IF THE DIRECTORS OF A COMPANY DEFRAUD ITS CUSTOMERS, THE PROCEEDS CAN STILL GO TO THE COMPANY

An article from Carey Olsen on 16 November concerned a case in England which involved a Jersey-registered company.  The Supreme Court decided a case against the CPS and involving a fraudulent scheme perpetrated by 2 directors of the company.  The scheme was a fraud on the customers and on the company, as instead of turning over around £4.55 million in proceeds from the scheme to the company, the directors kept these funds for themselves.  The scheme was uncovered and the directors were convicted of tax fraud, the CPS sought to confiscate the proceeds of the crime, and HMRC was pursuing the company’s customers to make good on tax credits fraudulently obtained under the scheme.  The Court has now ruled that the proceeds belong to the company (or the liquidators or anyone left to pick up the pieces where directors have breached their duties to a company).  It confirms the situation that (even in cases of criminal fraud by directors), the proceeds of that fraud can remain available to compensate the victims – in this case, the company defrauded and those doing business with it – rather than being confiscated by prosecutors as the proceeds of crime.

https://www.careyolsen.com/briefings/winner-takes-it-all-priorities-between-directors-companies-and-third-parties-when

https://www.mondaq.com/uk/directors-and-officers/1132054/a-heavy-blow-uk-supreme-court-decision-in-crown-prosecution-service-v-aquila-advisory-ltd

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Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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