National Crime Agency v Khan & Ors

This matter concerns a claim by the National Crime Agency (“the NCA”) under Part 5 of the Proceeds of Crime Act 2002 (“POCA”) for the recovery of property and bank accounts owned by the First and/or Second and/or Fourth Defendants alleged to be property obtained through unlawful conduct.

The property the subject of the claim is:

The First Defendant, Aurang Khan, lives at 11 Marlo Heights (Property 1) with his wife (the second Defendant) and children. He has lived in Northern Ireland since 1989 and is a chef. Between about 1995 and 2010 he ran a business with various others, the Taj Tandoori restaurant. Since 2012 he has run an Indian Takeaway called Bilal’s. He is the sole legal owner of 30/30a Albert Street (Property 2) and he is the joint owner of 190 Cherrywood Road (Property 4).

The Second Defendant, Shakar Khan (also known as Shakar Begum) is the wife of Aurang Khan. She is the sole legal owner of 11 Marlo Heights (Property 1) and 263 Stoney Lane (Property 6). She is the legal owner of the bank accounts with the Bank of Ireland in the names of her children (Properties 14 and 15).

The Fourth Defendant, Jamila Shabnam, is the wife of Alam Zeb Khan, who is the brother of Aurang Khan. Jamila Shabnam is the joint legal owner of 190 Cherrywood Road (Property 4).

On 19 June 2012 the predecessor to the NCA obtained a freezing order against various defendants, including the First, Second and Fourth Defendants, preventing them from disposing of or dealing with the above properties. The freezing order, as subsequently amended, remains in place pending the conclusion of these proceedings.

On 7 April 2014 the NCA issued a claim for civil recovery against the defendants in respect of 13 items of real property and 9 bank accounts, including Properties 1, 2, 4, 6, 14 and 15.

On 29 October 2014 the Twelfth Defendant was substituted for the Eleventh Defendant.

On 12 May 2016 summary judgment was granted against the Third, Tenth and Twelfth Defendants in respect of the civil recovery of 3 of the properties claimed.

On 10October 2016 the NCA entered into a settlement agreement with the Fifth, Sixth, Seventh, Eighth and Ninth Defendants, under which some of the properties claimed were recovered and others were discharged from the freezing orders, as set out in a consent recovery order.

Therefore, the current proceedings are concerned only with the First, Second and Fourth Defendants in respect of Properties Nos. 1, 2, 4, 6, 14 and 15.

The NCA’s case is that the defendants are part of the Zeb Khan network, an organised crime group led by Alam Zeb Khan and involved in the importation and supply of illegal drugs, primarily heroin. The properties, in respect of which recovery is claimed, have been acquired, held and transferred by various family members without any identifiable source of income. The only plausible explanation for acquisition of the properties, and the convoluted way in which the defendants have dealt with the properties, is that the funds used are the proceeds of crime, namely, drug dealing, money laundering, mortgage fraud and tax evasion.

The defendants’ position is that the property transactions and holdings are a reflection of the family and community ties and support that exist in the Anglo-Pakistani community. In that community, it is usual for family members to hold property for other family members. It is also usual for family and friends to lend money to each other without any formal arrangements or documents. Although Alam Zeb Khan is a convicted drug dealer, there is no Zeb Khan network and no evidence that the remaining defendants are involved in such criminal activities. The NCA is unable to establish that the properties represent the proceeds of unlawful conduct, or items which have been purchased with the proceeds of unlawful conduct.

Section 243 of POCA provides that proceedings for a recovery order may be taken by the enforcement authority in the High Court against any person whom the authority thinks holds recoverable property.

Recoverable property is defined by section 304(1) as property obtained through unlawful conduct.

Unlawful conduct is defined by section 241 as conduct which is unlawful under the criminal law of the country in which it occurs, whether this is the United Kingdom or elsewhere (provided that if the conduct occurs outside the United Kingdom it would be unlawful if it occurred in the United Kingdom).The court must decide on a balance of probabilities whether it is proved that any matters alleged to constitute unlawful conduct have occurred.

A person obtains property through unlawful conduct (whether his own conduct or another's) if he obtains property by or in return for the conduct (section 242). In deciding whether any property was obtained through unlawful conduct, it is not necessary to show that the conduct was of a particular kind if it is shown that the property was obtained through conduct of one of a number of kinds, each of which would have been unlawful conduct. It is not necessary to prove that individual properties were derived from specific offences.

