The mastermind of a fake designer clothing empire has been convicted of one of the UK's largest ever carousel tax frauds.
Arif Patel's illicit business was brought to an end when Scottish police officers stopped his criminal gang on the A74 near Ecclefachan in Dumfries and Galloway in August 2020. The 55-year-old, of Preston, tried to steal £97 million through VAT repayment claims on false exports of textiles and mobile phones.
His crew also imported solid gold counterfeit clothes that would have been worth at least £50 million, had they been genuine. The proceeds were used to buy property across Preston and London through offshore bank accounts.
Following a joint investigation between HM Revenue and Customs (HMRC) and Lancashire Police, Patel was yesterday found guilty of false accounting, conspiracy to cheat the public revenue, the onward sale of counterfeit clothing and money laundering.
Co-accused Mohamed Jaffar Ali, 58, of Dubai, was also found guilty of conspiracy to cheat the Revenue and money laundering yesterday. The convictions follow a 14-week trial at Chester Crown Court.
The 24 members of the criminal empire were convicted in five trials between 2011 and 2014 and jailed for a total of more than 116 years HMRC has also restrained more than £78 million of the gang’s UK assets and proceedings are now underway to recover these funds for the public purse.
Richard Las, HMRC fraud investigation service director, said: “These guilty verdicts close a significant chapter in one of the biggest tax fraud cases ever investigated by HMRC. For more than a decade HMRC and our partners have worked tirelessly and together to bring this gang to justice.
“Arif Patel lived a lavish lifestyle at the expense of the law-abiding majority. Tax crime is not victimless and fraudsters like this pair steal the money that funds the NHS and other vital public services we all rely on. Our work doesn’t stop here. We have more than £78 million of the gang’s UK assets restrained and have begun the process to recover all those proceeds of crime.”
Patel's Preston-based illicit trading was exposed when a container of fake goods were delivered to Glasgow - a wholesaler was intercepted by police, who revealed the items were designer rip-offs.
He also used the business, from 2004, to make fraudulent VAT repayment claims on supposed high-value goods and yarns. In total, the gang fraudulently claimed £97 million on false exports of textiles and mobile phones, but HMRC stopped £64 million of the claims.
Sam Mackenzie, Assistant Chief Constable, Lancashire Constabulary, said: “While presenting himself as a genuine and reputable businessman Arif Patel in fact used stolen taxpayers’ cash to line his own pockets and fund a lavish lifestyle. This is money that should have been used to fund the vital public services which we all rely on and to which most of us contribute our fair share by working hard and paying tax.
"I welcome these guilty verdicts which are the culmination of a lengthy and complex investigation which has involved many years of hard work and dedication by police officers and staff and partners from HMRC who have worked together in a truly joint operation.”
Andrew Fox, Senior Prosecutor, Crown Prosecution Service, said: “The convictions of Arif Patel and Mohamed Jaffar Ali successfully conclude this part of an immense investigative and prosecution case against an organised criminal group, involved in counterfeit clothing, fraudulent VAT claims and money-laundering.
“The cost to the public purse was tens of millions, money that could have been used for essential public services in the NHS, social care and education. Patel was convicted in his absence, having remained in Dubai throughout the trial.
“The CPS will now pursue confiscation proceedings against the defendants, to prevent them enjoying the benefits of their criminal enterprise.”
The scam is known as a carousel fraud, where goods are purportedly sold to genuine buyers, but in fact the whole process is controlled by the criminal, who instigates a paper trail of alleged sales and exports in order to reclaim VAT.
Patel frequently travelled to Dubai to meet Ali and also made trips to China and Turkey to set up deals with manufacturers of counterfeit clothing. The profits were laundered by Ali through freezone companies and bank accounts held in the UAE.
Money was sent to British Virgin Island-registered companies, which Patel then used to buy property in his hometown of Preston, including commercial properties on Fishergate, the Lancashire city’s main shopping street.
Patel’s criminal enterprise relied on dozens of lieutenants around the UK, including professional enablers. This involved two chartered accountants from a Preston-based practice: Anil Hindocha, 69, from Preston, and Yogesh Patel, 66, from Aylesbury.
Anil Hindocha was jailed for 12 years and 10 months in 2014 after being found guilty of false accounting, conspiracy to cheat the public Revenue and money laundering.
Yogesh Patel was jailed for five years and seven months after being found guilty of conspiracy to cheat the public Revenue and money laundering.
Arif Patel travelled to Dubai in July 2011 and failed to return. He was tried in his absence at Chester Crown Court where he was found guilty of all charges yesterday. He will be sentenced next month.
Ali was found guilty of conspiracy to cheat the public revenue and money laundering. After attending the majority of the trial, he failed to attend court on March 27 and a warrant was issued for his arrest. He will also be sentenced next month.
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