Private prosecution for Conspiracy to Defraud results in conviction and 8 year sentence: the case for Private Prosecutions

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Private prosecution for Conspiracy to Defraud results in conviction and 8 year sentence: the case for Private Prosecutions

Published 29 junio 2018

On 11 June 2018, Paul Sultana was sentenced to 8 years' imprisonment and disqualified from acting as a director for seven years following a prosecution pursued, not by the Crown Prosecution Service (the "CPS") but by a company which Mr Sultana had defrauded: having pursued the case as a private prosecution.

A private prosecution is a prosecution started by a private individual or entity who is not acting on behalf of the police or any other prosecuting authority. This article outlines what is involved, the key considerations and in what circumstances private prosecution might be an attractive and viable option.

Mr Sultana's case

Mr Sultana was pursued by Allseas which alleged he had engaged in a conspiracy to defraud the company. In 2010 and 2011, with promises of extremely high rates of return, Mr Sultana and his co-conspirator persuaded Allseas to hand over €100m (£88m) for, as it turned out, a bogus investment scheme.

The CPS had brought proceedings against one of the co-conspirators, Luis Nobre, who is now serving a 14 year sentence, but in Mr Sultana's case the CPS decided that there was insufficient evidence. Allseas decided to pursue the case. It carried out its own inquiries and used material provided by the police and information obtained during a civil court case. The result was a successful prosecution against Mr Sultana which is said to be the largest fraud in Britain to be successfully prosecuted privately.

What's involved?

Subject to some restrictions, any person has the right to bring criminal proceedings.

All criminal prosecutions must be conducted in an independent and impartial manner, and while private prosecutors are not legally obliged to comply with the same codes as public prosecutors (for example, the Code for Crown Prosecutors (the "CPS Code"), they should seek to replicate the behaviour of a public prosecutor. This is because a private prosecutor is subject to the same obligation to act as a minister of justice as a public prosecutor appointed by the state.

The lawyers acting for the "prosecuting party" must therefore have regard for the public interest and to act as a minister for justice. These duties must come before the interests of the client who has instructed them to pursue the prosecution. This can cause difficulties, in particular in regards to the client/lawyer relationship. In particular, the following issues can arise:

 

  1. A prosecution can only be brought if the "Full code test" is satisfied: (a) there must be sufficient evidence to provide a realistic prospect of conviction, and (b) the prosecution must be in the public interest. In civil proceedings, a client may bring proceedings even where he has been told by his legal advisors that prospects of success are less than 50%, but in criminal proceedings, the evidence should meet the higher criminal threshold of "beyond reasonable doubt", and if the evidence falls short, for professional reasons, a lawyer may have to refuse to pursue the prosecution.
  2. Like civil proceedings, communications between a lawyer and their client and documents created for the dominant purpose of litigation will be subject to legal professional privilege. However, unlike civil proceedings, documents that would ordinarily be privileged must be disclosed if they meet the test for disclosure, i.e. if they might assist the defence's case or undermine the prosecution's case (unless public interest immunity applies, which is only relevant where there is a real risk of serious prejudice to an important public interest). The lawyer may have no choice but to offer no evidence and end the prosecution if his client refuses to disclose privileged documents.
  3. A public prosecutor is bound to pursue all reasonable lines of enquiry. This has consequences for the costs of any investigations that a client has to bear: a client does not have full control of the extent of the investigation pursued.
  4. If concurrent civil proceedings are pursued at the same time as a private prosecution, it is important to ensure that the criminal proceedings are not used to encourage a settlement of the civil proceedings as this would be an abuse of process. If civil proceedings settle, for example, it cannot be a term of the settlement to discontinue the criminal proceedings. A lawyer is subject to strict requirements about when criminal proceedings can be discontinued notwithstanding that his client's instructions may be to discontinue

An attractive option?

Given the conflicts outlined above, is private prosecution ever an attractive option?

In Mr Sultana's case, the reason given by the president of Allseas Group, Edward Heerema, for pursuing the prosecution was that they "felt it was in the public interest for us to pursue the case against Mr Sultana to protect other potential victims by ensuring that he is not free to repeat his crime". Private prosecution can offer an important remedy to those seeking justice and redress for criminal conduct that has affected them or their business, particularly at a time when the CPS has limited resources to investigate and prosecute crimes.

Other reasons why a client may want to pursue a private prosecution include:

  1. A degree of control over the investigation, including expediting the investigation by providing higher levels of funding than would be available to the CPS, or electing particular counsel and/or investigators which might offer particularly relevant expertise.
  2. A private prosecution may offer an option for some redress where a client is unable to bring a civil claim. For example, where a limitation period has expired for a civil claim, a private prosecution may offer a route for some redress since criminal proceedings are not subject to limitation periods. 

Client expectations must, however, be very carefully managed. Criminal proceedings bring a greater risk of costly delays: the court has far fewer case management powers to curb deliberate delays on the part of the defendant than in civil proceedings. Also, the costs position in criminal proceedings is more unpredictable than in civil proceedings. If the prosecution is successful, the private prosecutor's costs may be recovered but if it fails, the private prosecutor may be ordered to pay the defendant's court costs, and any misconduct by the private prosecutor may result in an adverse costs order.

There is also a risk that the Director of Public Prosecution (the "DPP") will intervene at any time. Once the DPP decides to intervene, the CPS will consider the case and will discontinue proceedings if it is not satisfied that the Full Code Test is met or if it interferes with the investigation of another criminal offence or with the prosecution of another criminal charge, is vexatious or malicious, or the offence has already been disposed of. If there is no reason to dispose of it, the DPP may still decide to continue and take over the prosecution.

In view of all these factors, it is important that clients make fully informed decisions before pursuing a private prosecution. Clients may be frustrated that the prosecuting authorities will not pursue the case or have delayed in doing so. They may also start a private prosecution in the hope that the CPS will take it over in due course. However, it is important in all cases that where the client starts a private prosecution, it does so with the intention of seeing it through to the end. Any other approach is bound to lead to trouble in the long run.

The future

The number of private prosecutions has increased in recent years. As law enforcement agencies and the police continue to face budget restrictions, this is a trend that is expected to continue. In May this year, the Private Prosecutors Association (which aims to bring together expertise and promote best practice) announced plans for a private prosecution code of conduct. It is hoped the code of conduct will improve public confidence in private prosecutions and address the issue of private prosecutors balancing the interests of the client and the requirement to act as a minister of justice. This should add clarity to the position for clients which see private prosecution as a potential option to pursue.

Authors

Jonathan Brogden

Jonathan Brogden

London - Walbrook

+44 (0)20 7894 6290

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