Criminal law update

The UK has long looked ?to its US counterparts when it comes to matters related to tackling serious ?fraud and white-collar crime. When the National Crime Agency was established in October, the Government announced that it would consider the merits of incentivising whistleblowing, by including the provision of financial incentives to support whistleblowing in cases of fraud, bribery and corruption.

This review will involve examining the efficacy of the ?US system, in which employees who blow the whistle on their employers stand to receive ?a share of the financial penalties levied against a company ?found guilty of fraud against ?the government.

Recently, the US Securities ?and Exchange Commission (SEC), awarded $14 million to an anonymous whistleblower. Under SEC rules, if the tip proves vital to a case, a whistleblower could receive anywhere from ?10 per cent to 30 per cent of the monetary sanctions collected if those financial sanctions exceed $1 million.

In 2012, a former UBS banker, Bradley Birkenfeld, who had previously received a thirty month prison sentence prison for tax fraud, was awarded $104 million by US Internal Revenue Service, for revealing how UBS had helped wealthy Americans evade tax. While these sums may appear extraordinary on this side of the Atlantic, the American regulators clearly view the practice as essential in significantly boosting their ability to attract high quality tips, which in turn, lead to the successful corporate prosecutions of financial wrong doings on a large scale.

Insider evidence

Proponents of this measure say that it is notoriously difficult to gather evidence against those at the centre of organised crime and serious fraud allegations. It is therefore necessary to recruit the evidence of an ‘insider’ to provide prosecutors with the information needed to put together a case. Critics say that disgruntled employees may manipulate this measure. If the whistle-blowing employee needs to demonstrate a reasonable belief in the truth of what they are saying, this is somewhat muddied by the employee’s significant financial interest in the outcome.

At present, David Green QC, director of the Serious Fraud Office, has yet to voice public support for the introduction of financial incentives, because ?of the potential for defence lawyers to attack the credibility of prosecution witnesses who are financially rewarded. Instead, Green was reported as saying that “far more attractive would be to change the culture, empowering individuals who blow the whistle.”

Hidden defendants

In September, judge Murphy, sitting at Blackfriars Crown Court, ruled that a woman facing trial for intimidating a witness should be allowed to stand trial wearing a full face veil, but must remove it while giving evidence. The woman wore a full face veil and said that for religious reasons, she refused to remove her niqab and reveal her face in front of men. In an attempt to respect the woman’s right to practice her religious beliefs, the judge ruled that he would offer ?a screen to shield the woman from public view while giving evidence, but that she had to ?be seen by him, the jury ?and lawyers.

Understanding that the case attracted considerable public interest, the judge added that he hoped “Parliament or a higher court will provide a definite answer to the issue soon”. As this case was decided on its individual facts, the judge also said, “If judges in different cases in different places took differing approaches [to the niqab] the result would be judicial anarchy.” In response, the Home Secretary, Theresa May, announced that it should be for judges to decide whether witnesses or defendants should be asked to remove their veil.

In response, the Bar Council polled 400 of its members on the issue. 34 per cent supported the ban only when the defendant gave evidence, while 57 per cent would go further than what judge Murphy had decided recently, saying that they would insist on the removal of the veil for the entire proceedings.

The former justice secretary, and indeed, former barrister, Kenneth Clarke, also weighed ?in on the debate, saying said ?that defendants should not be allowed to wear veils in court, ?as it undermined the administration of justice. ?Clarke said that “the judge and jury have got to see the face of the witness [to] judge their demeanour and decide for themselves whether they are going to rely on this evidence. It may be you have to make some special arrangements, it may be they’ll have to be some screening from the general public, but I actually think it undermines a trial.”

Clarke’s comments reflects the view of many practitioners who consider that the open court process require the judge and jury to be able to see the defendant’s full face, in order to assess their body language, facial expression, and to take this into account in assessing whether the defendant is telling the truth.

However, one should also consider how this may affect the quality of the defendant’s evidence, especially when thrust in the stressful environment of ?a courtroom. If a female defendant is unaccustomed ?to being seen in public without her veil, one wonders whether ?a jury might mistakenly perceive her anxiety or distress as negative behaviour, indicative ?of guilt, rather than recognising the discomfort she might feel ?in having to give evidence in circumstances that are deeply incompatible with her ?religious beliefs.

