The Assets Recovery Agency v Virtosu & Anor

In civil recovery proceedings under Part V of the Proceeds of Crime Act 2002, the Director must identify the conduct alleged to constitute unlawful conduct. Foreign conduct requires dual criminality: it must be criminal where it occurred and would be criminal in the United Kingdom. A detailed foreign criminal judgment can provide evidence of the relevant conduct and its unlawfulness, although it creates no estoppel and remains rebuttable. The civil standard remains the balance of probabilities, applied with evidence commensurate with the gravity of the allegations. An unexplained lifestyle or rejected explanation alone cannot prove specified criminal conduct. Property obtained through another person's unlawful conduct may nevertheless be recoverable.

The Director sought civil recovery orders against Gheorghe and Victoria Virtosu in respect of properties, vehicles and bank balances allegedly obtained through unlawful conduct. The alleged conduct included people trafficking in France and England, mortgage fraud and money laundering. Mr Virtosu denied the allegations and attributed the funds to family gifts and business dealings in Moldova. The principal issues were whether the French conviction and judgment were admissible and sufficient evidence under section 241 of the Proceeds of Crime Act 2002, whether the alleged conduct satisfied dual criminality, and whether the identified assets were recoverable property. Mrs Virtosu was said to hold property transferred or traced from her husband.

The Director’s claim succeeded in its entirety and the court made the requested recovery order.

1. Dual criminality and pleading. Foreign conduct is unlawful conduct only if it was criminal under the law of the country where it occurred and would have been criminal under the law of the United Kingdom. The Director must identify the conduct relied on and the English offences said to satisfy the second limb. That obligation reflects substantive fairness and the requirements of CPR Part 8.2. The judge followed the approach in The Queen on the Application of the Claimant of Assets Recovery Agency and Others v Green [2005] EWHC 3168, which had been endorsed by the Court of Appeal in Assets Recovery Agency Director v Szepietowski & Ors [2007] EWCA Civ 766.
2. Foreign conviction. The French judgment was more than a certificate of conviction. It recorded the facts found proved and addressed the same issue which the English court had to determine. It was therefore admissible evidence capable of proving both the relevant conduct and its unlawfulness under French law. The conviction created no estoppel and remained rebuttable. The rule in Hollington v F Hewthorn & Co Ltd [1943] 1 KB 587 was distinguished because the issues and evidential context differed. The reasoning in R v Kordasinski [2006] EWCA Crim 2984 and Re a Solicitor [1993] QB 69 supported that approach.
3. Proof and recoverable property. The statutory burden remained the balance of probabilities, but the evidence had to be commensurate with the seriousness of the allegations and consequences. The judge accepted the French findings, rejected Mr Virtosu’s bare denial, and found that the assets represented benefits of people trafficking. Under sections 242(1) and 242(2)(a), the unlawful conduct could be another person’s conduct and the costs of obtaining the property were immaterial.
4. Additional conduct. Dishonest income misrepresentations used to obtain mortgages constituted obtaining money transfers by deception under section 15A of the Theft Act 1968; absence of intended or actual loss was no defence. The alleged money laundering was not proved because section 93C(1) of the Criminal Justice Act 1988 required proof of criminal conduct. Suspicious cash dealings and an untruthful explanation alone did not establish that offence. Property could be followed into Mrs Virtosu’s accounts, and no good-faith or Human Rights Act defence was raised.