'Public Wi-Fi' gang fail in cunning plan to hide £10m cigarette tax fraud A gang of five men who met at roadside cafes and used free public Wi-Fi to try to hide their £10m cigarette smuggling ring, have been jailed for 16-and-a-half years. The men attempted to evade £10,199,650m in excise duty by smuggling large freight consignments of illegal cigarettes from Europe and China into the UK. The items …
One of the major rules of a successful gangster business is to have ways to launder the money into legitimate businesses and pay the proper taxes on those legitimate businesses. You need to have legitimate businesses that can support your lifestyle, otherwise forensic accounting alone is enough to nail you on tax evasion. Contrary to how its portrayed in the movies, forensic accounting is how Al Capone was nailed. He was never even indicated for any gangster stuff, which is why he was still wealthy when he was released from prison.
"Contrary to how its portrayed in the movies, forensic accounting is how Al Capone was nailed."
Contrary to every movie put out before 1960 maybe. I can't think there's a person on the planet who ever went looking for the Al Capone story who didn't know that he was nabbed over tax, and just about every movie since about 1980 which deals with organized crime mentions that "obscure" fact somewhere.
Is that it is hard to show a legitimate business that could make that much. Yeah, you can take the usual route and have a fancy restaurant or posh club, but it is pretty easy for the government to look up alcohol sales, check how busy it is on a Saturday night etc. and figure out it can't possibly make that much money. Anyway, if the whole point of your fraud is to avoid taxes, laundering your money through a legitimate business that pays taxes sort of defeats the whole purpose of the exercise!
What he needed to do is have a fictitious wealthy overseas uncle who supported him by buying him a house, car and paying off his credit card bills. If they were smuggling stuff into the UK, they could smuggle the cash out of the UK on the way back and deposit it at a bank in a country that doesn't ask too many questions. A few wire transfers through a network of other banks in various jurisdictions that don't cooperate with each other or SWIFT and it arrives in his "uncle's" bank which pays his bills.
It isn't and never will be illegal to be idle rich, and you don't have to pay taxes on something that family is buying for your use that isn't even in your name. Pretty sure the children of oil sheikhs or Russian oligarchs living in London aren't paying taxes on all the money getting sent to them, but the government is still happy to have them because property tax gets paid on those posh residences and VAT on all the stuff they buy on shopping sprees.
If the HMRC got suspicious about all his traveling around and using burner phones, they might assume his uncle is the real criminal, and they'll expend all their effort trying to catch this fictitious character!
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> hey must have had their suspicions on someone in this gang already?
Either a snitch, or some forensic accounting software magic that combs company accounts and company director self-assessment forms for irregularities.
I wonder if (and if so, how much) HMRC paid a bounty for this
Don't forget that HMRC (or at least the old Customs bit) have huge, almost unfettered, powers of investigation. They can demand warrant free access at any time. As far as HMRC are concerned there is no tree, let alone a poisoned one. Is there a read over into the world of electronic comms?
"....they must have had their suspicions on someone in this gang already?" The article mentions that HM tax boyos were made suspicious by his extravagant lifestyle without any declared means of income. The tax boys keep a very sharp eye out for large value cash purchases - houses, luxury cars, yatchs and the like - by people claiming they have little or no taxable income. It's usually a sure sign of illegal activities, often drug dealing. I'm told the other most common tipoff is nosy neighbours.
Profits up in smoke for the smugglers but not for the Government. The Government makes far more money from tobacco than the manufacturers.
Tobacco revenue is nicely growing, it increased from £6.8bn 1990-91 to £12.3bn in 2012-13
Source:
http://www.the-tma.org.uk/tma-publications-research/facts-figures/tax-revenue-from-tobacco/
For further reading some debate on the economic cost to the NHS vs tax take:
https://fullfact.org/economy/does-smoking-cost-much-it-makes-treasury/
It's it nice how the Government profits from your addiction as well as the tobacco companies.
150% isn't high enough,
We're talking about a product which _if used as directed_ will kill or seriously disable about half its users (it was previously believed to be about 1/3 but the numbers have been revised upwards after longer studies.)
On the bright side, the ones that die young won't be a tax burden in their old age. Perhaps we should be encouraging baby boomers to resume smoking like chimneys.
they can keep all their profits, but only in the form of burning tobacco, inhaled by the Executive Board in a sealed chamber (don't want to pollute the atmosphere after all). They can leave once the last flake burns out. The addition of Oxygen to the chamber is optional, their choice.
Taxing the profits at 90% seems a bit low to me. 150% sounds about right.
You're teetotal yourself, and perfect weight I take it?
I'm a lot older than our sadly bereaved commentard's bro, and I've known that fags are bad for me (along with drugs and booze) since I was about 11. So whilst I can offer my sympathies at his loss, I don't buy the argument that it is the fault of fag makers.
