totalling €4,862 between 11 September 2001 and 11 March 2002 all from unknown sources although a possible source of one or more of these component amounts was another Solbank account No.0296 in the name of JP, which, according to DG was the source of €150,974.83 being part of the proceeds of the sale of Casa Manana which had been paid into that account by Ms Sanz – Ms Sanz confirmed that the proceeds of sale of Casa Manana were paid into the Solbank account she had opened for that purpose and which was the source of the funds for the purchase of Mezquita. The Receiver considers that this may be the likely explanation but it cannot be confirmed without access to the Solbank statements, access to which has been denied him. These various transactions are set out in chart 11.

DG has given various explanations for the purchase of Mezquita. On 19 September 2005, he said “we bought an apartment off the plan in Marbella under my mother’s name”. On 23 September 2005, he said the property was legally owned by his mother but he has an unwritten agreement with the family and that the family would have to sit down and work out to what extent he is financially involved; he said also that his mother gave him monies which he invested in property, receiving all rents and incomes but leaving her the capital appreciation and that was the arrangement with Casa Manana but he has provided no evidence of rental or other income. On 7 April 2006, he said his mother purchased Mezquita outright using the proceeds of sale of Casa Manana. His solicitor, David Corker or Corker Binning made a written statement together with a statement of truth on 3 October 2006 (volume 2 – 327) in which he said (Para 27) that he is instructed by DG that Mezquita is beneficially owned by JP but the solicitors in the divorce proceedings, Bahers, were instructed by him that although Mezquita was in his mother’s name, she held it on trust for him and he was the beneficial owner. If those instructions were correct – and I can think of no reason why they may not be – it must follow that he was also the beneficial owner of Casa Manana.

The evidence of Ms Sanz is that she dealt solely with JP; at face value this is perplexing because JP lacked the capacity at the material time to give meaningful instructions. On behalf of the claimant, Mr Peto submitted her evidence should be given no weight and that the Receiver was correct when he refused to accept the proposition that her firm was “eminently respectable”. There are concerns about features of her evidence but my conclusion is she may well have believed she was dealing with JP but was not – JP was in the UK and so all communications would have been by letter, email or telephone. Further, there were language problems – the Receiver said there had to be an interpreter when he met Ms Sanz – and my impression is that Ms Sanz just did as she was asked. While my suspicions are that TG stood in place of JP, that is not a conclusion I can reach on the balance of probabilities but I am satisfied on the balance of probabilities that someone stood in JP’s place and that DG knew that that was happening - there is the attendance note regarding a money transfer from a Gibraltar bank (see paragraph 106 above) and the subsequent receipt of £164,501.76p from JP. In my judgment, this attendance note provides the evidence that DG was the organising force behind this transaction. On 5 September 2005 Mezquita was transferred into the Receiver’s name by the Spanish authorities.

Las Hortensias

This property at Urbanizacion Nueva Andulucia, Marbella, was purchased on 16 June 2004 outright and without a mortgage for €1,100,000 in the name of JP. The results of the Receiver’s investigations as to the sources of the purchase monies are helpfully shown in chart 12. The purchase was, in fact, completed by Mz Sanz under a power of attorney. Ms Sanz confirmed that any questions concerning the purchase were dealt with directly by JP. For the reasons given above, I am satisfied she was deceived into believing that she was dealing with JP and that all the instructions conveyed to her by a woman were those of DG. Again DG has conflicting accounts: he has said that although he was financially involved, if anything were to happen to his mother, apart from being named in her will, he would be entitled to nothing but according to his solicitor, David Corker in his statement of 3 October 2006 [Volume 2/ 333]: -

“Mr Gale has instructed me that although his mother is the legal owner, he has contributed some €800,000 towards this and so may (my emphasis) have a beneficial interest in this property”.

If true, this contribution represents some 75% of the purchase price and in sterling terms at date of purchase £532,550. DG has provided no evidence as to how he came by that amount of money other than the generalised claims to which there has been much reference earlier in this judgment. On 8 December 2006 (and so some 2 months later) Corker Binning claimed DG had a 90% share in the property. All this contrasts with the claim by his solicitors in the divorce proceedings that he was the beneficial owner. I observe that in response to the Receiver’s specific query of 13 June 2008 regarding his precise interest in Las Hortensias and Mezquita, DG failed to answer saying only that his mother was the “outright owner and beneficiary” of Mezquita. In evidence, he said he was entitled to a 90% beneficial interest – asked why Las Hortensias had been bought in his mother’s name, he said he was going through a divorce at the time, the deal was done very quickly and his mother had the necessary NIS number.

