Fraud and Financial Crime

Claim by Company Against Director for Misappropriated Turnover

Rakesh Kapila was instructed by solicitors representing a profitable supplier of marble in a claim against a former director who had misappropriated a part of the company’s turnover over a two-year period. A report prepared by Rakesh based on a critical appraisal of the company’s financial statements and the working papers of the external accountants concluded that approximately £0.5 million had been misappropriated. A joint report prepared with the defendant’s accounting expert noted the latter’s contention that the misappropriation amounted to under £0.2 million.  Negotiations immediately before trial resulted in the defendant accepting that the misappropriated amount was much closer to that in Rakesh’s report.

Fraudulent Trading Defence Case

The directors of an engineering company were charged with fraudulent trading in connection with the taking on of “extra” credit so as to reduce bank borrowings, against which personal guarantees had been provided by one of the directors. Work undertaken by Rakesh Kapila on behalf of solicitors acting for the defendants showed that the total value of trade credit taken on by the company had decreased during the period under consideration. The expert report and Rakesh’s continuous attendance at court to assist Counsel in the cross-examination of witnesses resulted in a dismissal of the case on the basis of insufficient evidence.

VAT Fraud Defence Case

Sim Kapila were instructed by solicitors acting for a former company director who was accused of the fraudulent evasion of VAT. We prepared a report which showed that the defendant’s role in the company was extremely limited and that its affairs were controlled by a shadow director.  This, together with a further report showing that the director did not derive any significant benefit from the company, was instrumental in assisting Counsel in identifying and developing key areas of the defence and resulted in the director’s acquittal.

Investigation of Grants Provided by Quasi-Governmental Body

Sim Kapila were instructed to undertake an investigation into the provision of rental and equipment grants by a quasi-governmental body to a number of connected businesses. Our report into the representations made by the businesses when seeking the grants and the use made of the grants resulted in the grant provider initiating legal action against the businesses.

Asset Freezing and Repatriation

Sim Kapila have been involved in work connected with the freezing and transfer of funds for KapilaMukamal, our associated firm in Florida, as instructed by receivers appointed by the Securities and Exchange Commission.

Money Laundering Defence Case

Sim Kapila were instructed on behalf of a defendant who had established a foreign currency dealing business offering handsome returns to investors. The business was de facto a Ponzi scheme and investors were provided with fictional statements illustrating favourable returns.  After the defendant was charged, we assisted with the representations made in court in relation to his prospective sentence.  On this basis, we considered the proportion of invested funds lost in trading relative to the amounts misappropriated from the business. A careful analysis of the trading undertaken by the business in relation to a sample of selected investors enabled us to identify that over 50% of the invested funds had been lost in trading activities.

Confiscation Proceedings: Supply of Drugs

Sim Kapila were instructed on behalf of a defendant who was convicted of conspiracy to supply Class A drugs. We examined the prosecution’s allegation in the confiscation proceedings that the defendant had hidden assets abroad. There was no documentation, for example, relating to bank accounts in tax havens and no references to trusts or insurance policies. Moreover, the prosecution’s contention that there was a shortfall between the defendant’s known assets and the profit he was assumed to have made from his criminal activities was not supported by any calculations.

Confiscation Proceedings: Tax Fraud

In a case involving tax fraud in which Sim Kapila were involved, we examined transactions between the defendant and the company he controlled and found that some significant sums included by the prosecution in the calculation of his benefit had in fact been paid out for business purposes, thus reducing the amount of the computed benefit.