Carter, R. v

For confiscation under Criminal Justice Act 1988, benefit is the value of property obtained through or in connection with the offence. It is not confined to net profit, sums retained after distribution, or the offender’s eventual share. A person who controls criminal receipts in bank accounts obtains them, and cannot reduce the benefit by treating payments used to continue the criminal enterprise as deductible expenditure.

Where employment was obtained by deception, the deception may remain an operative cause of wages earned throughout the employment. A late change in the prosecution case on a money-laundering count requires careful directions. Without them, and particularly after an acquittal on the originally alleged conspiracy, the conviction may be unsafe.

The appellants were involved in a gang-mastering business which supplied illegal workers and used false Home Office SAL2 documents to represent that workers were entitled to work in the United Kingdom.

Ruslan Kulish challenged a confiscation order and sought an extension of time to appeal his seven-year sentence. Denis Lyashkov and Viktoriya Kulish challenged convictions for concealing proceeds of criminal conduct, confiscation orders, and sentences. John Carter challenged only his sentence for money laundering.

The central issues were the meaning of benefit for confiscation, whether wages earned after employment obtained by deception were benefit connected with that offence, and whether the altered basis on which the money-laundering counts were left to the jury rendered the convictions unsafe.

1. The appeals succeeded in part. The convictions of Denis Lyashkov and Viktoriya Kulish on count 6 for concealing proceeds of criminal conduct were unsafe and were quashed. Carter’s sentence was reduced from four years and six months’ imprisonment to three years and six months. The remaining challenges to confiscation and sentence failed.

2. Under section 71(4) of the Criminal Justice Act 1988, Ruslan Kulish obtained the criminal receipts paid into bank accounts which he controlled. The total turnover from supplying illegal labour was the proceeds of the conspiracy. Wages paid to workers were integral to sustaining that criminal enterprise and did not reduce the benefit. The court followed the principle in R v Smith (David) [2002] 1 WLR 54 that subsequent use of property already obtained does not alter the amount of benefit.

3. The wages earned by Lyashkov and Viktoriya Kulish were obtained as a result of and in connection with their deception. Their false representations of entitlement to work secured and maintained their employment. The representation remained an operative cause of the wages. The court applied the operative-cause approach in R v King David [1987] 1 QB 547 and declined to treat R v Lewis as establishing a contrary principle.

4. The statutory definition of benefit could not be narrowed into an inquiry only into the advantage ultimately accrued. The confiscation regime was not shown to be disproportionate under Article 1 of Protocol 1. The appellants had in any event received apportionment reflecting their agreed shares.

5. The Crown had initially put the money-laundering case against Lyashkov and Viktoriya Kulish on the basis of their participation in the conspiracy. Shortly before the summing-up it adopted a different basis, namely their alleged receipt of proceeds from others. That alteration came too late without a careful direction explaining its application to each appellant. In light of their acquittals on the conspiracy count, the court could not safely identify the factual basis on which the jury convicted them.

6. The seven-year sentence imposed on Ruslan Kulish was severe but not manifestly excessive. However, Carter’s sentence did not sufficiently reflect the jury’s finding as to his more limited offending and was out of line. It was therefore reduced.

• Court of Appeal (Criminal Division): In [2006] EWCA Crim 416, the court quashed the count 6 convictions of Lyashkov and Viktoriya Kulish, reduced Carter’s sentence, and otherwise dismissed the challenges.
• Crown Court at King’s Lynn: In March 2004, the appellants were convicted and sentenced for offences connected with the supply of illegal labour, false immigration documents, deception, and money laundering. Confiscation orders were made against Ruslan Kulish, Lyashkov, and Viktoriya Kulish.