And so on his own account, although the quantum of his beneficial interest has varied, he acknowledges that he has a beneficial interest in the property. Significantly, in breach of paragraph 5 of the Interim Receiver’s Order dated 28 July 2005, DG did not disclose any beneficial interest in this property – the Receiver only identified it when he discovered a transfer of 5 May 2004 of €438,351.80 from DG’s Nat West bank account No.28501187 to the Solbank account 0938. This discovery led to a restraint in respect of these assets and an order of the Spanish authorities dated 5 September 2005 transferring the property into the name of the Receiver.

The source of the funds for the purchase of Las Hortensias required a complex tracing exercise involving many different transfer and bank accounts which would take some time to summarise. By reference to chart 12, it can be seen that some of the purchase monies can be traced to the proceeds of sale of Casa Paraiso, 118 Hurn Road, 1 Glendale Road and, if DG is to be believed, of Casa Manana all via a variety of different bank accounts, all off-shore; other monies came from the closure of the Allied Dunbar accounts, some monies from unknown sources and £100,000, according to DG came from a con-man called Charles McLean who repaid an investment in a company called Poole Carpets Limited. As to this, the evidence was frankly incredible; DG claimed to have invested £100,000 without legal advice and after signing a document which he said was not worth the paper it was written on. These are supposed to be the actions of a successful businessman. The Receiver’s conclusions, with which I agree, are that there is evidence of unlawful conduct; there are unknown receipts into the Solbank account during the period of September 2001 to 2005 of €1.5m, held in JP’s name when she lacked the capacity to effect these transactions; the pattern of those transactions is typical of money laundering; and the origin of the funds used to purchase Las Hortensias, Mezquita and 120 Hurn Road can all be traced back to unknown sources. I am satisfied that the Solbank 0938 account was used for the purposes of money laundering. DG, who admitted he was the beneficial owner of the account for the first time at the beginning of the trial, has, at no time, provided any credible explanation as to why the account could not have been in his name. One of his explanations was that he was “sorting my situation out”.

Other Property the subject of Schedule 2 of the Order

The Receiver has identified a Mercedes SL500, registration number T23 ESA, a MG ZS, registration number HJ 53 TTE, a Smart Car, registration number HJ O2 RVM and a Gemini boat under construction. He discovered that DG purchased the Mercedes on 12 September 2003. Ownership was transferred to TG on 3 March 2004. It is currently kept by DG in Spain. Enquiries of the vendor [Jacksons in Bournemouth] revealed it was purchased for £67,907, with a part exchange allowance of £24,000 for a Mercedes CLK 320 purchased, according to DG in October 2000 with monies from the Merrill Lynch account, and a deposit of £1,000. The Receiver found out that £57,023 was transferred into that business’ bank account from the Natwest account 6082. As the total paid exceeded the purchase price by £13,948, the Receiver asked DG if another vehicle had been bought; DG said two vehicles (a Mercedes CLK 320 and a Mitsibushi Shogun) were part exchanged and a new Mercedes ML350 bought. That car was subsequently sold on 28 October 2004 (and so within a year) for £24,000 with the money deposited in the Lloyds Bank account. That would seem to be confirmed by a deposit of £23,600 into the LTSB 9387 account on 1 November 2004 although the bank has been unable to confirm the origin of the deposit.

The Receiver has established that the £57,023 was funded by a chain of inter-account transfers between accounts in the names of DG and TG. On 25 June 2002, the Nat West account 6082 was credited with £180,000 transferred from an Alliance & Leicester account 0117; that account had been credited between 8 November 2001 and 28 January 2002 with four transfers. Two of those transfers were from the Northern Rock Guernsey account into which DG and TG deposited the £212,248.49 proceeds of sale of 1 Glendale Road and £38,541 from an unknown source or sources, although it may be that £24,000 of that £38,541 was a cheque drawn on JP’s Barclays account 3249. £10,000 came from the Nat West account 6082, which had itself been funded by transfers from the Jyske account which had been credited with monies from Wordsell, DG and TG’s property agent in Portugal and there was a credit of £8,000 from ‘Penton Cars’ which related to the sale of a vehicle in December 2001 by DG and/or TG. DG said he has no recollection of this transaction. The Receiver reported that although he has tried to trace the funds used to purchase both Mercedes, “all funds trace back to unknown sources or a mixture of funds which contain known and unknown funds” and so it is likely that these funds are associated with unlawful conduct.