Section 305 provides for tracing property. Where property obtained through unlawful conduct is or has been recoverable but has been disposed of, property which represents the original property is also recoverable property unless the person who obtained it did so in good faith, for value and without notice that it was recoverable property.

If recoverable property is mixed with other property, the portion of the mixed property which is attributable to the recoverable property represents the property obtained through unlawful conduct (section 306).

Where a person who has recoverable property obtains further property which represents the profits accrued from the recoverable property, that further property is deemed to represent property obtained through unlawful conduct (section 307).

Section 266(1) stipulates that if the court is satisfied that any property is recoverable, the court must make a recovery order.

The recovery order must vest the recoverable property in the trustee for civil recovery (section 266(2)).

An exception to section 266(1) is contained in section 266(3). The court may not make a recovery order in respect of any recoverable property if:

Section 282A provides that a recovery order may not be made by the High Court of England and Wales in respect of property outside the jurisdiction unless there is or has been a connection between the case and this jurisdiction, as set out in Schedule 7.

The issues that the court has to determine in this case are:

The burden of proof in establishing that any of the properties are recoverable property for the purposes of POCA lies with the NCA. The standard of proof is the balance of probabilities, that is, whether on the evidence the facts alleged are more likely than not to have occurred: Re B [2008] UKHL 35 per Lord Hoffmann Para.13 and Baroness Hale Paras.62-70; Re S-B [2009] UKSC per Lady Hale Para.10; Gale v SOCA [2011] UKSC 49 per Lord Phillips Para.54, Lord Clarke Para.57, Lord Dyson Para.123.

It is not necessary to prove that the property was acquired as the result of any particular criminal offence but it is necessary to prove that the property was obtained by the kinds of unlawful conduct relied on. This may be established 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: Gale v SOCA [2009] EWHC 1015 per Griffith Williams J Paras.12-17; Olupitan v The Director of the Assets Recovery Agency [2008] EWCA Civ 104 per Carnwath LJ Paras.22-24; R v Anwoir [2008] EWCA Crim 1354 per Latham LJ Para.21.

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: Gale v SOCA (above) per Griffith Williams J Para.14; Olupitan (above) per Carnwath LJ Paras. 13-18.

The following witnesses gave evidence at the trial:

Although witness statements were prepared by Mrs Shakar Begum and Mrs Jamila Shabnam and served in the proceedings, they did not attend court or give evidence.

Mr Ewart’s witness statement was careful, thorough and meticulous. The primary facts established by his investigation were not challenged, although the conclusions he drew from the facts are in dispute. He was measured in his response to questioning and his readiness to accept points that were not favourable to his case indicated a balanced and fair approach.

The evidence collected by Mr Ewart and adduced at trial comprised the following:

Based on the above investigation, the NCA’s evidence can be summarised as follows. Alam Zeb Khan is a career criminal involved in the supply of Class A controlled drugs. He has unspent convictions for possession of Class A and Class B drugs with intent to supply. On 28 July 2000 he was sentenced to a custodial sentence of 12 years for importing heroin. On 13 March 2012 he was convicted of conspiracy to supply cocaine, for which he received a custodial sentence of 7 years. On 25 June 2013 he was convicted of money laundering and given a concurrent custodial sentence. Despite having a cumulative declared income of £20,526.48 between 2006 and 2012 (excluding declared losses of £8,482), he and other family members have acquired property and bank accounts with an estimated value of just over £2 million. The defendants are family members or associates who have participated in money laundering, mortgage fraud and tax evasion as part of the “Zeb Khan Network”:

There is no identified source of family wealth and the declared income of the family members would not explain the family’s ability to acquire the property the subject of the recovery application.

The first defendant, Aurang Khan, moved from Birmingham to Northern Ireland in 1989. His wife, Shakar Begum (also known as Shakar Khan), joined him in 1991. They have three children, Samara, Mohammed Bilal and Rehanna.

He worked for 6 years in an Indian takeaway, “the Eastern Tandoori,” initially as a trainee chef and then as the main chef. In 1995 he set up his own restaurant, “the Taj Tandoori”, as sole proprietor. The funding for the business was provided by a bank loan of £120,000 approximately, guaranteed by Aurang Khan’s partner, Mr Ghafoor. Subsequently, Mr Ghafoor’s interest in the business was sold to Mr Abdul Miah. In February 1999 the business was transferred to Aurang’s sister, Nazrah Begum, the third defendant. In June 2002, Aurang re-purchased the business for £35,000 with his brother, Alam Khan, who was in prison at the time.

