Ex-officers jailed in £11m cigarette smuggling fraud

Two former Cleveland Police officers have been jailed for creating an £11 million cigarette smuggling fraud.

Gary Thompson, 43, from Hartlepool, and Anthony Lamb, 50, from County Durham, were jailed for six and five years respectively at Newcastle Crown Court following an investigation by Her Majesty’s Revenue and Customs (HMRC).

The two men hijacked the identities of 16 companies and created false documentation, invoices, websites and email addresses to trick shipping companies into transporting illegal Far Eastern tobacco products into the country. They claimed to be importing goods including reels of paper, metal dog crates and ceramic pots.

The pair created false identities for themselves and rented properties for their fake companies. Thompson even posed as a serving police officer to verify identification documents to open a bank account.

Thompson also admitted to laundering more than £2 million through a fake fish tank company called Bubblearium.

The criminal operation began in 2006 after Thompson left Cleveland Police and he was joined soon after by Lamb. A third man, David Lister, 49, from Doncaster, was also convicted of conspiracy to evade excise duty and was sentenced to two years.

The men spent money on property, cars, holidays and private schools for their children.

HMRC’s assistant director for criminal investigation, Paul Rooney, said: “They both quite blatantly flouted laws that they were formerly employed to uphold, which makes this fraud even more brazen. Quite simply, this pair thought they could make themselves a better life on the wrong side of the law, but HMRC is determined to crack down on criminals who think they can outsmart the UK tax system.”

In a similar case, two men have been convicted for a £26 million tax and VAT fraud after investigations by HMRC and West Midlands Police.

Thomas Scragg, from Solihull, and Paul Phillips, Derbyshire, used multiple companies to create a complicated fraud over five years to fund lavish spending on homes, hotels and cars, including Lamborghinis and Bentleys.

Scragg was imprisoned for 12 years in November 2010 for his part in the fraud, with a further four years for another £8 million scheme in May 2011.

He received a further year to run consecutively for his involvement in another fraud that had been previously suspended after an investigation by HMRC and West Midlands Police.

Phillips was sentenced to nine years in November 2010.

The two men set up a number of different construction firms to receive gross payments from contractors. The payments were then sent to a second layer of payroll companies. These were used to channel money to a third layer of companies to launder the money.

The workforce was paid cash-in-hand and VAT for work completed was unaccounted for.

After his arrest, Scragg adapted the scheme, leading to the further £8 million fraud.

Reporting restrictions were previously in place but were lifted on July 9, 2012 after another two defendants, Carl and Anthony Johnson, were convicted for money laundering offences.

Detective Chief Inspector Shaun Edwards from West Midlands Police said: “This was fraud and money laundering on a massive scale; it deprived the public purse of millions of pounds and Scragg’s audacity is shown by the fact he continued the fraud in various guises even after he knew he was being investigated.

“A number of my officers have devoted the last five-and-a-half years to bringing these men to justice and I’m pleased that we can now tell the world about the extent of their crimes for the first time.”

Simon De Kayne, assistant director of criminal investigation for HMRC, said it was “a massive attack on the nation’s finances” and they will now be seeking to recover the proceeds of the crime.

A further nine defendants were also convicted and sentenced to up to six years imprisonment.