The MG ZS was registered to DKG on 22 November 2003; he said he purchased it 19 November 2003 for £10,800. It has been sold by the Receiver, with the proceeds of sale (£3,500) lodged in the Receivership account. The Receiver has not been able to identify the funds used to buy the car but DKG’s account in his witness statement is as follows – when he was 17 years old, he passed his driving test and was given a present of a Ford Ka with the cost, he understands, split between his parents and his grandmother. As he was 17 years old on 15 August 2000, his grandmother was then suffering from encephalitis. He said he sold the Ka privately for £5,000 three years later; his father looked after that money, as he looked after an inheritance of £3,000 on the death of a family friend and a 21^st birthday gift of £2,100 from his grandmother, a total of £10,100. He said he bought the MG but his father used a Honda Civic in part exchange for the MG. A moment’s thought is sufficient to appreciate that this account cannot be right. He was not 21 years old until 15 August 2004 and so 10 months or so after the MG was bought and so in November 2003, he would not have had the necessary funds for the purchase.

The Smart car was registered to DG on 9 July 2002 following its purchase on 8 July 2002 from Jacksons of Poole for £10,250, made up of a deposit of £1,000 and the balance of £9,250, and transferred to TG as part of their divorce settlement. It was part exchanged (with a value of £3,000), with the claimant’s consent by TG on 1 May 2008 for a Citroen Xsara Picasso. The payment of the deposit was from the Nat West account 6082 which was funded predominantly from the Northern Rock Guernsey account (see above); the balance was from the Alliance & Leicester account 0117. The Receiver has traced the funding of that account to the Northern Rock Guernsey account as well. He concluded that the source of the funds for this car is likely to be associated with unlawful conduct, a conclusion with which I agree.

DG ordered a catamaran from Gemini Workshops, making 7 payments on account totalling £64,530 between 14 January and 8 July 2005. The Receiver has ascertained that the four payments in April 2005 totalling £40,000 were funded by way of an inter-account transfer of £50,000 from the Lloyds 1668 account, which was itself funded by an inter-account transfer of £160,000 (sourced from the proceeds of sale of 118 Hurn Road) which originated from the Alliance & Leicester 0117 account. DG gave less than convincing explanations for this purchase or the funding. My conclusion is that once more the source of the funding was unlawful conduct.

Bank Accounts

The Receiver has identified that the respondents operated some 68 bank accounts in Spain, the USA/Bahamas, Portugal and the UK as well as off-shore accounts with banks in Jersey, Gibraltar, Guernsey, Isle of Man. I am satisfied on the available evidence that the proper inference must be, on the balance of probabilities, that the use of so many accounts may only be explained by money laundering. Neither DG or TG has provided any acceptable explanation for such a multiplicity of accounts. For the purpose of the judgment, I shall consider only the accounts which are listed in Schedule 2.

PART E

DRUG TRAFFICKING

Criminal Conduct

As has been observed, DG and TG have given consistently as the reason for the move to Spain the opportunities of making money there in property. After his arrest in Portugal on 9September 1998, DG was questioned by a magistrate on 11 September 1998, who informed him that he was obliged to answer any questions about his identity and criminal background truthfully and that he would “incur liability” if he lied. Asked about his criminal record, the record shows he gave truthful answers about his criminal convictions. The Record continues - “He left England because of problems associated with drugs, hashish, that he thinks that the authorities wanted to talk to him because of those problems, that he contacted the aforementioned British authorities and that they told him that if he left England the authorities were not going after him and so he left”. Cross-examined about this by Mr Peto, he said that his lawyer had asked him if this was a possible explanation for his leaving and he had said it was possible; that if he had been asked why he left England, he would have said it was for a better life. This explanation was shown to be wrong when the more full record was considered; that includes the following – “By that time i.e. in the sixties, hashish was a very demanded drug. He was then the owner of a nightclub in Bournemouth whose clients came either in search of the said product or with a view to sell it. The authorities had made pressure on him so that he would make a statement relating to those activities. He felt threatened because he had already a criminal past showing some unlawful activities though the police had never produced specific charges against him on the count of those activities … Asked whether the English authorities had produced any charges against him for any unlawful acts or not he replied they might have charged him with being an accomplice on the hashish dealings which occurred in his night-club in England”. DG did not challenge the accuracy of this record and the conclusion must be that he was telling the magistrate the truth.

The ‘Hanja’

On 26 June 1991, Colin Allen and Rudolph Scholz left a mooring outside Calle Fluvia No.9, Ampuriabrava (Gerona) in Northern Spain in the ‘Hanja’, a vessel 58 feet long and with a gross tonnage of 71.84 tonnes, which DG said may have cost £40,000; they proceeded to Palma Majorca where they repaired the generators and then to Ibiza where, after picking up a man, they went back out to sea. At sea, they collected 2,112 kilograms of cannabis worth some £2.9 million before returning to Ibiza to drop off the man and then returning to the mooring at Calle Fluvia No.9, where they arrived on 11 July 1991. This drug trafficking was clearly highly organised. Later that day, police officers seized the cannabis and arrested Allen and Scholz.