Between 25 September 2002 and 13 August 2010 the cumulative sum of £457,901.69 was deposited in the First Trust Bank business account no. 05520-008 in the name of Aurang Khan trading as Taj Tandoori.

On 18 February 2008 First Trust Bank hire purchase account no. 0239219/001/01 was opened in the name of Aurang Khan to facilitate the purchase of a BMW DM Sport vehicle, registration no. KHZ 1830. The purchase price of the car was £21,950 in respect of which a deposit of £3,000 was paid by Aurang Khan, probably using the cash withdrawal of £3,000 from his Ulster Bank Limited Reserve 90 account no. 35852203 on 1 February 2008. Initially, repayments of the loan were made from the Taj Tandoori business account and, subsequently, repayments were made from the First Trust Bank account no. 03190-044 in the name of Shakar Khan. The final payment of £5,633.07 was made on 1 December 2011. Aurang Khan explained that this was the sum received on selling the car back to the dealer.

HMRC records show that the declared cumulative gross income of the business between 2003 and 2010 was £487,012 and the net income in that period was £30,965 (excluding losses of £16,963). Unfortunately, Mr Miah stole from the business and disappeared to Bangladesh. The income of the business was under-declared to HMRC, resulting in penalties and additional taxes of £73,526.71 in full and final settlement of sums due. The business stopped trading in 2010. The lease of the restaurant was sold and the proceeds paid to Nazrah Begum. Nazrah Begum transferred the funds to her brother, Alam Khan, who used them to purchase property in Birmingham, 307 Station Road.

Following closure of the business, Aurang Khan worked as head chef at the Bilal Indian Curry House in Carrickfergus. In 2012, he set up a new business in Carrickfergus, an Indian takeaway known as “Bilal’s”.

Aurang Khan has a criminal record for dishonesty and drugs offences. They are spent offences and the most recent offences, for possession of Class A and Class B controlled drugs, were on 9 December 1998, 18 years ago. As a result, I find that they are of no probative value in determining the issues before the court. However, Aurang has admitted that he was a heroin user until 2010, and that years of heroin abuse have affected his cognitive functioning, including his memory. Given that he has drugs convictions going back as far as 1994, it follows that he has been a long-term drug abuser in contact with drugs suppliers. This is significant given that his brother, Alam Zeb Khan, has convictions for drug trafficking and money laundering.

HMRC records show that Aurang Khan’s declared cumulative gross income between 1999 and 2011 was £31,336 and his net income in that period was £17,867.40 (excluding losses of £8,481). Taking into account working tax credits, his cumulative gross income was £43,991.12 (excluding the declared losses).

Shakar Begum has no criminal record. She does not work. She does not speak or read English and relies on her husband to manage their financial affairs. Between 1998 and 2011 her declared cumulative income was £6,505.25. Taking into account child tax credits and child benefit, she had a total income of £36,581.03 during that period.

In about 1998 Ulster Bank Limited account no. 88300022 was opened in the name of Shakar Begum. Between May 1998 and October 2004 deposits in the cumulative sum of £93,230.71 were made, including:

Aurang and Shakar Khan have a First Trust Bank account no.03364-052:

A further First Trust Bank account no. 03190-044 is in the name of Shakar Khan:

On 4 April 2003 a Progressive Building Society account no. 01300009664 was opened in the name of Shakar Begum with a deposit of £17,970.83. Between August and October 2004 there were:

On 20 October 2004 Ulster Bank Limited account no. 30280038 was opened by Aurang Khan on behalf of his son, Bilal, with the sum of £1,440. A total of £7,738.23 was deposited into this account but on 31 October 2011 the balance was £70.55.

On 16 May 2006 Aurang Khan opened two Ulster Bank Limited ISA accounts:

On 8 May 2008 Ulster Bank Limited account no. 00714636 was opened in the name of Aurang Khan with a deposit of £4,889.94:

On 8 February 2005 Ulster Bank Limited account no. 35852203 was opened in the name of Aurang Khan with the funds transferred from Shakar Khan’s account no. 88300022. Payments made to and from this account include the following:

On 30 November 2009 an Ulster Bank Limited Bonus Save account was opened in the name of Aurang Khan, no.10322750, with the above transferred funds of £81,206.60. Further transactions included the following:

On 29 April 2010 Ulster Bank Limited bonus saver account no. 10415760 was opened by Aurang Khan with a deposit of £4,128.36. On 4 June 2010 the sum of £3,778.36 was transferred to the above account no.10322750.

