Account Forfeiture Order to seize proceeds of crime 13 years after conviction

The Serious Fraud Office (SFO) has recovered a significant sum for the UK taxpayer after securing an Account Forfeiture Order against an account linked to Mr Virendra Rastogi, one of the architects of a transatlantic securitised finance fraud with global losses of around £494 million.

This forfeiture comes 13 years after he was convicted of conspiracy to defraud in 2008.

Mr Rastogi was the Chairman of RBG Resources plc, an ostensibly genuine, but in fact entirely fraudulent, metal trading business, run from a glamourous head office at the end of Piccadilly, overlooking Green Park. Mr Rastogi and other directors persuaded banks and funding institutions to provide facilities to RBG amounting to many hundreds of millions of US dollars by convincing the banks that they traded extensively with genuine businesses around the world.

Former SFO prosecutor and white-collar crime solicitor Claire Shaw, who led the SFO team that investigated and prosecuted the case, looks at the significance of the SFO’s latest Account Forfeiture Order and how the original case against Mr Rastogi had a long-term impact on our criminal justice system.

UK–US case which gave rise to DPAs

The original case and the investigation were fascinating for a number of reasons. From a legal perspective, it was the first time that US co-operating defendants had given evidence against their UK co-accused. While the defence at the time made much of the heavy incentives given to co-operators under the US regime, their testimony was powerful and compelling and was instrumental in obtaining the convictions.

Another aspect of the case is its long-term impact on our criminal justice system. The case started on the same day in 2002 in London and in New York, with simultaneous searches. The US case, which used the co-operation regime to great effect, resulted within weeks of arrest in pleas from most of the defendants (coupled with the required extensive co-operation), and the trials of the remaining defendants were completed within three years of the investigation commencing and lasted for a short three weeks. In the UK, none of the defendants pleaded, the trial lasted eight months and was finally completed over six years after the start of the SFO investigation.

The striking differences in the processes between the US and UK led to Jessica de Grazia (a former US Assistant District Attorney) being instructed to review and make recommendations on the tools available to the SFO. That in turn led to the advent of US-inspired changes such as Plea Discussions and more latterly Deferred Prosecution Agreements, which are now used to considerable effect by the SFO in corporate cases.

Account Forfeiture and the proceeds of crime

This case is now making the headlines over a decade later for other reasons: the SFO has succeeded in obtaining approximately £247,000 of assets using the Account Forfeiture powers of the Criminal Finances Act 2017 – which of course were not available to the Confiscation team at the time of the conviction in 2008.

During the investigation, Mr Rastogi’s considerable assets were analysed, and appeared to have been obtained with the proceeds of his fraudulent scheme. By the time he was convicted, those assets had been significantly reduced, he was in receipt of Legal Aid and his company had been liquidated with available assets recovered and distributed by the Liquidator.

It sends a strong message, therefore, when the SFO is tenacious in pursuing assets believed to represent the proceeds of crime, no matter how long ago the conviction was obtained.

Whilst the recovery may seem small in comparison to the hundreds of millions lost in 2008 by banks involved with the RBG Resources scam, it is important to bear in mind, as referred to above, that cash and assets belonging to a defendant may well have been exhausted before the individual’s trial takes place. The interests of the defendant’s family, including wholly innocent children, also need to be taken into account when considering what is recoverable. Add to that the difficulties of multiple cash transactions across numerous jurisdictions, and the difficulties in tracing recoverable assets become apparent. It is therefore a significant win for the SFO to track down bank accounts containing tainted funds after all this time, with the help of relatively new legislative powers.

This case is no doubt a welcome piece of good news for the beleaguered SFO. It is clear that the SFO will pursue the confiscation of the proceeds of crime long after a defendant has been convicted, and that new and powerful tools will be utilised to do so. That is clearly right – the interests of justice demand it. When the beneficial ownership of bank accounts can still be opaque, and money can be sent around the world at the press of a button, the authorities need to take the wins where they can find them.