Stephanie Hayward led by William Davis of 5 KBW secured 9 convictions and a total sentence of 15.5 years’ custody following a trial for redundancy payment fraud – the first fraud of its kind to be litigated in the U.K.
This multi-handed trial, (Operation Chum), which lasted 9 weeks and involved a 5-year conspiracy to cheat the public revenue, concerned the submission of hundreds of false claims to the Redundancy Payment Service (RPS). The RPS, which is overseen by the Department of Business, Energy and Industrial Strategy, issues payments to employees who are owed money as a result of a business failing and entering the insolvency process. The payments will often include notice pay as well as any outstanding holiday pay.
The Defendants, Lennox Mcleod, Francine Francis and Muhammad Nadeem were accountants who worked for various accountancy firms between 2010 – 2015. Mcleod was the Director or Principal Partner of three accountancy businesses from 2010 -2013 and Nadeem and Francis worked for him. When the accountancy businesses entered insolvency, they used this opportunity to submit fraudulent claims using their clients’ identities. Prosecution witnesses, who were tax clients of the Defendants, exposed the falsity of the claims by confirming that they had neither worked for Mcleod, nor signed forms claiming redundancy payments despite claims appearing in their name. The Defendants also manufactured identities, creating and operating bogus email addresses and doctoring bank statements to show wage payments.
Between 2013 – 2015, the Mcleod, Francis and Nadeem submitted further fraudulent claims across 8 third party businesses. They used their positions as accountants to the businesses which had entered the insolvency process to submit false claims. In furtherance of the fraud, and in order to “legitimate” the claims, the Defendants created false employment contracts and wage slips. These were found on computer equipment following a search of the accountancy premises in 2015.
As a result of the Defendants’ fraud, the Insolvency Service paid over £459,000 of Government money into bank accounts linked to the Defendants. The Defendants who were further convicted of converting criminal property, claimed a further £401,000 by way of Redundancy Payments but this was withheld by the RPS. The total fraud exceeded £860,000.
Zahid Chugtai, a fourth Defendant charged with cheating the public revenue with Mcleod by submitting a false RPS claim through one of the third-party businesses, pleaded guilty in April 2018. His wife will be tried separately next year.
In a linked case, (Operation Curate), for which Lennox Mcleod was to be tried for fraudulent evasion of tax claiming VAT repayments amounting to £111,000 Mcleod pleaded to the charges shortly before trial.
Confiscation proceedings will now be commenced against Mcleod, Francis and Nadeem.
Stephanie and William were instructed by Elizabeth Russell of the CPS Serious Fraud Division and supported by the HMRC Team in Southampton.