Businessman convicted of £150m Tax Fraud
Arif Patel, aged 55, of Preston, has been convicted of a £150 million tax fraud.
The sock manufacturer 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 fake 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.
After a joint investigation between HMRC and Lancashire Police, Patel was found guilty of false accounting, conspiracy to cheat the public revenue, the onward sale of counterfeit clothing and money laundering.
Mohamed Jaffar Ali, aged 58, of Dubai, was also found guilty of conspiracy to cheat the revenue and money laundering.
It was revealed that 24 members of the criminal group were convicted in five trials between 2011 and 2014 and jailed for a total of more than 116 years.
HMRC has also restrained over £78 million of the gang’s UK assets.
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.
“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.”
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.”
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 from enjoying the benefits of their criminal enterprise.
Patel ran the fraud operation from his Preston-based company, Faisaltex Ltd. He ran the counterfeit clothing import operation and false export business.
Ali laundered the proceeds through bank accounts he set up in Dubai and other regions.
The Faisaltex group of companies turned to bulk imports of counterfeit clothing in 2004.
Over the next three years, dozens of containers with fake designer clothes were stopped at ports across the UK, including Liverpool, Southampton and Felixstowe.
Onward distribution to UK traders was confirmed when a delivery to a Glasgow wholesaler was intercepted by police and revealed to be poorly made designer rip-offs.
Patel also used the business to make fraudulent VAT repayment claims on apparent 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.
Patel frequently travelled to Dubai to meet Ali.
He also travelled to China and Turkey to set up deals with manufacturers of counterfeit clothing.
The profits were laundered by Jaffar Ali through free zone 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 Preston, including commercial properties on Fishergate, the 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: 59-year-old Anil Hindocha and Yogesh Patel, aged 66.
In 2014, Hindocha was jailed for 12 years and 10 months 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.
Patel travelled to Dubai in July 2011 but never returned.
He will be sentenced in May 2023.
Although he attended the majority of his trial, Ali failed to attend court on March 27, 2023. A warrant has been issued for his arrest. He will also be sentenced in May 2023.
Patel’s brothers Munaf Umarji Patel and Faisal Patel are on Lancashire Police’s wanted list.