Fake clothing boss used accountant from Bucks in £150 million fraud

Sock manufacturer Arif Patel, 55, of Preston, Lancashire, and his 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 from China and Turkey with a value of at least £50 million, had they been genuine.

The proceeds were used to buy property across Preston and London through offshore bank accounts.

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, Buckinghamshire.

Patel’s company, Faisaltex Ltd, was the heart of his criminal empire but he fled to Dubai in 2011 and was convicted in his absence while his two brothers are 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.

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.

A delivery to a Glasgow wholesaler was intercepted by police and revealed to be poorly made designer rip-offs.

Patel also used the business from 2004, to make fraudulent VAT repayment claims on supposed high-value goods and yarns.

Yesterday (Tue) 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.

The gang was rumbled after Scottish cops stopped a van full of counterfeit clothes on the A74 near Ecclefechan in Dumfries and Galloway in August 2005.

Inside the van were replica goods including Calvin Klein, Walt Disney, Nike, Prada, Emporio Armani, Lacoste and Levi Strauss.

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.

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, 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.”

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.”