The Spanish authorities suspected that DG and his brother Philip Moore were running a drug trafficking organisation which arranged the smuggling of the cannabis. It was alleged that Calle Fluvia No.9 was purchased with cash brought by DG because it had a mooring and direct access through canals to the open sea; it was alleged further that a Gibraltarian company, Tideswell Limited, the registered owner of the ‘Hanja’, had granted a power of attorney to Philip Moore. On 26 March 1992, an indictment was issued against DG in the name of David Cedrick (sic) Gary Moore and 8 others. On 6 May 1992, Letters Rogatory were issued and on 23 June 1992 the accounts in the name of DG and TG with Allied Dunbar, Isle of Man were restrained. On 16 November 1992, an International Arrest Warrant was issued for DG. On 20 October 1993, in the Central Criminal Court O1, Madrid, Allen and Scholz were each convicted of an offence which equates to an offence of possession with intent to supply in this jurisdiction and were sentenced to 6 years imprisonment. The Ruling of the Court was prefaced with this declaration – “the proceedings have been received at this Court, the opening of oral proceedings was decided, the parties formulating their provisional submissions letter, the default of appearance of David Cedrick Garry Moore, Philip Lionel Moore, Kathleen Buttery and Arthur Owen being declared, to whom this decision does not refer”. The Ruling contained a recital of the facts found to have been proved against Allen and Scholz, amongst which were that in early 1991, Allen and Scholz “agreed with other people to whom this resolution does not refer, since they are in a position of default of appearance”, to transport hashish intended for sale. It was found proved that to do that, “following the indications of other people” Allen bought Calle Fluvia No.9 on 6 April 1991 and the ‘Hanja’ was provided to Allen.

DG was not arrested on the warrant and on 12 March 2003, the High Court in Spain declared that the criminal liability of DG was extinguished “on account of prescription”. In December 2003, the restraint order in respect of the Allied Dunbar accounts in the Isle of Man were lifted. It follows that the Spanish Court did not consider the evidence against DG but it clearly concluded that Allen and Scholz were part of a larger conspiracy which included some or all of those who were in default of appearance.

The case for the claimant is that DG was party to the smuggling of the cannabis. The claimant rely upon the following details of evidence: -

The case for DG is that it was an oversight on the part of the skipper, Mr Grainger when he was described as the owner of the ‘Hanja’, although he accepted in cross-examination there was no reason why the registration documents to which the skipper had access would not record the owner as an individual. His case was he was in no way involved in the smuggling. While he brokered the purchase of Calle Fluvia No.9 some months before the smuggling, the agent who lost the sale and the commission implicated him out of spite. He said that he had been in the USA for 5 months before the smuggling – as to that, a police officer gave evidence at the trial of Allen and Sholtz, that DG had gone to the USA and pilot’s log books establish that DG was flying in the USA at the material times. In a witness statement dated 6 April 2006 he said he was charged “because of a connection I had with the sale of a boat which was subsequently used in an offence”. In that statement he made no mention of his brother Philip’s link to that boat but in his examination-in-chief, he mentioned for the first time that his brother was connected to Tideswell and held a power of attorney for the company; later, he said his brother owned the company and the ‘Hanja’ – this was mentioned for the first time after the court had been told Philip Moore would not be a witness and was not credible evidence. In a later statement, in which he commented on various allegations made by Ruth Davison he said “how he got involved was that he brokered the purchase of the house some 12 months before the incident”. When cross-examined, he denied putting up the money for the purchase and said that he had not brokered the purchase – he said he was aware of the offer for sale of the property, mentioned it to his brother Philip in passing and told his brother that he would obtain the particulars from an estate agent, to whom he gave his name and address. He said he did not know a friend of his, Colin Allen had bought the house and did not know that Colin Allen in due course ended up owing the ‘Eagle’ (see below).

My clear impression was that DG in his evidence sought to play down his links to Colin Allen, saying he met him in southern Spain where he sold him a few cars and describing him as a friend he said he had not seen him for a while. But, in cross-examination he agreed that Carmen Barcello was Allen’s girlfriend and that she had given him power of attorney to drive her car, a necessary requirement (he said) for anyone to drive a third party’s car in Spain and in April 2005, Allen witnessed DG’s signature on the transfer of title to 120 Hurn Road. Further, it is apparent that Philip Moore, a landscape gardner, did not have the means to purchase the ‘Hanja’, which according to DG worth some £40,000. From my findings of fact (see above), Philip Moore’s earnings from Kwik Print SA would have been very modest and his earnings from Rosie O’Grady’s probably even more modest and there is no evidence of his employment in 1991. As I am satisfied that Philip Moore was not the owner, I reject DG’s evidence that he sold the boat to some unidentified Germans before July 1991. I agree with the submission of the claimant that that evidence had all the hallmarks of recent invention, demonstrating the capacity of DG to lie if he considers it will advance his case. If DG is to be believed there is a series of unfortunate coincidences – a year or so before the smuggling, he travelled on the ‘Hanja’ and his links with the vessel were such as to give at least two others the impression that he owned it; he just happened to acquire the particulars of a property in Northern Spain for his brother Philip even though he had no business dealings in Northern Spain and the property was acquired by a friend of his with whom he had business dealings in Southern Spain and that same man was later to acquire the ownership of the ‘Eagle’ linked to another drug smuggling operation in Portugal (see below). I shall return to this but I am satisfied that DG’s move to the USA was linked to his drug trafficking, just as his move from the UK to Spain was so linked.

