A mortgage fraudster has paid £265,000 to the Crown Prosecution Service, more than a decade after buying a flat with a mortgage obtained using fake payslips, and after already paying a confiscation order in full.
What did the CPS recover?
The CPS said on 28 September that Parmjit Dhami, of Hornchurch in Essex, has paid the sum following civil recovery proceedings in the High Court over a property in Ilford. He had earlier paid a confiscation order of £146,150 made under Part 2 of the Proceeds of Crime Act 2002, after pleading guilty at Birmingham Crown Court to conspiracy to commit fraud and receiving a nine-month suspended sentence.
How did the fraud work?
Dhami obtained a mortgage in 2010 using false information about his business and income, supported by fake payslips. He used it to buy the Ilford property, which he let to tenants and took the rent from.
In 2014 he obtained a second fraudulent mortgage to buy a family home in Hornchurch. That one ran through a mortgage broker in the West Midlands and a sham company, Delaware Securities Limited. Dhami paid the company, the money came back to him minus commission, and false payslips were produced showing him as its employee. The West Midlands Regional Organised Crime Unit investigated the broker, who was prosecuted along with four people who had used his services.
Why could the CPS come back after confiscation?
Confiscation under Part 2 follows a conviction and targets the benefit from the offending. Civil recovery under Part 5 is a separate route. It runs in the High Court against the property itself, the court decides on the balance of probabilities, and the powers apply whether or not proceedings have been brought for an offence connected to the property.
The confiscation order here related to one fraudulent mortgage. The CPS Proceeds of Crime Division then opened a civil recovery investigation into the property bought with the earlier one. Tom Oates, Deputy Chief Crown Prosecutor in the division, said a criminal conviction and confiscation order “may not be the end of our efforts”.
Why only 85% of the equity?
The claim sought a recovery order over 85% of the equity in the Ilford property. The remaining 15% represented the share acquired with a legitimate deposit. The claim was settled by agreement, and the High Court ordered Dhami and his wife, who claimed an interest in the property, to pay £265,000 within three months. Had it not been paid, the property could have been sold to recover the money. Nothing in the CPS account alleges wrongdoing by his wife.
What does this mean for solicitors?
Two practical points. For anyone advising a client who has satisfied a confiscation order, that is not necessarily the end of it. Property connected to earlier conduct can still be pursued under Part 5, and here about 16 years passed between the 2010 mortgage and the payment.
For conveyancers and compliance leads, the method is worth recognising at the source-of-funds stage: payslips from an employer that exists only on paper, with a payment out and a payment back minus commission. The CPS says its Proceeds of Crime Division has obtained 16 civil recovery orders in the past four years over property worth more than £11m.
Frequently asked questions
What is civil recovery under Part 5 of the Proceeds of Crime Act?
It allows an enforcement authority to recover, in civil proceedings in the High Court, property that is or represents property obtained through unlawful conduct.
Does civil recovery need a criminal conviction?
No. The powers apply whether or not proceedings have been brought for an offence connected to the property, and the court decides on the balance of probabilities.
Can the CPS pursue more after a confiscation order has been paid?
Yes. In this case the confiscation order concerned one fraudulent mortgage, and civil recovery followed over a property bought with an earlier one.
What happens to a legitimate share in the property?
It can be carved out. Here the claim was limited to 85% of the equity, with the remaining 15% representing a legitimate deposit.