The public will now have an opportunity to express their views on this issue; the Lord Chief Justice has announced ?a public consultation on the matter, with the responses feeding into the development of much needed court guidelines.

Guilty plea credit

Credit for a late guilty plea in the case of R v Dallimore, Weeks and Miah [2013] EWCA Crim 1891 is a Court of Appeal decision, concerning credit given to three defendants pleading guilty, at various late stages, namely, the first day of the trial and at the closing of the prosecution case. The defendants faced a multi-count indictment of dishonesty offences including, conspiracy to commit fraud, as well companies and financial fraud offences, such as carrying on an unauthorised investment business, see section 23 of the Financial Services and Markets Act 2000.

The factual background showed that all three defendants were alleged to have been involved in several schemes to defraud members of the public of investment funds. The first scheme was a film-making project, called ‘A Town Called Arthur’. The second scheme alleged that the defendants had dishonestly sold investors’ shares in a pharmaceutical company called Daval International at an inflated price.

The case was listed on 16 April 2012 at Cardiff Crown Court. On the first day of the trial, Miah pleaded guilty to five counts on the indictment, and Weeks pleaded guilty to one. What followed was a trial of Weeks and Dallimore, which lasted until the prosecution closed its case.

Following submissions, Weeks and Dallimore pleaded guilty to a further count of carrying on an unauthorised investment business. For this offence, Weeks and Dallimore were sentenced to a prison term of 17 months and 15 months respectively.

Miah had, on the day of trial, pleaded guilty to activities concerning Weeks and Dallimore which were conspiracy to commit fraud and carrying on an unauthorised investment business. In addition, Miah had also committed other offences of fraud and forgery that were unrelated to those activities pertaining to his co-defendants. In total, he was sentenced to a total of four years and nine months in respect of these offences, and to shorter concurrent terms in respect of those offences committed with Week and Dallimore.

Defendants’ misconduct

In terms of the aggravating features of the defendants’ misconduct, the court took into account the manner in which the defendants had held themselves out as providing valuable investment advice, when in fact they deliberately set out to manipulate investors. The allegations also concerned connections the defendants had to cold-calling companies, and the use of high pressure sales tactics as well as making false promises of high returns.

It was through the setup of companies and the provision of advice to investors by Miah, Weeks and Dallimore, which led to the offence of carrying out an unauthorised investment business, (even though a conspiracy to defraud was not proceeded with.

In sentencing, the judge considered all three defendants as dishonest, having failed to provide full information to investors, and advising them to trade in high-risk investments. The outcome of these failed ventures led to many investors suffering significant financial loss. While Miah pleaded guilty on the first day of his trial, the judge considered that he deserved very little credit for his early guilty plea. It was on this point that Miah appealed against sentence. He submitted that he was given insufficient credit for his guilty plea, as a five per cent discount was given when he submitted that credit should have been given between 10 per cent and ?20 per cent.

The sentencing judge held that a great deal of expense could have been avoided had Miah entered his guilty plea earlier. However, counsel representing Miah argued that greater consideration ought to have been given to efforts to defence negotiations attempting to avoid trial. On 3 April 2012, the defence emailed the Crown indicating that it would be possible to resolve the trial and this led to further communications, following which, on 11 April 2012 negotiations were opened between the Crown and the defence to finalise the precise pleas on the indictment.

Pre-trial negotiation

Especially in cases that may be factually complex, it was submitted that this form of pre-trial negotiation saved significant court time and costs. The Court of Appeal held that, while it was not binding upon the court to give the defendant ?a 10 per cent discount when he pleaded guilty at the door of ?the court, in this case, and ?taking into account steps taken by the defence prior to the commencement of trial, it was held that there was no sufficiently good reason given by the sentencing judge to grant only 5 per cent credit.

For practitioners, this decision serves as a reminder that any meaningful steps taken to avoid a trial, and to negotiate pleas, must be carried out as early as possible, and that those steps should be properly recorded as this may be relied upon in establishing the amount of credit due to a defendant pleading guilty, albeit late. SJ