The mastermind of an international fake designer clothing scam has been convicted of one of the UK’s largest ever carousel tax frauds.
Arif Patel tried to steal millions of pounds through false VAT repayment claims and imported false clothes from China and Turkey. Had the clothing been real, it would have had a value of at least £50 million.
The 55-year-old, of Preston, and his gang used shipping containers shipped to Liverpool, Southampton and Felixstowe filled with counterfeit Calvin Klein, Walt Disney, Nike, Prada, Emporio Armani, Lacoste and Levi Strauss. The proceeds from the clothing scam were used to buy property across Preston and London through offshore bank accounts.
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An investigation found that Patel's company, Faisaltex Ltd, was the heart of his criminal empire which also tried to steal £97 million through VAT repayment claims on false exports of textiles and mobile phones. Patel fled to Dubai in 2011 but was convicted in his absence while his two brothers are still wanted.
Co-accused Mohamed Jaffar Ali, 58, of Dubai, also laundered the proceeds through bank accounts he set up there and offshore. Ali attended the trial at Chester Crown Court but fled before it concluded and was convicted in his absence.
Patel and the Faisaltex group of companies had turned to bulk imports of counterfeit clothing in 2004. Dozens of containers with fake designer clothing inside were stopped at ports across including Liverpool.
On Tuesday, April 11, Patel was found guilty of false accounting, conspiracy to cheat the public revenue, the onward sale of counterfeit clothing and money laundering. Co-accused Ali was also found guilty of conspiracy to cheat the revenue and money laundering in his absence, and both will be sentenced next month.
Some 24 members of the criminal empire were convicted in five trials between 2011 and 2014 and jailed for more than 116 years.
HMRC has restrained more than £78 million of the gang’s UK assets and proceedings are now underway to recover the cash. In total, the gang fraudulently claimed £97 million on false exports of textiles and mobile phones, but HMRC stopped £64 million of the claims.
The scam is known as a carousel fraud, where goods are purportedly sold to genuine buyers - but the 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 the main shopping street. Patel’s enterprise relied on contacts 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, Bucks. 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’s brothers Munaf Umarji Patel and Faisal Patel are on Lancashire Police’s wanted list.
Richard Las, director, fraud investigation service at HMRC, 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."
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