On 21 September 2010 Halifax plc account no. 01029170 was opened in the name of Shakar Begum to service the mortgage in respect of Property 6, 263 Stoney Lane, Yardley, Birmingham. Cash deposits totalling £4,420 and other deposits (probably cash) of £3,400 have been made into the account. Aurang and Ameran Khan’s evidence is that these sums are cash rental payments made by unnamed “asylum seekers” living at the property.

The declared cumulative income of Aurang and Shakar Khan between 1998 and 2011 is £80,572.15. However, during that period sums totalling £371,212.39 have been paid into Aurang Khan’s personal bank accounts with Ulster Bank Limited and First Trust Bank and sums totalling £340,047.95 have been paid into Shakar Begum’s personal bank accounts with Bank of Ireland, First Trust Bank, Progresive Building Society, Halifax plc and Ulster Bank Limited.

The defendants have not challenged the accuracy of the NCA’s evidence as to the existence and ownership of the above accounts or the transactions identified, which are supported by bank statements, HMRC records and other documentary records. Aurang Khan has provided no credible explanation for the source of these funds. His evidence is that the Taj Tandoori was a successful business until 2008 but, even allowing for the under-declared income to HMRC, that does not explain the substantial sums in his personal accounts. His evidence was that he was drawing £500 per week from the business, which would produce an annual income of just over £25,000, not enough to explain the deposited funds (even without taking into account living expenses for himself and his family). He states that his business partner stole money from the business. That could explain the shortfall in declared income for the business, as funds received by the restaurant might not be recorded in the books. However, if funds were stolen from the business, that would not provide an explanation for the substantial deposits in his personal bank accounts. No evidence has been produced to establish any wider family wealth and, although references were made to land owned in Pakistan, no evidence has been produced to show that any specific land is owned by the Khan family or its value. Aurang Khan’s evidence is that funds were received through loans from family members and friends. However, no documentary evidence has been made available to support that claim, Aurang Khan was unable to identify the individuals who made the loans and none of the lenders was called to give evidence at trial. There is no credible, legitimate explanation for the number of accounts held or the movement of funds between accounts. Aurang Khan stated that he put funds into accounts in his wife’s name so that he would not have access to them to fund his drug habit but, in practice, he controlled the accounts and made a number of cash withdrawals from them, as well as maintaining his own accounts. In any event, that explanation would not justify the use of multiple accounts or the movement of funds from one account to another.

The accumulation and movement of substantial funds between numerous accounts without any credible explanation or identified declared income, against the background of Aurang Khan’s heroin addiction and his ongoing financial links to Alam Khan, lead to the irresistible inference that the funds are the product of drug dealing, money laundering and tax evasion. However, it is necessary for the court to consider the circumstances in which each property sought to be recovered was acquired and held in order to determine whether or not, on the balance of probabilities, it was obtained through unlawful conduct.

Jamila Shabnam is Alam Zeb Khan’s wife. She has no criminal record. She does not work. She does not speak or read English and relies on her husband to manage their financial affairs. She has no declared income for the period 2001 to 2008. HMRC records show declared income of £31,477.70 for the year 2008-2009 from Shop Direct Home Shopping Limited but her statement to the NCA was that she has never worked.

In May 1998 Aurang and Shakar Khan purchased 55 Manor Avenue, Bangor, Northern Ireland, for the sum of £57,000. In July 2001 the property was sold for £72,000. Proceeds of £21,571.46 were paid into Ulster Bank Limited account no. 88300022 in the name of Shakar Begum, from which:

In July 1998 Aurang and Shakar Khan purchased 221 Belfast Road, Bangor from Aurang’s sister, Nazrah Begum, for the sum of £27,500 (although his evidence was that he only paid £5,000). On 6 March 2002 it was sold for the sum of £97,000. There is no evidence before the court as to the destination of the proceeds of sale.

On 2 January 2001 Aurang and Shakar Khan purchased Property 1, 11 Marlo Heights for £99,250. It is their family residence. On 30 June 2011 it was transferred into the sole name of Shakar Khan.

On 9 April 2003 Property 4, 190 Cherrywood Road, Birmingham (purchased in 1987 by Saraj Khan and transferred in 1993 to Nazrah Begum), was re-registered in the names of Aurang Khan and Jamila Shabnam. The property is occupied by tenants. Aurang Khan initially stated that he did not receive the rental income, although he now concedes that he has done so. The income has not been declared to HMRC.

