“nothing can be traced”
Rule number one of fight club: Never talk about fight club.
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!
> 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
For further reading some debate on the economic cost to the NHS vs tax take:
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.
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.
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.
To be an IT Security consultant to criminals, advice on things like tor, encrypted phones etc.. ways of not having the inconvenience of not being able to use modern technology to save time and effort without having your collar felt (then, presumably many other areas you'd prefer weren't felt, thoroughly inspected or becoming intimately familiar with other inmates..)
I wonder how dicey that would be, if you claim you're just offering advice on secure communication channels for business clients, what they've used them for is unknown to you and the burden is for the court to prove you were willing and compliant in crimes then committed.
In the US at least this would be foolhardy (in my opinion). Your legal defense, obviously, would be that you just provided a service and had no idea what the clients were doing with it.
The prosecution would argue that a generally intelligent average person would have had cause to be somewhat suspicious based on certain activities/requests on the part of the client, that the client was involved in criminal acts that you were aiding. Then they would argue that you, as an expert and specialist consultant in the field possessing knowledge beyond that average person, could not possibly have avoided realizing that the client was doing criminal acts with your assistance.
"I wonder how dicey that would be" --- sampler
Your risk assessment seems to be missing something. When helping criminals, you possibly have to be worried about being the target of some other criminals. It may be less likely than being targeted by law enforcement but the consequences could be somewhat worse ...
Even if your business is completely legal, there would be a trail of money going from the bad guys' accounts to your company account. So when they arrest one of your customers (which is inevitable), the police will batter down your door demanding the names of all your other customers. Suddenly you have an angry Mob on your hands.
There are several lessons to be learned here:
1. If you wanna live a high lifestyle, you need to at least have a job or a company that files tax - the company must be real and be profitable, in the tax payers eyes. Whatever other criminal activity you are in to will not be as easily detected.
2. Free wifi is nice, provided YOU DO NOT USE THE SAME DEVICE elsewhere, such as at home.
3. You use an OS that makes extensive use of a RAM drive, is loaded from a read-only filesystem ... such as ... a CD-R, USB thumbdrive that you exclusively use that boot said device, you remove it once the device has booted.
4. You can use Tor over free wifi, this deters the smaller copper units, somewhat.
5. If GCHQ is after you all of the above is futile, so try to keep a low profile ...
6. It is MUCH easier to live an honest life ;-)
"Five blokes cop 16 years' jail time from HMRC"
Interesting subhead - thankfully HMRC don't (yet) have the power to send people to jail just on their say-so. They can fine people unreasonably, but time in chokey still requires them to convince a judge (and possibly a jury) - although only an enemy of the people would refuse to take the word of HMRC as gospel.
Please don't give T May ideas.
have we forgotten that recent Reg story that the snoopers charter also allows TPTB to lie in order to protect their dirty little secrets ????
Let's put it another way ... when I read stories of wannabe Jihadists whose car was stopped "by a regular police check" (maybe for being uninsured) and a boot full of AK-47s is found, my first thought is "golly, that was a bit of luck".
There is a whole section deep in MI5 towers devoted to cooking up alternative narratives for public (and court) consumption to disguise how they *really* do things. Remember - no "fruit of the poison tree" doctrine in UK law. In fact, there is the opposite "well even if it was illegal, we caught you up to no good" doctrine.
They're just importing cigarettes without paying duty on them. Tobacco duty is about £5/pack of 20, so a £10m fraud means 200,000 airport-size cartons of 200. A luton van can carry maybe 18,000 cartons, so you're talking about a dozen round trips to some country where tobacco is cheap (Bulgaria is popular). Not exactly major-league crime.
"Just".... A Luton packed with fags does get questioned... That is entirely the detail, maybe it is a back and forth in various cars, but the costs would be very high with that. Detail...
Your "not exactly major league" is netting 10.2 million, I know some on here are public sector, but the rest of us haven't cleared that in the last couple of decades or so.
Re-reading the article, it actually says "large freight consignments". They weren't even using vans, just shipping containers. Only about one in twenty containers is inspected, and if they see a bunch of mattresses (containing hidden tobacco) matching the manifest, they might not bother to investigate any further.
The crims didn't net £10.2m: that's the amount of duty they didn't pay. If you import a pack of fags for £2 and resell it for £4, you've made a profit of just £2 but evaded duty of £5. You can't just sell each pack at RRP (unless you operate a vast network of newsagents). You need to re-sell all the fags outside of the normal distribution networks, i.e. to black-market dealers, each of whom takes a significant cut.
Don't get me wrong, making a profit of £4m or so would still be nice - but these are just imagined numbers, I have no idea what the actual costs and profits are.
"Your "not exactly major league" is netting 10.2 million,"
No, that's how much duty would have been paid in legit retail sales. They had to buy that baccy first, ship it, sell it (at less than retail) I'd be surprised if their profit was half the "lost" duty.
Remember, the press (including El Reg) and the "authorities" always like to big up the numbers to make the bust look bigger than it really is. Sometime just by playing with units. Is 1000mm bigger than 1m? 'Course not, but it makes a better headline.
I refer you to my previous observation that criminals are rarely the brightest tools in the box. They really are thick as pigshit, and the only saving grace is that the police tasked to catch them - generally - are only marginally less thick.
I did hear of a junior barrister who made the mistake of challenging a detective when his clients intelligence was questioned, demanding to know how the policeman was qualified to judge his clients intelligence ...
"Well, your honour; " replied the detective. "The accused did steal a Purdey shotgun, and saw the barrels off to rob a bank of a few thousand pounds".
(This was in the 80s, and I often wondered if it was this story which sparked "Lock, Stock ...")
"Well, your honour; " replied the detective. "The accused did steal a Purdey shotgun, and saw the barrels off to rob a bank of a few thousand pounds".
The cost of a classic Purdey side-by-side now begins at £57,340. A sidelock over-under based on an improved Woodward design costs £67,562.
The Sporter will cost in the region of £20,000 to £25,000 including VAT, a price made possible by the style of gun and its innovative method of manufacture.
None of the bank executives who did that in the US have done a day of time.
The banks and investment houses (the ones that didn't go under, at least) were "too big to fail", and paid token multi-million dollar fines. When's a multi-hundred million dollar fine "token"? When your profits are billions every quarter, that's when.
A) learn how TCP/IP works over the air and wires
B) learn how to fake your Ethernet MAC address
3) never use your work, home, public, or friend's WiFi for your good works
D) learn those things above, and how to pop WiFi routers with common tools like https://en.wikipedia.org/wiki/AirSnort and their ilk
E) pop routers ONLY from clustered installations, like your supermarket parking lot where there is a host of apartments (flats) nearby. DOZENS of WiFi networks stay up 24/7 with very little security on them, if at all, and loads of power for the enterprising young hacker that can harness the bandwidth available
F) if you want to be "social" do this thru Tor. See http://distrowatch.com/table.php?distribution=tails
G) don't tie anything back to any of your real accounts ANYWHERE
H) Script up the WiFi cracking tools to pop multiple networks per session and Have fun!
"......like your supermarket parking lot....." Only hearsay, but I was told one of the first thing the coppers do in London when looking for paedo activity in an area is check the traffic cams for the registration plates of cars going into wifi-supplying supermarket car parks at night. You need to bear in mind the coppers are not thick, they have years of experience of catching crims that thought they were too technically-savvy to get porridge.
It's not tax they got done for, it's excise duty. That doesn't come from profit. Even if you tried to sell tabs as loss-leader at below cost, you'd still have to pay the full duty rate to HMRC. (I don't think it's legal to do "special offers" on tobacco products)
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