I don't smoke, I'm the right weight. On the other hand I drink more than the recommended limits, and if that produces a really bad outcome for me, I won't be blaming the drinks companies.
"Having to bury my brother aged 43 due to lung cancer.....Scum of the earth." I'm sorry for your loss, but unless he never smoked and was a victim of secondary tobacco smoke (which is hard to prove seeing as there are many other environmental and genetic causes of lung cancer), I'd have to point out that the negative health aspects of smoking have been widely publicised for a lot longer than when he was young. No-one forced him to smoke, he chose to. I too lost a family member to smoking-related illness, and he wasn't a heavy smoker by any definition. I tell the story of his slow, embarrassingly messy and very painful decline to youngsters who are starting smoking in the hope they'll quit. But I also admit my relative made the choice to smoke, no-one held a gun to his head, and he carried on long after the health implications were widely acknowledged. I don't consider cigarette companies any more scummy than the manufacturers of skis - use of both products lead to deaths every year - because it is the end user that makes the choice on how they use them.
"It hardly profits from it. The revenue barely covers the hospital and disability costs that result from smoking: lung cancer, emphysema, and many other disabilities" -- Richard Plinston
I am very far from being a supporter of smoking. But the direct cost to the NHS is somewhere between 25% and 50% of tobacco duty income (which is around 12B pa). The most significant spend on the NHS is the elderly, and smoking is quite an effective cure for that.
The Government spends all that nice cash (see my post above) it gets from tobacco tax on GCHQ eaves dropping to stop others muscling in on it's very lucrative tobacco racket. The free Wi-fi bit will be BS and they've been well tracked from the comfort of a Gloucestershire swivel chair for some time.
That's the way it works in the US - all communications are tracked, even if you can't read the message then VPN traffic analysis can reveal people worth studying. When you find a candidate, you start tracking their cell phone and then stop them on the interstate for changing lanes without signalling. And just by coincidence you'll have a dog in the car with you that indicates the presence of drugs (any old mutt will do because you already know they are dirty) so you can do a search.
Busted and sources protected.
The other proof that you need is that they now get to spend several years earning nothing at all. This is significant in terms of the lifetime earnings of criminals. The last conference that I attended had a nice talk about the rewards of criminality taking into account the rate that they can spend at, the years of not earning either because they can't find another crime to commit or because they are helping big Dave in 'B' Wing to explore the other side of his sexuality. It worked out that average criminal earnings run at about £25k pa or less than the national average.
I've done some cold calculations of how much money I would need to steal in order to make it worthwhile stealing something, bearing in mind that after the theft one would need to relocate to a friendly jurisdiction, employ good security etc. It came to a huge amount of money. Way more than a mere £10million. Even ten times that isn't enough.
"...they now get to spend several years earning nothing at all"
Also spending nothing.
You have calculated your dirty dealings wrongly.
1. Nick large sum. Expect to get caught.
2. Hide/invest sum secretly in high interest account.
3. Get caught- do time.
4 Get released.
5. Receive bacon.
A couple of mill would do fine.
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The other proof that you need is that they now get to spend several years earning nothing at all. This is significant in terms of the lifetime earnings of criminals
It really isn't.
This is a £10m fraud. Now they won't have pocketed all of that - people only buy hooky fags when they're cheap. So let's imagine they made half of that as profit - £5m. That's £1m each.
They got a total of 16.5 years - that's a little over 3 years each.
I don't know how long they've been running this racket, but a million squids for that-time-plus-three-years is likely to be quite a decent rate of earning - particularly if they are as intellectually ungifted as many would have us believe.
Vic.
Proof (if it were needed) that crims really aren't the brightest bunnies.
These ones. Proper organised crime rarely sees the top dogs get their collars felt. The other day I got a 2005 pound coin in my change. Nice and shiney it was, very good condition, which seems a bit strange for a twelve year old coin. Maybe it was one that had been in a sealed tube or coin collectors case for over a decade and then tumbled into circulation, but I don't think so, I've seen a few of these. You occasionally see the bumblers done for poor quality forgeries, but I'd suggest that the people doing a high quality copy, and keeping their "business" clear of electronic communications get away with it.
For the druggies, thugs and twats, crime probably doesn't pay. Further up the tree I think it does pay and pay very well (sadly). Meanwhile Plod are busy investigating people for sending nasty tweets, using naughty words, or covering up their own misdemeanours.
Another example of tabloid newspaper levels of accuracy in El Reg headlines:
"Smuggling gang learns that free Wi-Fi doesn't hide £10m cigarette tax fraud"
Then the story goes on to imply that free wifi probably did a perfectly decent job of hiding it, and they were caught because of the occasions they accessed the accounts not using the free wifi.
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