Four people were on Friday sentenced to a total of 22 years in prison following their involvement in a “carousel” VAT fraud that is estimated to have cost HM Revenue & Customs (HMRC) over £40 million.
Record producer Stephen Pigott, whose credits include Celine Dion, Rod Stewart and The Pet Shop Boys, will spend nine years in prison, while former New York environmental judge, Stacy Haber-Hofberg, was sentenced to six years. Joanna Harris and Theresa Igbanugo, both from London, were each sentenced to three and a half years in prison.
All four were charged with money laundering and cheating the public revenue with intent to defraud for their participation in a type of fraud known as missing trader fraud.
Missing trader fraud occurs where fraudsters obtain VAT registration to acquire goods VAT-free from other Member States. They then sell on the goods at VAT inclusive prices and disappear without paying over the VAT paid by their customers to the tax authorities.
The most abusive form of the fraud is "carousel" fraud, where the same consignment of goods is sold through a series of contrived transactions back and forth between Member States in order to steal the sums charged as VAT every time the goods go around the circle.
On this occasion the fraud involved buying mobile phones from three fictitious companies and using false receipts to charge VAT on the transactions. The proceeds from this crime were then sent to the Hong Kong bank accounts of a number of companies created to perpetrate the fraud.
These companies were in fact clones of existing British-registered companies dealing mostly in mobile phones. The four accused issued fraudulent invoices in the names of the existing British companies, and VAT was charged on those invoices under their true VAT registration numbers.
The invoices were manufactured to resemble those used by the real companies, often by means of downloading logos and other details from the internet. Buyers were instructed to make payment to the Hong Kong accounts. The funds could then be electronically dispersed.
"It was an audacious and outrageous fraud, said Her Honour Judge Williams, passing sentence at Canterbury Crown Court on Friday. “All defendants showed a shameless dishonesty," she added.
Assistant Chief Investigation Officer Deborah Hayman warned that the HMRC would vigorously pursue those involved in similar frauds.
"Tackling Missing Trader Intra-Community fraud is HMRC's top VAT priority. It is a deliberate attack on the VAT system, perpetrated by organised criminals operating across and beyond the EU. The sentences imposed today clearly illustrate that the courts agree that this attack on our Revenue systems is serious crime,” she said.