On 9 January 2006 Aurang Khan purchased Property 2, 30/30a Albert Street, Bangor, for the sum of £130,000. The property was converted into 2 apartments and let out as staff accommodation for workers at the Taj Tandoori.

On 21 September 2010 Shakar Khan (Begum) purchased Property 6, 263 Stoney Lane, Birmingham for the sum of £300,000. Extensive structural and refurbishment works have been carried out to form a 9-bedroom property.

11 Marlo Heights was purchased by Aurang and Shakar Khan on 2 January 2001 for the sum of £99,250. On 30 June 2011 it was transferred into the sole name of Shakar Khan.

The deposit paid was £64,180, £63,500 of which was transferred on 2 October 2000 from Aurang and Shakar Khan’s joint First Trust Bank account no. 03364-052. The source of those funds were:

Aurang Khan has offered a number of different explanations for the source of these funds:

In my judgment the absence of any credible explanation for the source of the deposit, against the background of the multiple bank accounts held by Aurang and Shakar Khan and numerous transactions to and from those accounts, leads to the conclusion that the deposit funds must be derived from drug dealing, money laundering or tax evasion. I take into account the fact that Aurang Khan’s faulty recollection of the events some 16 years ago could be due in part to his memory loss caused by long-term heroin abuse. However, it is implausible that he could manage the web of accounts and transactions evidenced by the documentary records yet be unable to give any particulars of the sources of those funds. Either he is lying or he has nominal control over the accounts for someone else. His changing explanations and the inconsistencies with known facts make his evidence unreliable

The balance of the purchase price for 11 Marlo Heights was funded by a buy-to-let mortgage of £29,706.25 with Southern Pacific Mortgages Limited. In the application for the mortgage, Aurang Khan stated that he had a basic salary of £28,000 from his occupation as head chef at the Taj Tandoori restaurant. He accepted that the statement was false but he denied that he supplied false details because the form was completed by a mortgage broker for him and he simply signed it on advice. I am not satisfied that Aurang Khan provided false information to his broker or that he appreciated that false representations were being made about his earnings. Although the broker’s false statement would be treated as Aurang Khan’s statement, and it is not necessary for the lender to give evidence as to the materiality of any false representations where an inference of materiality can be drawn, in this case, there is no obvious inference that the mortgage would not have been advanced without the declared earnings. Mr Ewart noted that he did not need the stated annual income in order to obtain that level of mortgage. The mortgage was a buy-to-let mortgage and Aurang Khan had other assets that could be used to repay the capital, including 55 Manor Avenue, which was subsequently sold. On this point, I am not satisfied on the balance of probabilities that the mortgage advance was obtained by fraud.

However, on 23 August 2004, the mortgage was redeemed by a payment in the sum of £30,403.21 from Shakar Begum’s Progressive Building Society account no. 01300009664. No credible explanation has been provided as to the source of the funds in that account, including substantial cash deposits. Aurang Khan’s evidence was that the proceeds from the sale of 55 Manor Avenue or 221 Belfast Road were used. However, as set out above, the proceeds of sale from 55 Manor Avenue were dissipated by August 2002 and so would not have been available in 2004. 221 Belfast Road was sold in March 2002 but there is no evidence that the proceeds of sale were paid into any of the Khan accounts or otherwise retained by Aurang Khan. Aurang Khan’s declared income at that time was £3,187 (for 2003-04) and £4,674 (for 2004-05). The declared net profit from the Taj Tandoori was £6,375 (for 2003-04) and £9,348 (2004-05). Therefore, he had no legitimate source of funds from which to make the payment. The irresistible inference is that the funds used to redeem the mortgage were derived from drug dealing, money laundering or tax evasion.

For the above reasons, I am satisfied on the balance of probabilities that 11 Marlo Heights is recoverable property for the purposes of POCA.

30/30a Albert Street was purchased by Aurang Khan on 9 January 2006 for the sum of £130,000.

The deposit paid was £20,885, which was transferred on 9 August 2005 from Aurang Khan’s Ulster Bank Limited account no. 35852203. Aurang Khan’s declared income for that tax year was £5,059 and the declared net income from the Taj Tandoori was £10,118. There has been no credible explanation for the substantial cash and cheque deposits into this account. Therefore, the irresistible inference is that the funds used for the deposit were derived from drug dealing, money laundering or tax evasion.

