Powell & Anor, R v

Neutral Citation Number: [2008] EWCA Crim 1214 IN THE COURT OF APPEAL CRIMINAL DIVISION No: 2008/1809/A9 & 2008/2232/A9 Royal Courts of Justice Strand London, WC2A 2LL Tuesday, 13 May 2008 B e f o r e: LORD JUSTICE HUGHES MR JUSTICE TREACY SIR PETER CRESSWELL - - - - - - - - - - - - - - R E G I N A v CURTIS POWELL DEAN HINKSON - - - - - - - - - - - - - - Computer Aided Transcript of the Stenograph Notes of WordWave International Limited A Merrill Communications Company 190 Fleet Street London EC4A 2AG Tel No: 020 7404 1400 Fax No: 020 7831 8838 (Official Shorthand Writers to the Court) - - - - - - - - - - - - - - Miss S Caddle appeared on behalf of Powell Miss J Lule appeared on behalf of Hinkson Mr S Winberg appeared on behalf of the Crown - - - - - - - - - - - - - - J U D G M E N T MR JUSTICE TREACY: In this case Curtis Powell comes before the court as an appellant; Dean Hinkson as an applicant. The two persons before the court were convicted on 7th March 2008 after a trial. The conviction took place in the Crown Court at Southwark. The trial judge and sentencing judge was His Honour Judge Testar. Both individuals were convicted of separate counts of the same offence, namely an offence contrary to section 25 of the Financial Services and Markets Act 2000. Powell was convicted on count 6 of the indictment; Hinkson was convicted on count 5. Each was sentenced to 15 months' imprisonment. We have decided to grant leave to Hinkson so that he is in the same position as Powell so far as the hearing of this matter is concerned. The trial which concluded in March 2008 represented the second trial of these appellants. Each of them had faced in addition to the section 25 counts charges of money laundering. At the first trial each of them was acquitted of those money laundering allegations. Those money laundering allegations were to the effect that these appellants knew or suspected that no spread trading funded by their investors was in fact taking place. There was a third individual who was featured in both trials whose role in the matter was considerably greater than that of either of these appellants. That individual was Lindani Mangena. He was convicted at the second trial and sentenced to a total of five years' imprisonment for offences of fraudulent trading and money laundering. The background is this. On 19th August 2003, Mangena, who was still only 19 years of age, set up a company JNL Limited ("JNL"). Mangena and these two appellants along with another man became directors. The company rented offices in Throgmorton Street in the City of London. It purported to offer investment opportunities with enormous rates of return. These were said to be based on Mangena's skills spread trading on the stock exchange. Most of the investors were members of the Seventh Day Adventist Church. They were persuaded to trust JNL because the JNL directors, including these appellants, were also members of the church. The reality was that hardly any money at all was invested. Mangena spent a great deal of it financing a lavish lifestyle for himself and also the other directors, including these appellants. Money was spent on renting or buying extremely expensive flats, expensive motorcars and travel to luxury hotels. Neither Mangena nor these two appellants was authorised by the Financial Services Authority to carry out, invite or induce anyone to take part in investment activity. The company offered a number of different investment packages all promising huge returns within a matter of weeks. Once a fairly short original investment term finished many investors were encouraged to reinvest their original stake and alleged paper profits into a one year investment plan again offering huge returns. No proper records were kept, but it appears that a minimum of £3.2 million was paid into JNL's business account by more than 1,000 people who responded to these schemes. Only £12,000 was placed in spread bets and about half of that was lost. Something like £1.7 million appears to have been paid back to investors early on in the life of this scam in order to keep the matter going and to encourage others to invest, but in effect this was a case of robbing Peter to pay Paul. The police eventually recovered only about £900,000. In January 2004 investors were told that the scheme was closing and that an alternative company had been found to administer the investments. Investors were told that they should open an "E Gold" account. These were not anything other than manoeuvres to pacify irate investors. In mid-February 2004 Mangena was arrested at a bank trying to open an ISA account with forged documents and so the investigation began. These two appellants were arrested in early March 2004. They admitted becoming directors of JNL and explaining and selling company products. They told investors that the schemes were guaranteed and that there was no risk, but they were not authorised by the Financial Services Authority. The counts which these two appellants were convicted of, count 5 in Hinkson's case and count 6 in Powell's case, were specimens or representative counts involving particular investors invited to participate in one of the JNL schemes by one or other of these appellants. In relation to Powell the victim was a woman who had heard about the scheme at her church. She contacted JNL and spoke to Powell. He told her that there was no risk to her investment and that fantastic returns of 30 per cent per month would be achieved through spread trading, so she parted with £25,000 to the appellant Powell. In the case of Hinkson he persuaded a Mr Taylor-Kamara who worked as a chauffeur to invest. He reassured that man that the scheme was not a scam and told him that the investment was guaranteed. He told Mr Taylor-Kamara that he and others were Seventh Day Adventists and there was no way he would run off with his money. The result was that Mr Taylor-Kamara ended up bankrupt. In sentencing the judge said that Mangena was a prodigiously precocious nineteen-year-old who was a consummate conman who had enthusiastically exploited a gold rush mentality which he had created in others. He was the driving force behind JNL and sceptical investors were shown