In the Media

Criminal mastermind gets record sentence for ?54m fraud

PUBLISHED January 9, 2007

A criminal mastermind was given a record prison sentence after defrauding British taxpayers of ?54 million in one of the most elaborate and intricate tax-evasion cases in history, it can be revealed today for the first time. 

Emmanuel Hening, 33, a businessman with both Belgian and French nationalities, was described as "the guiding hand" behind the huge VAT fraud and sentenced to 15 years in prison.

Hening's intricate scheme involved a total of eight fraudsters trading in mobile phones with each other all over the European Union (EU) under the names of registered companies, evading VAT tax at every transaction.

After the sales were completed each of the trading companies then suddenly 'disappeared' in a bid to prevent detection by Her Majesty's Revenue and Customs (HMRC).

Reporting restrictions on the case, which took place in December, were lifted after the judge said he was satisfied that no inter-linked fraud investigations could be prejudiced.

The fraud, known as a 'Carousel' fraud, is one of the most complex forms of so-called 'Missing Trader' fraud, which always takes many years to investigate because of the massive paper-trail it causes.

Investigators from HMRC started investigating Hening's company, known as Handycom SA, in 2000.

The investigation led the authorities to businesses located all over Luxembourg and France with the offending firms eventually found to have their headquarters the West Midlands, Lancashire and the Isle of Man.

Hening was extradited from France in December 2005 to be placed on trial.

He and his British gang were given combined sentences of 38 years after they were all found guilty on three counts of 'Missing Trader' fraud.

Chris Harrison, the deputy director of investigation for HMRC, said the sentencing sent out a clear message.

"This was not some kind of victimless crime, but organised fraud on a massive scale perpetrated by criminals all bent on making fast and easy profits at the expense of the British taxpayer," he said.

"This was theft of revenue needed to fund our country's public services. Missing trader fraud is not merely a paper fraud but often features links to other forms of criminal activity.

"This case is a further example of our determination and success in bringing to justice the criminals behind this type of fraud. The sentence should send out a clear message to others who may contemplate such criminal activity.''

Judge McCreath said: "This case involves fraud against the revenue on a massive scale amounting in total to a revenue loss in excess of ?50m, described accurately as an orchestrated attack on the United Kingdom VAT system.''

In sentencing Hening, Judge Alistair McCreath said: "You are responsible, in my judgment, for the genesis of the fraud, through your control over the foreign importers and your control over the UK missing traders, and because of the reality that the evaded VAT was paid to you, into your bank accounts.''

In the case of all these prosecutions, HMRC has announced that confiscation proceedings are being pursued in order to strip the guilty of their assets and return them to the Treasury.

Of carousel fraud, a spokeswoman for the HMRC said: "It?s the costliest form of VAT fraud facing the UK with the most recent of the potential impact on VAT receipts for 2005/06 broadly between ?2bn and ?3bn."