Dennis Michael Cook, was sentenced yesterday at Telford Magistrates Court to an additional 5-years imprisonment for failure to comply with a confiscation order. In addition Cook received a 12 months consecutive sentence for failure to comply with a compensation order. He is already serving a 5-year sentence for the underlying fraud. The sentences therefore accrue to 11 years.
Cook's sentence for fraud was announced on 5 July 2000 at Birmingham Crown Court. He was given 5-years' imprisonment for conspiracy to defraud creditors of his various businesses'. He was also found guilty of offences relating to the submission of VAT returns. This conviction was not published by the SFO at the time as Cook was facing separate and unconnected proceedings being brought by the Crown Prosecution Service. Those proceedings have since concluded.
Subsequent to the conviction for fraud, Cook was made the subject of a confiscation order (at Hereford Crown Court) of nearly £1,326,000 payable within 6 months. Compensation of £1.8 million was to be paid to the trustee in bankruptcy.
Background to the case
The case centres on street market trading businesses run by Cook in the West Midlands between April 1995 and December 1996 and involves supplies of goods to Cook worth over £1 million. The goods were ordered and received by Cook's trading businesses and then sold on. However he did not pay his suppliers and the proceeds from the sales were not properly recorded in the business accounts.
The victims were more than fifty suppliers of goods with whom Cook had built up a relationship of confidence. The reality was that Cook had no intention of honouring his debts. He and his co-conspirator systematically defrauded the suppliers. They took delivery of the goods, sold them on, made various excuses to the suppliers to justify overdue or non-payments and pocketed the proceeds.
During the relevant period, Cook was trading under three separate trading names - Megatoys International and Boss Commodity Contracts; both dealing in toys, fancy goods, household and electrical items - and Central Meat Trading Company which sold meat, cheese and other foodstuffs. Goods were retailed by these firms at street markets from goods vehicles and market stalls and also from shops in Gresham, Worcester and Warwick called "Poundstore". Takings were mostly in cash.
Additionally, in order to impress suppliers, Cook claimed to have numerous dealings in Europe. He was to describe himself as being in the import/export business "in a big way".
The defendants
Dennis Cook (51) was the central figure. He controlled the trading operations and the dealings with suppliers. He also managed the financial arrangements and the money flow through the numerous bank accounts used by his businesses. Paul Lester (48), who was Cook's right-hand man, dealt with the purchasing arrangements under Cook's direction. He was sentenced to 21 months imprisonment. Keith Brace who was acquitted by the jury, was responsible for producing sales invoices, general administration and for running the "Poundstore" shops. Cook also employed a small number of warehouse and office staff.
The fraud
The defendants, led by Cook, carried out a deliberate policy of obtaining goods on credit with no intention of paying for them. Promises of payment were not kept, post-dated cheques were stopped, payments were promised on the basis of fictitious VAT rebates. On two occasions Cook refused to pay creditors, falsely claiming that the goods supplied were faulty. An example of this was an excuse by Cook that a consignment of orange juice was no good because it contained fragments of glass. However, when questioned, Cook later claimed that the juice had been sold on to a client in the Ukraine and that because the deal was conducted by telephone there were no documents.
On another deal, payment was refused by Cook on the pretext that a freezer breakdown had resulted in a consignment of about 2,000 boxes of frozen chips being ruined and that the matter was subject to an insurance claim.
Cook's excuses for not paying creditors include stories that he was still waiting for payment of £114k from Russian customers. In response to a County Court summons, the Ukraine was also cited by Cook, to be the destination of £20,000 worth of video tapes that he claimed turned out to be faulty and for which he said he received no payment.
To help mask their dealings, Cook and his conspirators used eight different bank accounts to channel invoices and funds. Cook also evaded payment of VAT and produced false export documentation.
The investigation
HM Customs & Excise questioned Cook, initially in February 1997, about his claims for VAT repayment. The matter was subsequently referred to the SFO. West Mercia Police assisted in the investigation. The three defendants were charged in February 1999 with conspiracy to defraud contrary to common law. Cook was additionally charged with fraudulent evasion of VAT contrary to the Value Added Tax Act 1994.
The case was brought jointly by the SFO and HM Customs & Excise. The trial opened at Birmingham Crown Court on 2 May 2000.
Cook's business solicitor
During the course of the investigation, the SFO also interviewed Cornelius Joseph McCarthy, a solicitor with an office in Birmingham who was engaged by Cook in relation to his business affairs. In contravention of a Section 2 notice (Criminal Justice Act 1987) served on him, McCarthy failed to provide the SFO with all relevant documentary records concerning Cook's affairs under investigation; records that were subsequently discovered through the execution of a search warrant at McCarthy's premises.
McCarthy was convicted in April 1998, fined £1,000 and ordered to pay £750 costs.
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