Hidden Assets In Confiscation Proceedings

The topic of hidden assets is a major issue for many clients who first ask us for assistance at various stages of confiscation proceedings. Those proceedings might be in accordance with the Criminal Justice Act 1988 or the Proceeds of Crime Act 2002 but I am often approached by defendants when the prosecution believe (or the court has determined) that the defendant has hidden assets. The defendant will almost always say – I don't have hidden assets, no matter what the prosecution says and I can't afford to pay a confiscation order including hidden assets. Can you do something about it?

The answer to that depends on the stage reached in the confiscation proceedings and what has happened before the defendant asks for advice, but understanding the burden of proof is critical. The basic position in confiscation proceedings is this:

It is for the defendant to prove that he/she is worth less than the figure representing 'criminal benefit'. I do not comment in depth upon the meaning of 'criminal benefit' in this article but once the prosecution bring sufficient evidence of hidden assets, it is for the defendant to prove on the balance of probabilities that he/she does not have hidden assets. Defendants often complain that the prosecution sometimes make wild assertions about the existence of hidden assets in order to inflate the confiscation order and produce a second prison sentence by effectively obliging the defendant to serve the sentence set in default of payment. There have been many cases where hidden assets arguments have dissolved upon being properly challenged but the prosecution is in a comfortable position where a reasonable degree of evidence exists. If this is sufficient to shift the burden of proof onto the defendant, dealing with the issue needs careful consideration. There is no secret to dealing with a hidden assets argument. The need for clarity and good documentary evidence underpins all of the preparation.

1. Providing a statement of means

   At the start of the confiscation timetable, the court will usually direct the defendant to provide a statement of means, unless the assets are obvious to the prosecution or they already have a statement of means because of related restraint proceedings.

   The importance of the means statement is often underestimated. Defendants will sometimes try to hide the existence of a vehicle, bank account, property or other asset and sometimes they are successful. However, many defendants decide not to disclose because they are simply unaware of the powers available to the Crown to obtain that information. Investigating officers can often make financial enquiries without the defendant even knowing about it. The consequences of failing to disclose assets can amount to a contempt of court and it also invites a hidden assets argument. In short, it can damage or even destroy a defendant's credibility across a range of issues in the case.

   Solicitors should therefore obtain instructions using a comprehensive questionnaire which addresses each of the issues covered by S18 Proceeds of Crime Act 2002. This will include references to real property (in the UK and abroad), bank accounts, cash, vehicles, significant debts owed to the defendant and other financial issues. Providing good quality answers to those questions is the first step in avoiding a hidden assets argument.

   What if an asset is jointly owned? It still needs to be disclosed but the joint ownership should be highlighted because the prosecution need to be aware of just how easy or difficult it is going to be to realise that asset.This can affect the asset's value and many problems occur after a confiscation order has been made because a jointly owned asset has not been properly valued at the outset. The status of a co-owner in confiscation proceedings is a tricky issue and is beyond the scope of this article but suffice it to say that their role is more important at the enforcement stage.

2. Where has the asset gone?

   Once the investigating officer has considered the statement of means, the Crown will allege a certain level of criminal benefit and the proposed amount of realisable assets. The existence, ownership and value of some assets might be obvious, but a court will often decide that a defendant has hidden assets where an item clearly existed and has subsequently disappeared without a satisfactory explanation. A defendant will often say – e.g." I sold the car to...