I am satisfied on the balance of probabilities that DG was the true owner of the ‘Hanja’ and had been instrumental in the arrangements for the purchase of Casa Fluvia – in my judgment, in all probability either financing or contributing towards its purchase. I am satisfied on the balance of probabilities that DG, if not a participant in the arrangement for the importation of the cannabis found on the ‘Hanja’, knew that it was to be used to smuggle cannabis and like many significant drug traffickers had deliberately distanced himself geographically from Spain. It is not coincidental that he used an off-shore company and a nominee to purchase Melbourne Beach and used a false name – all devices, in my judgment to make it more difficult to trace him; it is again not coincidental that he left the USA once it was clear the Spanish authorities had traced him in to the Melbourne Beach address.

The ‘Eagle’

There is evidence of Portuguese police surveillance of DG from 1994. On 4 May 1994, an agent reported that DG flew on trips which lasted a day or a day and a half and when he returned there were signs of sand on the landing gear; on 12 July 1995, there was a report that the Aviat Huskey had been fitted with extremely wide tyres, suitable for landing in open country, that GPS equipment had been installed and on one trip the aircraft carried jerry cans of fuel and so giving it the range to travel to Morocco and back. The police evidence raises suspicions but there are details about the aircraft which were not challenged. As my conclusion is that DG did not have a legitimate flying business, then the question “why did he have the aircraft in Portugal?” needs to be answered. I am satisfied, on the balance of probabilities that it was used it for the purposes of drug trafficking by him and/or his associates. I have referred earlier in the judgment (see paragraph 88 and 89 ) to the evidence of what Anneliese Meinert told the Portugese authorities and said in court and so highlight only these details – there was DG’s possession of false passports, his use of her mobile phone and the construction and use of the airstrip. DG, who had previously denied telephoning Morocco, in answer to Mr Peto, agreed that the Portuguese court had found proved that he had done so; Mr Peto then asked him why he had telephoned Morocco and he replied there was nothing sinister in it, that it was a developing country with many investment possibilities. Asked for the name(s) of the person(s) to whom he spoke, he said he could not remember. He then said he had been to Morocco but he was not sure if he went in 1994-1996; he said it was doubtful if he used the mobile phone in Morocco. Asked why he borrowed Anneliese Meinert’s mobile phone, he said it was not common for people to have mobile phones at that time in Portugal, I reject his evidence as incredible – if he had genuine business interests in Morocco, I would expect him to be able to give some detailed evidence about them, even with the passage of time. If, as he claimed, he was a successful business man, I would expect him to have his own mobile. The fact he used another’s mobile provides further evidence of the lengths to which he was prepared to go to ensure he could not be linked to unlawful conduct. In that regard, it is not without significance that on 15 November 1996, police officers carrying out a surveillance operation, identified TG using a public telephone to phone a number which the Receiver has identified as that of Bank Indosuez in Gibraltar.

In the night of 10/11 August 1996, at Gale Beach, officers of the Portuguese Republican National Guard observed a boat without navigation lights off the coast in Alburfeira, a red coloured 4 x 4 vehicle parked with two men in it and movements between the boat and the vehicle. When the officers moved in, the two men ran off and escaped; the officers found the Jeep registration No.J848 WPY containing 450 kilograms of cannabis in 40 packages. The vehicle was legally owned by Kevin Barry. He was to claim that DG gave him the vehicle in lieu of payment of £4,000 he owed him for 6 weeks work on property belonging to him in Alturas. The vehicle had been previously kept by Ahmed Bouamar, the purchaser of the fish and chip shop in Marbella (see above); subsequently, fingerprints of Kevin Barry and Robert Ward were found in the vehicle. Also found were a Zodiac S rubber dinghy with a copy of Kevin Barry’s passport and a Suzuki outboard motor.

