UK: GBP5.375 confiscation order against professionals

The Consent Order was granted following an agreed settlement between the Agency and John Szepietowski, Susan Ann Szepietowski both of Ashford House, Four Winds Park, St Georges Hill, Weybridge, Surrey,Merchant Taylor Company Limited, registered in the British Virgin Islands, Cobham Investments Limited and Cobham Investments Leisure Limited.

The original case, involving criminal assets held by an offshore Trust, was referred to ARA by Surrey Police in October 2004 following its investigation into Mr Szepietowski's alleged money laundering of the proceeds of drug trafficking. In mid-2005 the Agency was granted an Interim Receiving Order (IRO) freezing the assets held by Mr Szepietowski on behalf of the offshore Trust.

During the subsequent independent investigation by the Interim Receiver considerable additional criminality on the part of the Szepietowskis and assets unrelated to the Trust were identified.

Based on this additional evidence the Agency in October 2005 successfully applied for a second Interim Receiving Order effectively freezing the assets held by the Szepietowskis' and those of their companies, Merchant Taylor Company Limited, Cobham Investments Limited and Cobham Investments Leisure Limited. ARA had alleged that the Szepietowskis had amassed a large property portfolio through fraudulent mortgage claims and the laundering of rental income through off-shore accounts. It was also alleged that the Szepietowskis benefited from phoenix fraud involving the publishing of 'adult magazines'. The Agency further contended that the Szepietowskis' lavish lifestyle greatly exceeded their known legitimate income and that the Szepietowskis had evaded their tax liabilities.

On 22 October 2007 the respondents entered into negotiations with ARA and on 15 January 2008 agreed to a full and final settlement of all of the Agency's civil and tax claims by agreeing to transfer properties to a value of £5.375 million to the Agency on 16 January 2008. The Agency still continues to pursue its civil proceedings against the assets associated with the original offshore Trust which led to the initial investigation into the Szepietowskis.

ARA's Interim Director Alan McQuillan said: "This case started with an initial investigation into the alleged laundering of the proceeds of drug trafficking from Turkey through an offshore Trust which owns assets in the UK. Mr Szepietowski was the Solicitor who set up that Trust for a client and also acted as Trustee. "When ARA opened an investigation into the Trust the Receiver soon uncovered a separate and complex web of fraud, money laundering and tax evasion by the Szepietowskis over a period of 15 years.

"The Agency alleged that Mr Szepietowski, a solicitor, assisted by his wife, a former building society manager, obtained property by fraud and through the widespread use of false identities to conceal true ownership. "The Szepietowskis had consistently denied this but have now agreed to settle with ARA by handing over £5.375 million in assets. "In this particular case, ARA's initial investigation into an offshore Trust Fund believed to contain money from drug trafficking then led on to an investigation into the Szepietowskis' personal affairs resulting in them now losing a large part of their wealth.

"Organised criminals cannot exist without the support of dishonest professionals who assist in the laundering of their illegal profits. Those involved in money laundering must realise that, when caught, they now stand to lose far more than just their clients' criminal assets," he added.

The Agency has not alleged any criminality on the part of the other Directors of Merchant Taylor Company Limited, Cobham Investments Limited or Cobham Investments Leisure Limited.

It was not as if Szepietowski was new to the risks: in 2003, he was fined GBP7,000 by the Law Society for, in effect, allowing an Iranian client to use the firm's client account as a bank account for effecting international funds transfers. The Law Society fell short of accusing him of actual laundering, but did say that the arrangement may facilitate laundering.

When the Szepietowski's large house in Surrey was raided in 2005, the couple went on a charm offensive with friends telling newspapers that Jane Earl, then heading the Asset Recovery Agency, was "the witchfinder general." However, Szepietowski ceased practice shortly afterwards.

Media reports at the time said that ARA had identified assets of approximately GBP19 million including houses and offices. If that is true, then the settlement is quite in his favour, it seems.