evidence of legitimate returns, impressive City of London offices and expensive flats and clothes, all to bolster the apparent success of the scheme. Many people had borrowed from friends or banks in order to be able to invest. They had raised money from the sale of property or from money put aside for their children's education. Powell had played a part in drafting one of the investment plans, albeit that he had used pre-existing material in order to do so. Both Powell and Hinkson had acted as salesmen doing what the judge described as "front of house work", but the reality the judge accepted was that the driving force behind what was taking place was Mangena. In sentencing, the judge made it plain to both appellants that he was only sentencing them for the offences of which they had been convicted. He said in sentencing that if ever there was a case which called for imprisonment this was it. He accepted that the appellants had acted out of character and that they had been, as he put it, "in thrall to Mangena", but he said that nonetheless there was no alternative to custody. He pointed out that they had contested the matter against overwhelming evidence, that neither of them had been particularly frank in the witness box and he stated that it was difficult to accept that two such intelligent young men could possibly have thought that they could SMITH BERNAL WORDWAVE carry on in the way they had without regulation. He pointed out that that was something which had been raised by a bank manager in November 2003 and that they had been aware of that. He concluded that they had got carried away with the gold rush mentality of JNL and had carried on regardless. He therefore concluded that these were serious examples of offending under the Act and that a custodial sentence was necessary. The submissions made to us point out that in each case these men are of good previous good character. Powell aged 31 and Hinkson aged 29. Each of them has provided a plethora of character references in highly favourable terms which have been placed before the court. The submissions made in each case are similar in nature. It is submitted that a sentence of custody was wrong in principle. It is submitted that if a custodial sentence was appropriate that in each case that which was imposed was simply too long. Reliance is placed on the fact that there was no express finding of dishonesty made by the judge against these two applicants and that there behaviour could be characterised as reckless rather than dishonest. Emphasis is placed on the fact that they came to this scheme having been recruited by Mangena, whose brainchild it was, and that he was plainly a dynamic and persuasive personality who swept them along. Each of them has personal mitigation which they have placed before the court. On any view this court regards this offending by these appellants as disgraceful. The argument that this offending did not cross the custody threshold or that, for recklessly greed driven behaviour of this sort for which no remorse at all was shown, a custodial sentence could not be passed because of prison overcrowding is simply unsustainable. It is true that the scheme was created and organised by Mangena and that the judge viewed him as a compelling personality, notwithstanding his youth. He must of course bear the greater responsibility for what happened as he was involved in even wider criminality than these appellants on the jury's verdicts. But these two appellants played significant roles and dealt directly with investors peddling their schemes in breach of legislation designed to protect potential investors from approaches by unauthorised persons and to regulate the conduct of those who are properly authorised. Both appellants were of previous good character. Each was able to put forward a number of favourable references. But those references are to some extent compromised by the extent in which each man speciously argued at trial that all he had done was to explain the schemes for investors to make their own decisions about. Each had at times characterised the victims as "greedy" or "money hungry" as if in some way that justified the appellant's own conduct. An important purpose of the 2000 Act is to protect the integrity of financial markets and to reduce the prevalence of financial crime. Sections 19 to 25 of the Act prohibit unauthorised persons from carrying on investment business, or inducing or inviting others to engage in investment activity. These appellants were not authorised by the Financial Services Authority. Their breach of the Act is not merely technical. Their conduct was carried out over a significant period of time and on a large scale. It was carried out with a complete lack of integrity. The appellants were motivated by greed. They caused serious loss to others who trusted them. They carried on after November 2003 when a bank manager warned them that FSA authorisation was necessary for their activities. Whilst dishonesty is not a necessary element of the offence, (it is an offence of strict liability subject to statutory SMITH BERNAL WORDWAVE defences), in assessing culpability, dishonesty (not this case) or indeed grossly reckless behaviour is plainly a relevant factor in deciding where in the scheme of offending any particular appellant falls. There was, it is true, a delay of about four years between arrest and sentence in this case. Much of this delay was no doubt due to the lengthy investigation process. In addition there were two trials. These appellants were acquitted of more serious allegations in the first trial, with the jury disagreeing on the matters for which they were ultimately convicted. But they needed to be retried in the second trial upon these allegations which they continued to deny and of which the jury in the end convicted them. We have listened with care to counsels' submissions, but even having regard to all the arguments covering delay, previous good character, the role of Mangena in this case and the family circumstances of these appellants, we are not persuaded that these sentences were either wrong in principle or manifestly excessive. Accordingly, these appeals must be dismissed. SMITH BERNAL WORDWAVE