The balance of the purchase monies was from a mortgage of £110,415 advanced by Preferred Mortgages Limited on 11 August 2005. Aurang Khan falsely declared that his income was £50,000 per annum in the application and signed the form which clearly stated: “Please note: Falsifying income is considered to be mortgage fraud”. He admitted in cross-examination that this mortgage was obtained through fraud.

For the above reasons, I am satisfied on the balance of probabilities that 30/30a Albert Street is recoverable property for the purposes of POCA.

190 Cherrywood Road was acquired by Saraj Khan, Unjuman Khan’s husband, on 28 January 1987, without any mortgage.

On 16 July 1993 the property was transferred into the name of Nazrah Begum for no monetary value. Nazrah Begum could offer no explanation for her ownership. It is a rental property but Nazrah did not receive any of the rental income. She was a nominee owner only without any beneficial interest.

On 9 April 2003 the property was re-registered in the names of Aurang Khan and Jamila Shabnam. Aurang Khan produced an unsigned and undated witness statement in October 2012 in which he stated that he did not have any actual interest in 190 Cherrywood Road but during interview on 24 October 2012, he admitted that he receives the rental income from the property. His oral evidence was that he receives the rental payments and sends them to Jamila but there is no documentary evidence of this. Given that Jamila is in Birmingham as is the property, the rental payments are made in cash and Aurang is in Northern Ireland, this arrangement would not make sense.

Although she did not attend the hearing to give evidence, Jamila Shabnam’s explanation was that the property was transferred to her by Nazrah Begum in return for a plot of land in Peshawar, Pakistan. She was unable to provide any details about the land, she had no documentation in respect of the land and did not know its value. Her explanation was contradicted by Nazrah Begum, who stated that she did not own, and had never owned, land or other property in Pakistan and denied that the title to 190 Cherrywood Road was transferred to Jamila Shabnam and Aurang Khan in return for land in Peshawar. I reject as untrue Jamila Shabnam’s explanation. It is inconceivable that Nazrah Begum would have no knowledge of land that she had received. The suggestion that Nazrah Begum is lying about it as the result of a family argument is inconsistent with the fact that she provided evidence as to the ownership of other properties the subject of the NCA investigation, including 59 Cobham Road, Birmingham, which she stated she held in her name for the benefit of Ameran Khan.

Aurang Khan’s case is that 190 Cherrywood Road is a family asset that has been traded between family members for land in Pakistan and that the transfers in ownership reflect a cultural tradition of property being held communally by the family. I accept that there is a culture of family ownership within the Anglo-Pakistani community but I reject that as an answer to the NCA’s case that the movement of property in this case is evidence of acquisition by unlawful conduct. No justification has been provided for the transfer of the property into Nazrah Begum’s name in circumstances where she derived no financial or other benefit from the property. There is no plausible justification for the subsequent transfer of the property to Jamila Shabnam. The explanation provided for putting the property in joint names with Aurang Khan, namely, to prevent Jamila Shabnam taking the property from the family, doesn’t explain for what purpose the property was transferred into her name at all. In any event, at the time of transfer into Aurang Khan’s name, he was a drug addict. The only purpose served by putting the property into the names of Nazrah Begum and then Jamila Shabnam was to conceal the identity of the real beneficial owner.

I acknowledge that the court does not have evidence as to the source of the funds used to acquire the property in 1987. The NCA points to the possible link with Izzat Khan, father of Alam, Aurang, Nazrah, Ameran and Unjuman. Izzat Khan was convicted of a serious drug offence in West Germany in 1986, for which details are not available but for which he received a custodial sentence of 7 years. However, Mr Ewart accepted in cross-examination that this was not the strongest evidence in support of the case. In the absence of other evidence about the finances of the defendants and criminal activities of Alam Zeb Khan, the court would not be justified in making a property recovery order simply based on the transfer of property from one family member to another. However, in this case, there is strong evidence that Aurang Khan has been involved in money laundering by reference to the movement of funds into and between many bank accounts and properties for over 16 years. Saraj Khan has participated in the movement of funds. On 14 July 2005 Shakar Khan paid £2,000 into Saraj Khan’s account 171332 and on the same date she made a further payment of £2,000 into Saraj Khan’s account 171333. On 15 July 2005 Shakar Khan paid £2,000 into Saraj Khan’s account 171745 and on the same date a further payment of £2,000 into Saraj Khan’s account 171746. No explanation has been provided for the successive payments over two days to four separate accounts. Against that background, the history of successive nominee legal owners of the property, the patently false accounts of the land exchange, and the failure of Jamila Shabnam to attend court and give evidence, give rise to an irresistible inference that this property is the product of money laundering.

