The mastermind of a fake designer clothing scam has been convicted of one of the UK’s largest ever carousel tax frauds.
Sock manufacturer Arif Patel, 55, from Preston and his criminal gang tried to steal £97 million through VAT repayment claims on false exports of textiles and mobile phones.
They also imported and sold counterfeit clothes that would have been worth at least £50 million, if they were genuine.
The proceeds were used to buy property across Preston and London through offshore bank accounts.
What is carousel fraud?
Carousel fraud is the evasion of VAT by organised crime groups.
Goods are purportedly sold to genuine buyers, but in fact the whole process is controlled by the criminal, who creates a paper trail of alleged sales and exports in order to reclaim VAT.
Patel’s Preston-based company, Faisaltex Ltd, was the heart of his criminal empire where he ran the counterfeit clothing import operation and false export business.
As well as being a major player in the overall criminal conspiracy, Mohamed Jaffar Ali also laundered the proceeds through bank accounts he set up in Dubai and offshore.
Patel and the Faisaltex group of companies had turned to bulk imports of counterfeit clothing in 2004.
During the next three years dozens of containers with fake designer clothing inside were stopped at ports across the UK, including Liverpool, Southampton and Felixstowe.
Patel was found guilty of false accounting, conspiracy to cheat the public revenue, the onward sale of counterfeit clothing and money laundering.
His co-accused Jaffar Ali, 58, from Dubai, was also found guilty of conspiracy to cheat the Revenue and money laundering.
The convictions follow a 14-week trial at Chester Crown Court.
Now reporting restrictions have now been lifted and it can be revealed for the first time that 24 members of the criminal empire were convicted in five trials between 2011 and 2014. They were 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, Director, Fraud Investigation Service, HMRC, said: “These guilty verdicts close a significant chapter in one of the biggest tax fraud cases ever investigated by HMRC.
“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.”
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."
In total, the gang fraudulently claimed £97 million on false exports of textiles and mobile phones, but HMRC stopped £64 million of the claims.
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, 11 April 2023. He will be sentenced next month.
Mohamed Jaffar Ali attended the majority of the trial but he failed to attend court on 27 March 2023 and a warrant was issued for his arrest.
He will also be sentenced next month.
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