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6


IN VIEW


THE ‘SOCK KING’ WHO MASTERMINDED A £150M FRAUD


Special report by Ged Henderson


He was once described as the UK’s ‘sock king’ and hailed as the head of one of the most profitable clothing businesses in the country.


Today there is a warrant out for Arif Patel’s arrest after he was convicted of one of the UK’s largest ever carousel tax frauds. The authorities say he is currently in Dubai. Behind the façade of respectable businessman and philanthropist, the 55-year-old from Preston was the mastermind of a massive fake designer clothing scam.


He and his criminal gang tried to steal £97m through VAT repayment claims on false exports of textiles and mobile phones.


They also imported and sold counterfeit clothes that would have been worth at least £50m, had they been genuine. The proceeds were used to buy property across Preston and London through offshore bank accounts.


Following a joint investigation between HM Revenue and Customs (HMRC) and Lancashire Police, Arif Patel was found guilty of false accounting, conspiracy to cheat the public revenue, the onward sale of counterfeit clothing and money laundering.


Co-accused Mohamed Jaffar Ali, 58, of Dubai, was also found guilty of conspiracy to cheat the revenue and money laundering. The convictions followed a 14-week trial at Chester Crown Court.


In total, 25 members of the criminal empire have been convicted in five trials held between 2011 and 2014 and jailed for a total of more than 116 years, along with a total of 135 years in directors’ disqualifications.


HMRC has also restrained more than £78m of the gang’s UK assets and proceedings are now underway to recover these funds for the public purse.


Arif Patel’s Preston-based company Faisaltex was the heart of his criminal empire. From there he


These guilty verdicts


close a significant chapter in one of the biggest tax fraud cases ever investigated by HMRC


ran the counterfeit clothing import operation and false export business.


As well as being a major player in the overall criminal conspiracy, Mohamed Jaffar Ali also laundered the proceeds through bank accounts he set up in Dubai and offshore.


Investigators say Arif Patel and the Faisaltex group of companies had turned to bulk imports of counterfeit clothing in 2004. During the next three years dozens of containers with fake designer clothing inside were stopped at ports across the UK, including Liverpool, Southampton and Felixstowe. Onward distribution to UK traders was confirmed when a delivery to a Glasgow wholesaler was intercepted by police on the A74 in Dumfries and Galloway and revealed to


be poorly made designer rip-offs. From 2004 Arif Patel also used the business to make fraudulent VAT repayment claims on supposed high-value goods and yarns. In total, the gang fraudulently claimed £97m on false exports of textiles and mobile phones, but HMRC stopped £64m of the claims.


The scam is known as a carousel fraud, where goods are purportedly sold to genuine buyers, but in fact the whole process is controlled by the criminal, who instigates a paper trail of alleged sales and exports in order to reclaim VAT.


Arif Patel frequently travelled to Dubai to meet Mohamed Jaffar Ali and also made trips to China and Turkey to set up deals with manufacturers of counterfeit clothing. The profits were laundered by Mohamed Jaffar Ali through freezone companies and bank accounts held in the UAE.


Money was sent to British Virgin Island-registered companies, which Arif Patel then used to buy property in Preston, including commercial properties on Fishergate, the city’s main shopping street.


His criminal enterprise relied on dozens of lieutenants around the UK, including those HMRC called ‘professional enablers’. This involved two chartered accountants from a Preston-based practice: Anil Hindocha, 69, from Preston, and Yogesh Patel, 66, from Aylesbury.


Hindocha was jailed for 12 years and 10 months in 2014 after being found guilty of false accounting, conspiracy to cheat the public revenue and money laundering.


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