Serial fraudster Ketan Somaia was today ordered to pay a confiscation order totalling £20,434,691 after confiscation proceedings were commenced under section 71 Criminal Justice Act 1988 following a successful private prosecution brought by a private prosecutor, Mr Murli Mirchandani.
The court ordered that the defendant shall pay the sum of:
- £20,434,691 to the state – the amount appearing to the court that might be realised;
- £18,220,723 compensation in favour of Mr Murli Mirchandani (the victim and private prosecutor; and
- £200,233 compensation in favour of Mr Dilip Shah (another victim).
Summary of case
Ketan Somaia was convicted in June 2014 following a private prosecution brought by Mr Mirchandani for 9 counts of obtaining a money transfer by deception totalling US$19,690,000 (just over £12.25 million), after Mr Somaia had persuaded Mr Mirchandani to make short term loan payments to him with the assurance of high rates of interest and investments in business opportunities over the period between June 1999 and August 2000. Mr Somaia is currently serving an 8 year prison sentence at the maximum security prison, HMP Belmarsh. The benefit from the nine offences of which Mr Somaia was convicted adjusted to present day value was £18,420,956.
Following conviction, Mr Mirchandani instructed specialist private prosecution law firm Edmonds Marshall McMahon to commence confiscation proceedings in order to deprive Mr Somaia of the benefit of his criminal conduct, after State bodies indicated they did not have the capacity to pursue the matter.
During the trial and confiscation proceedings, Mr Somaia maintained that he did not have a penny to his name, yet the evidence presented a completely different story. Despite telling the jury in May 2014, and maintaining throughout the confiscation proceedings, that all the money had gone (whilst claiming Legal Aid on the basis that he had no money), evidence obtained in the confiscation proceedings showed that Mr Somaia owned two properties held in the names of third parties worth over £1 million, had spent £100k on his daughter’s wedding, made a £40k loan to a family friend and was spending huge sums on luxury holidays, restaurants and hotels as well as making substantial transfers to his family and friends. Mr Somaia was shown not to have any assets in his own name, but rather would use family members, staff and advisors as fronts or nominees to evade tax and to conceal his personal beneficial interests.
Somaia has been resident in the UK since 2009, but had a house and conducted business here for over a decade before. Since moving permanently to the UK, he received a £3.4million settlement and hundreds of thousands of pounds in alleged earnings, however he had never paid a penny in tax in this country or any other jurisdiction in the last 10 years. When he was asked why, his response was that: “I was not sure what my tax status was. Over the past six years I have not consulted any tax adviser although I was in the process of doing so”.
Today, HH Judge Hone QC ordered Mr Somaia to pay £20,434,691 by way of confiscation which will go to the state, and £18,420,956 by way of compensation to be paid to the victims, within 6 months. If Mr Somaia fails to repay this amount in this period allowed, he will face an additional prison sentence of 16 years. HH Judge Hone QC commented that Mr Somaia was ‘a formidable and serial fraudsman on a truly Olympian scale’ and that it was “quite clear that Ketan Somaia was in receipt of significant sums and his lifestyle continued to be lavish until he was imprisoned in July 2014”.
In a time of state retrenchment, the historic right to bring a private prosecution has proved to be an important constitutional safeguard. To our knowledge, this is the first case where a private prosecutor has started and conducted large scale confiscation and restraint proceedings without any state assistance with the financial investigation.
Edmonds Marshall McMahon statement
Tamlyn Edmonds, Director at Edmonds Marshall McMahon comments: “Mr Murli Mirchandani came to Edmonds Marshall McMahon due to our expertise in conducting private prosecutions and confiscation. Conducting a large scale financial investigation of this type without any assistance from State bodies, where the defendant is so adept at hiding his assets, has been a considerable and challenging task and we therefore welcome today’s careful judgment. This has been an incredibly difficult journey for Mr Mirchandani, who has invested a significant amount of his own money and emotional energy in ensuring Mr Somaia is brought to justice, which unfortunately has been to the detriment of his own health. We hope that today’s decision, which recognises the importance of recompensing victims, will help to finally put this difficult chapter behind him”
Murli Mirchandani’s statement
“The theft of $19.5m by Ketan Somaia from me has had a devastating effect on my life, my health, my business, and regrettably, on my family. My entire family and I were left completely broken by this cruel fraud and for many years we believed that we would never see Mr Somaia brought to justice and pay for what he has done.
It was heart breaking to hear during these proceedings how Mr Somaia was spending a small fortune in luxury restaurants and hotels in London and distributing money that was the result of decades of hard work by my family business, to his own family and friends, who were living the life of royalty. Today is the day the UK criminal justice system has recognised the primacy of victims.
It is certainly a relief, consolation and brings some satisfaction that Mr. Somaia has finally been brought to Justice even despite his persistently trying to dodge the British legal system with various delaying tactics throughout the course of these proceedings.
I would like to thank my boutique, specialist legal team at Edmonds Marshall McMahon, Tamlyn Edmonds and Ashley Fairbrother as well as William Boyce QC and Rachna Gokani and Forensic Accountant, Gavin Pearson for their expertise and tireless work. I would also like to thank the Court and the UK criminal justice system for ensuring this man has finally been brought to justice. I am now very much looking forward to closing this chapter of my life and look positively to the future”.
Wilf Pickles, Director of BGP Global Services comments:
“We have been involved with this case since its inception, and conducted many of the inquiries, as well as providing evidence relating to the actual offence, that led to Somaia’s conviction. Subsequently, we have also been instrumental in identifying assets that were clearly hidden by the defendant. It is evident that Ketan Somaia has gained substantially from his criminal activities and we are glad that our efforts have gone some way into identifying these.”
Gavin Pearson, Forensic Accounting Partner at HSNO comments:
“Following my instruction as financial investigator for the Private Prosecutor in the confiscation proceedings, it quickly became clear that the Defendant’s business affairs had been operated in a manner designed to hide income and assets from public view (including tax authorities across the world). When combined with an extremely extravagant lifestyle through to the date of his conviction, this led me to conclude that the Defendant has hidden assets. I am delighted that the Court has accepted virtually all my findings both in relation to the extent to which the Defendant has benefited from criminal activity and the assets that remain available to meet a confiscation order”.