For the above reasons, I am satisfied on the balance of probabilities that 190 Cherrywood Road is recoverable property for the purposes of POCA.

263 Stoney Lane was purchased in the name of Shakar Begum on 21 September 2010 for the sum of £300,000. Substantial works were carried out on the property pursuant to planning permission obtained a few months after purchase. A two-storey rear extension was added to transform it from a 4-bedroom house to a 9-bedroom property. Ameran Khan’s evidence was that the works cost approximately £50,000. There is no documentary evidence to support that claim and it is improbable that such extensive works could be carried out for that limited cost. Aurang Khan’s evidence was that the property was purchased with a view to him moving from Northern Ireland to live in Birmingham with his family. However, he did not move to Birmingham and the alterations to the property indicate that it was intended to be let out to tenants, rather than a family home.

The deposit paid was £209,780.82 transferred from Aurang Khan’s Ulster Bank Limited account no. 10322750. The source of those funds was stated to be loans arranged by Ameran Khan from various third parties, made between 21 October 2009 and 4 June 2010 totalling £231,074, including the following:

Both Aurang Khan and Ameran Khan were very vague about the identities of the persons who lent the funds. None of the alleged loans has been repaid and no supporting documentation has been produced, confirming the loans. During his evidence, Ameran Khan suggested that there was a book containing details of the loans but it was not produced. None of the individuals who provided funds towards the purchase of the property was called to give evidence at the hearing. I do not accept the evidence of Aurang and Ameran Khan that the sources of the funds were legitimate loans. Most of the individuals who transferred the funds to Aurang Khan’s account did not have a legitimate source of income so as to enable them to lend such sums of money. The transfer of substantial sums into the accounts of those who purportedly provided the loans is strong evidence that this was a money laundering exercise. I find that the purchase monies for this property were derived from unlawful conduct, namely, drug dealing, money laundering or tax evasion.

The balance of the purchase monies was from a buy-to-let mortgage of £100,000 advanced by Halifax plc in the name of Shakar Begum. She falsely declared that her income was £25,500 per annum and that her occupation was working as a professional chef at the Tandoori. Aurang Khan’s evidence is that he submitted these details and arranged the mortgage in his wife’s name. In support of the application a “payslip” was produced, indicating that Shakar Begum received a monthly income of £1,626.39 after tax i.e. a gross annual income of £25,500. Shakar Begum is not a professional chef. The Taj Tandoori ceased trading in 2010. She declared no income for that year and the payslip is fraudulent. In interview, Shakar Begum accepted that the details in the application form were untrue. Therefore, this mortgage advance was procured by fraud.

The monies used to service the mortgage account are undeclared rental income from the property made through Shakar Begum’s Halifax account as referred to above.

For the above reasons, I am satisfied on the balance of probabilities that 263 Stoney Lane is recoverable property for the purposes of POCA.

Bank of Ireland account no. 90542080 was opened in the name of Shakar Begum on behalf of her son, Bilal Khan on 6 October 2011. The account was opened with a deposit of £3,000 and received further cumulative cash deposits of £1,484 between 8 November 2011 and 4 January 2012. As at 21 March 2012 the account had a balance of £4,488.53.

Shakar Begum’s explanation to the NCA is that the monies in the account were gifts from friends and family members on the birth of Bilal. I accept the defendants’ evidence that it is customary for gifts of money to be made on the birth of children by their friends and family. This could be a truthful explanation for the sums in the account. The transactions shown in the account statement are not suspicious. I do not find that the NCA has proved its case on the balance of probabilities in respect of this property.

Bank of Ireland account no. 39227413 was opened in the name of Shakar Begum on behalf of her daughter, Samara Khan on 29 October 2001. As at 13 December 2004 the account had a balance of £13,629.95. On 13 December 2004 a deposit of £1,000 was made. Three cash withdrawals were made in 2008: £10,000 on 16 September 2008, £4,000 on 27 October 2008 and £1,000 on 27 November 2008. Three cash deposits were made in 2009/10: £6,100 on 10 December 2009, £2,600 on 15 June 2010 and £3,900 on 1 July 2010. On 31 January 2012 the account had a balance of £12,716.