The evidence established that the dinghy, the outboard motor and other items were purchased from Shepherd and Co. in Gibraltar on 27 July 1996 and delivered to the ‘Eagle’. The ‘Eagle’ had arrived in Gibraltar on 26 July 1996 as evidenced by the crew/passenger list. That document recorded that the vessel was owned by Kevin Barry and was carrying Robert Ward and DG, who signed the form. DG’s evidence was that he cannot remember how he came on be on the board but he does remember that he travelled on it only to Gibraltar and did not make the return trip. In his witness statement of 7 November 2008, he said this was the only time he went on the boat but in cross-examination, he said he had been on it twice, or three times. The receipt for the outboard engine, the dinghy and other items, together worth £2,638 and paid in cash was in the name of Ward. He said that he left the boat in Gibraltar and made his way towards Malaga on 26 July and so has no knowledge of the purchases on 27 July. Asked why he went towards Malaga when he was then living in Portugal and where he went and how he got there, he dissembled. His evidence as to this was frankly incredible and had all the features of lies told spontaneously because he wanted to distance himself from the purchase of the dinghy and outboard engine. I am satisfied on the balance of probabilities that DG provided the funds to purchase the ‘Eagle’ and the cash to buy the outboard engine and the dinghy needed to move the cannabis to shore.

The case for DG is that he was not in Portugal on the night of 10/11 August 1996 - as to that, that is almost certainly correct because the police observation evidence of his house on 8 August 1996, when the jeep was found parked there revealed that the house was unoccupied and DG said that it was at about this time that he and TG and their son flew to Singapore for a holiday. As with the ‘Hanja’ incident, my conclusion, in all probability, is that DG deliberately left the country in the knowledge that there was to be smuggling. I am satisfied on the balance of probabilities that Barry was not the owner of the ‘Eagle’; he lacked the means to fund the purchase and maintenance of such a vessel and was at best a casual labourer. The evidence established that the vessel was owned in 1998 by Allen, another who lacked the means to purchase such a vessel. The conclusion must be that DG was again using nominees

In November 1996, Kevin Barry and Christopher Moore (DG’s brother) and a man called Patrick Myers were arrested in France with 21 kilograms of cannabis; given bail, the men returned to the UK. According to Kevin Barry, DG had asked him to go back to Portugal and to some work on a house but he had to return to appear at South Anglesey Magistrates Court and DG gave him a black Frontera to drive and so he made the return journey with Christopher Moore. On the evidence, I am satisfied that the three men were couriers and not the suppliers of the cannabis.

As stated earlier, DG was arrested on 9 September 1998 and remanded in custody. He was tried in May 2000 and acquitted. In its judgment, in the case of DG, the Portuguese Court made the following findings of fact – that DG in 1993 or 1994 built the landing strip at his own expense, that the airstrip is located in a “perfectly secluded position, difficult to access and view” that it was used on countless occasions from 1994 to 1996 by DG travelling in two small planes that he owned, that he made short local trips, some incursions into Southern Spain and observation flights along the Algarve coast, that from 1994 to 1996, he used the mobile phone owned by Anneliese Meinert “to establish telephone contacts to and from Spain, Gibraltar and Morocco (for which he used the roaming service)”, that Kevin Barry was the owner of the Jeep and the ‘Eagle’. The court made a number of findings of fact relating to bank accounts and the acquisition of motor cars. The court concluded: -

“It seems to us that that without a shadow of a doubt there are no proven facts permitting the conviction of the defendant for the three crimes for which he is accused, since the objective elements of each of the types of crimes refer to above have not been proved, much less the subjective elements of each of them. The matter consequently seems insufficiently proved to us, namely the Jeep, Cherokee which was seized at the time of the unloading of the hashish have been parked a few days before at the house of the defendant… Nor has it been proved that the accounts he held alone or together with his wife, namely in Portugal, were the exclusive (my emphasis) fruits of such activity (drug trafficking). Nor has it been proved that the defendant together with those who were his co-defendants had formed the objective of together dedicating themselves to drug trafficking in Portugal.”

While DG was not directly involved in the smuggling in June/July 1991 or on 10/11 August 1996, I am satisfied on the balance of probabilities there is evidence of his participation in a wider conspiracy to smuggle cannabis. There is the evidence of his links with the ‘Hanja’ and the purchase of the property in northern Spain; then there was his attempt in the witness box to distance himself from the purchase of the outboard motor and dinghy, which was wholly incredible. If he was to be believed, yet again, he is the victim of a series of coincidences. There is also the evidence of Anneliese Meinert given in the Portuguese trial, summarised in some detail (see below) which supports the conclusion that DG had links with Morocco and used her to launder money. DG now admits he had business interests in Morocco and lied to the Portuguese police about that. Then there is the evidence of his lies to the Portuguese police when he said he knew neither Barry or Ward and did not know his brother had been arrested in France. It cannot be a coincidence, when considered with all the other evidence that he just happened to associate with drug traffickers. There are also the police intelligence reports both from the early 1980s and from 2001-2005.

PART E

CONCLUSIONS

I have made specific findings of fact in the course of this judgment – see paragraphs 54, 55, 57, 65, 66, 72, 73, 76, 78, 84, 89, 90, 93, 97, 99, 100, 103, 104, 109, 111, 115, 116, 122, 123, 124, 125, 126, 132, 134 and 136 - and so at the risk of some repetition, I am in no doubt that DG and TG engaged in unlawful conduct – in DG’s case, money laundering and drug trafficking, in TG’s case, money laundering. There is also evidence of tax evasion in four jurisdictions. They have acquired capital and various assets as a direct consequence of the money laundering and/or drug trafficking but it is not possible to quantify the extent of the tax evasion or to estimate the extent, if at all, that it contributed to their capital wealth. For reasons given during the course of the judgment and below, I am satisfied the Receiver has correctly identified recoverable property. I found DG a witness whose evidence, on the central issues, was wholly unreliable. He was so often demonstrably lying. I am not prepared to believe the evidence of TG insofar as she purported to confirm his account or to explain her involvement; she too was shown to be a liar about matters of real moment. While I am prepared to accept that DG was the moving force behind all criminal conduct, she was hardly ignorant of what he was doing and played her full part in the money laundering. I base that conclusion not only on the unfavourable impression I formed of her as a witness of the truth, but in particular on the evidence about the paper concealed in the candlestick, her knowledge of the off-shore accounts and companies and her assumption of the role as money launderer when DG was in prison in Portugal. My other conclusions are as follows:-

I have concluded the only inference must be that the recoverable property identified and listed in Schedule 2 to the Interim Receivers Order was obtained from the unlawful conduct alleged – money laundering, tax evasion and drug trafficking.

PART F

THE LIMITATION ACT 1980

a claim form is issued, or

an application is made for an interim receiving order,

the action is based upon the fraud of the defendant; or

the action is for relief from the consequences of a mistake;

Nothing in this section shall enable any action—

to recover, or recover the value of, any property; or

to enforce any charge against, or set aside any transaction affecting, any property;

A purchaser is an innocent third party for the purposes of this section—

The provisions of Part 1 of POCA which created the Asset Recovery Agency and established the office of Director (whose civil recovery powers have been transferred by the Serious Crime Act 2007 to the Serious Organised Crime Agency) who was required to bring proceedings under Part 5 of the Act to deprive criminals of the proceeds of their crimes. The provisions of Part 5 came into force on 24 February. 2003. It is common ground that the primary liability period is 12 years ending with the application for the Interim Receiving Order on 28 July 2005 – and so from 29 July 1993. Of course, the Agency, and so the Serious Organised Crime Agency were not in place in 1993 or earlier but there is the retrospectivity section - section 316(3) of POCA.

The claimant’s case is that the limitation defences relate to the monies deposited in the Allied Dunbar accounts between 1989 and 1992 and to the proceeds of sale of Casa Manana (purchased in 1988) which DG and TG assert were used to purchase Mezquita in 2002 and partly to purchase Las Hortensias in 2004 but that any limitation defence is defeated by the concealment by DG and TG of their criminal conduct, so that the facts “relevant to the cause of action” would not have been known to the Assets Recovery Agency before 28 July 1993, had it existed then.

Mr Lederman submitted that as the claimant’s case is that 120 Hurn Road (purchased on 2 February 2001), Mezquita (purchased on 9 April 2002) and Las Hortensias (purchased on 16 June 2004) are all properties which represent the ‘original property’ i.e. properties representing property obtained through unlawful conduct (section 305(1) of POCA) and the cause of action accrued from the date when the ‘original’ property was obtained (section 27A(4)(b)). My understanding of paragraph 40 of his first skeleton argument is that he relied upon that part of the judgment of Waller LJ in The Director of the Assets Recovery Agency –v- Szepietowski & Others – ante at paragraph 20:-

“… the effect of section 27A is to exclude property representing the original property obtained unlawfully if the original property obtained unlawfully was itself obtained more than 12 years before commencement of the proceedings …”

Wall LJ agreed – see paragraphs 82-84 – as did Moore-Bick LJ – see paragraph 117. These observations, for they are no more than that, are in no way binding but they are most persuasive and I am satisfied that the provisions of section 32 must apply to section 27A.

Mr Lederman accepted in paragraph 2.6 of the second skeleton argument that the House of Lords in Sheldon –v- RHM Outhwaite (Underwriting Agencies) Ltd said that in the case of concealment, whether contemporaneous with or subsequent to the accrual of the cause of action, the limitation period did not begin to run until the concealment was or should have been discovered but he relied upon that part of the decision (at page 144A) that where a claimant is aware of the relevant facts during a period of concealment, no subsequent act on the part of a respondent can have concealed those facts from the claimant – see also Ezekiel –v- Lehrer [2002] Lloyds Report PN 260 and 268,270. He submitted the evidence establishes that the claimant (on the assumption that the Agency existed in 1992) “or the British authorities at any rate” were aware as early as 10 March 1992 of “material that they are actually relying on now”. He based his submission on the consequences of the ‘Hanja’ incident in 1991 and so two years or so outside the limitation period. He relied upon the evidence of Michael Pye, a police officer seconded to the No 1 Regional Crime Squad, that on 10 March 1992, a Spanish magistrate issued a Commission Rogatoire in accordance with the provisions of the European Agreement on Judicial Assistance in Penal Matters authorising the judicial authority in the UK to investigate the financial assets of DG, TG and others; DC Pye stated that with another officer he conducted those investigations and identified the Allied Dunbar, Isle of Man accounts; he ascertained that one account had been opened with a transfer of £59,500 from the Bank of Credit & Commerce in Gibraltar; he was present on 23 June 1992 when a restraint order was made in respect of the accounts by Deemster Callow. Mr Lederman submitted that the copy documentation appended to the witness statement establishes that the police were aware of the value of the deposits and of monies being transferred to the USA before 28 July 2003, the date the cause of action accrued. It should be noted that the knowledge that Mr Lederman argues should be attributed to ARA/SOCA is limited to the knowledge of the Allied Dunbar accounts and not of the purchase of Casa Manana or any other Spanish property.

The evidence of Ruth Davison in her statement dated 23 February 2009 was that “The Agency only takes action pursuant to Part V of the Proceeds of Crime Act 2002 (so encompassing investigations and the issue of proceedings) on the basis of referrals received from police forces and law enforcement agencies. This case was referred to the Agency by Judith Rigby of the National Crime Squad on 17 December 2004”. It follows that the claimant was not on notice until that date but Mr Lederman submitted that if a police officer found out information at the request of a foreign state, that is information which should be passed on to the prosecuting authorities in this country, who in their turn, should pass the information on to the ARA/SOCA , which must be deemed to have that knowledge. I do not agree. While section 4 of POCA provides that “Persons who have functions relating to the investigation or prosecution of offences must co-operate with the Director in the exercise of his functions”, that is a provision which cannot be read as attributing to the Director the knowledge of the police.

But even if the police officer was under a duty to inform the Director of the Allied Dunbar evidence, and even if there is an assumption that the Director had the knowledge of the police, there must be evidence to establish at the very least a prima facie case both of alleged unlawful conduct and the existence of recoverable property. There is nothing in the statement of Detective Constable Pye to prove either. There was suspicion of drug trafficking and of money laundering out with the jurisdiction but no evidence of recoverable property. The Allied Dunbar accounts, without more, would not provide evidence sufficient to prove unlawful conduct in proceedings for civil recovery.

There is a further ground for rejecting the submission. Although the Allied Dunbar accounts monies were transferred to the USA and applied in part in the purchase of Melbourne Beach, and the proceeds of the subsequent sale paid into a Merrill Lynch account 909-SXE7, there is no evidence that any of the Allied Dunbar monies can be traced to the purchase of any of the three scheduled properties. The sources of funding for Mezquita and Las Hortensias [Charts 11 & 12] establish no connection at all and although £48,723 from the Merrill Lynch 909-1SXE7 account was held by Preston & Redman as surplus funds on account following the purchase of 1 Glendale Road [see Chart 10], there is no evidence that any part of those ‘spare’ funds were applied in the purchase of 120 Hurn Road.

I can deal briefly with the issue of concealment because in my judgment the evidence proves compellingly that DG and/or TG deliberately concealed both the facts relevant to establish the commission of offences of drug trafficking and money laundering and the existence, location or nature of items of recoverable property and so if there had been an Assets Recovery Agency in 1992, those facts would not have been known. At the risk of repetition and by way of example rather than an exhaustive catalogue, the evidence of concealment is to be found in the steps DG took to distance himself from the ‘Hanja’, Casa Fluvia, the ‘Eagle’, Robert Ward and Kevin Barry and the use of nominees, off-shore bank accounts and companies, the movement from country to country and the use of false names.

For all the above reasons, I reject the submission that the Director should be attributed with knowledge of criminal conduct by no later than 23 June 1992 and reject the submission that the claim is time-barred.

Decision

There will be a Recovery Order in favour of the claimant in respect of each item listed in Schedule 2 to the Interim Receiving Order.