Shakar Begum’s explanation to the NCA is that the monies in the account were gifts from friends and family members on the birth of Samara. Although there could be legitimate gifts from friends and family members, as indicated above in respect of Bilal’s account, it is evident that any such funds were withdrawn during 2008. Thereafter, substantial deposits were made during a period when Aurang Khan and Shakar Begum had no legitimate source for the funds. Given the strong evidence of money laundering through the accounts of Aurang Khan and Shakar Begum, I find that the funds currently in the account are the proceeds of drug dealing, money laundering or tax evasion.

Therefore, I am satisfied on the balance of probabilities that Bank of Ireland account no. 39227413 is recoverable property for the purposes of POCA.

Properties 1 and 2 are located in Northern Ireland. Section 282A of POCA empowers this court to make a recovery order in respect of property outside England and Wales provided that there is or has been a connection between the case and this jurisdiction. Aurang Khan is a British citizen and therefore is a person linked to the relevant part of the United Kingdom for the purposes of Schedule 7A. Further, the other recoverable properties are in Birmingham and the unlawful conduct, namely, drug dealing, money laundering and tax evasion, occurred partly in England. Therefore, there is or has been a connection between the case and this jurisdiction for the purpose of section 282A of POCA.

Mr Spooner, on behalf of the defendants, submitted that the section 266 defence was engaged in respect of 11 Marlo Heights and/or the other properties because Aurang and/or Shakar Khan were not aware of any mortgage fraud and therefore acquired the properties in good faith. Having paid the mortgage on the properties, they would suffer detriment if they were to now be recovered and it would be unfair and inequitable so to do.

Despite the best efforts of Mr Spooner on this issue, I reject those arguments. Although I have found that Aurang Khan was not aware of the false mortgage statement in respect of 11 Marlo Heights, the deposit funds and the funds used to redeem the mortgage were tainted by unlawful conduct. There is strong evidence that the first and second defendants were aware of the money laundering through their network of bank accounts. Therefore, they did not acquire or subsequently deal with the property in good faith. In any event they have not suffered detriment so as to render any recovery of the property unfair or inequitable. As Mr Hall QC for the NCA submitted, they have had the benefit of living in the property for many years and any detriment suffered by the Khans is outweighed by the NCA’s interest in realising the proceeds of the recovered property.

The position in respect of 30/30a Albert Street is clear. Aurang Khan admitted mortgage fraud and I have found that the deposit funds were the product of unlawful conduct. Therefore, the property was not acquired in good faith.

Likewise, in respect of 263 Stoney Lane, I have found that the deposit funds were the product of unlawful conduct. Reliance is placed by Mr Spooner on the fact that the mortgage for this property was obtained through a broker but Aurang and Shakar Khan must have been aware of the false documentation and false statements of income used to procure the advance. Therefore, the property was not acquired or held in good faith.

In respect of 190 Cherrywood Road and the bank account in Shakar Begum’s name for Samara, I have found that these were the product of unlawful conduct. Aurang Khan must have been aware of the money laundering through his accounts and the property transfers. Shakar Begum failed to attend court and give evidence. In any event, the numerous transactions in respect of her bank accounts and property holdings are such that she must have been aware that they were the proceeds of unlawful conduct. Again, therefore, the properties were not acquired or held in good faith.

Mr Spooner raised at trial a potential human rights defence, namely, that recovery of 11 Marlo Heights, the family home of the first and second defendants, would be a breach of their rights to a family and private life under Article 8 and/or their right to peaceful enjoyment of property under the First Protocol to the Convention. These issues were considered by the Court of Appeal in National Crime Agency v Azam [2015] EWCA Civ 1234, to which Mr Hall QC helpfully drew my attention. Giving the judgment of the Court, Sir Terence Etherton stated at Para.50 that the starting point is that where assets are the proceeds of crime and are subject to confiscation, they should ordinarily, as a matter of justice and public policy, be recovered and realised by the receiver. Although that was subject to the Protocol rights, where properties have been acquired with the proceeds of crime, it is not disproportionate or unfair in principle for a recovery order to be made, even if it leaves third parties dependent on state benefits (Paras. 71 and 72).

The first and second defendants have not produced written statements or given oral evidence as to the impact of any recovery order on their family. There may be arguments that could be raised in the event that possession proceedings follow but there is no evidence before this court that would justify any departure from the recovery order that is otherwise mandated by section 266.

For the reasons set out above, there will be a recovery order in respect of the following properties: