CC(3) FI 31
ILLEGAL MONEY LENDING PROJECT
REPORT FOR THE NATIONAL ASSEMBLY OF WALES’
COMMUNITIES AND CULTURE COMMITTEE INQUIRY
INTO FINANCIAL INCLUSION AND THE IMPACT OF
FINANCIAL EDUCATION
INTRODUCTION
The Wales Illegal Money Lending Unit is one of 7 Units across the United
Kingdom. The Welsh Unit was established in November 2007, as part of the
Government’s Financial Inclusion Strategy. The Unit is funded by the
Department for Business, Innovation and Skills, empowering Cardiff Council
to administer the Unit on behalf of 22 Welsh Trading Standards Services.
The Welsh Unit is ostensively Trading Standards Investigators, with a
dedicated Police Officer seconded to the Unit, to coordinate a multi agency
approach to tackle loan sharks. In addition Client Support Officers (CLOs) are
employed, with backgrounds across the social support sector. CLOs support
victims towards financial inclusion and up to and beyond any prosecution. The
investigators and support officers make the Unit fairly unique in the way in
which victims are supported beyond the prosecution stage of a case.
The Unit has been established to tackle the issue of illegal lending across
Wales seeing more prosecutions and eventually reducing the incidences of
this type of lending.
The main objectives of the Unit are:
•
to create a climate where victims can come forward – confident that
prosecution will be undertaken, and convictions obtained, without fear
of reprisals,
•
To change the perception amongst those lending that illegal money
lending is rarely prosecuted, and
•
To develop an understanding of the victims’ needs in the medium to
long term and the interventions required for a sustained move away
from illegal lending.
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Historically illegal money lenders have operated throughout the UK for a
number of years, using threats, intimidation and violence when loans are not
repaid, and yet have far too infrequently been prosecuted.
This report illustrates the achievements of the team to date, the progress
made towards achieving the objectives, difficulties encountered and points of
note.
ENFORCEMENT SUMMARY
Number of investigations commenced
Total (since start of
project)
84
Number of illegal lenders identified
111
Number of illegal money lenders(loan sharks) arrested
43
Number of proceedings instituted
- of which prosecutions
- of which other enforcement actions
28
13
9
Number of defendants
26
Number of prosecutions resulting in custodial
sentences
8
Number of proceedings resulting in non-custodial
sentences
15
9 yrs 10 months
Total length of prison sentences
Total value of illegal lenders’ loan books (estimated if
necessary)
Value of Associated criminal activity identified and
reported
Value of assets seized / Proceeds of Crime (POCA)
compensation awarded to victims.
- Amount of Cash seized
- Estimate of value of assets Restrained under
Section 41 POCA
- Amount awarded by Confiscation or Forfeiture
Order
Direct / Actual savings to victims
£2,055,600
£399,700
£132,694
£3,041,000
£139,759.34
£745,950
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Having set up in the November of 2007, the Wales Illegal Money Lending Unit
(WIMLU) officially launched in the March of 2008 in Merthyr and In May in
Llandudno.
The WIMLU found a similar picture to the original pilot projects in Birmingham and
Glasgow where it took a full 12 months from the launch to get cases into the court
process.
To paint the picture of loan sharks operating within Wales at the start of 2008
North Wales Police successfully convicted Patrick Kiely at Mold Crown Court of
Illegal Money Lending. He received the maximum sentence of 2 years
imprisonment. Following that conviction the WIMLU worked with North Wales
Police to identify the 573 victims within Kiely’s loan registers and to offer support
and assistance through our Client Liaison Officers (Financial Inclusion and Victim
Support remit).
Kiely’s criminal empire was vast but from his illegal lending alone had profited
more than £200,000, with APRs of up to 149,000%. In the Proceeds of Crime
hearing he was ordered to hand over £85,833 or faces an extra prison sentence.
It is significant that after this the Birmingham IMLU arrested Kiely’s brother,
operating a similar scale illegal money lending enterprise in Manchester and
successfully took the case through to conviction.
This demonstrates a regional spread amongst crime families.
We have instigated 84 investigations either to corroborate or develop the
information we have received or pro-actively sought out. Occasionally in doing so
we are unable to identify illegal money lending but may uncover evidence of other
criminality and refer these to more appropriate agencies.
The overlap in criminality means that the WIMLU are not always the lead agency,
although we do lead in the majority of cases. We work closely with the 22 Trading
Standards Services, 4 Police Forces and other Agencies in Wales.
Proceeds of Crime legislation is an integral and necessary part of the investigative
process for illegal money lending. Many of the loan sharks have been operating for
several years without any fear of prosecution. In the cases we have proceeded
with we can evidence over 2 million pounds in loan books. With the intervention of
the WIMLU we can also evidence an actual saving to victims of nearly three
quarters of a million pounds.
We have subsequently restrained the criminal assets of loan sharks in the form of
financial accounts, property, land and vehicles. We have also made cash seizures
of £132,694. This is having a dramatic impact on loan sharks prior to trial, when
they openly fear the loss of these assets more than the sentence.
Geographically the ‘loan shark’ picture of ‘hot spots’ in Wales is largely
indicative of the initial research namely the South Wales Valley’s and South
East Wales. We now have a fair spread of at least one referral across the
majority of Welsh Local Authorities. The top three Local Authority areas for
2009/10 were: Rhondda Cynon Taff (6 investigations), Cardiff (4
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investigations) and Swansea (3 investigations). For 2008/09 the top 3 areas
were: Swansea, Cardiff and Merthyr.
We are now starting to see cases coming to culmination through the Court
system. Convictions to date are detailed below.
Convictions
Operation Cannes (Rhondda Cynon Taff) (1 arrest)
This was a joint operation with the Police in which they requested our
support to deal with a carer who had stolen £45,000 from an elderly
victim and had gone on to use the money, operating as a loan shark in
some of the valley communities.
A warrant was executed and she was arrested. £5,000 in cash was
seized and evidence with names of victims in the area. The WIMLU
investigators took some of the statements to evidence this and continued
dealing with the victims and providing evidence to the Police.
The subject was sentenced to 2 years imprisonment for Illegal Money
Lending and Theft.
Operation Beirut (Cardiff) (8 arrests)
This was a case involving Illegal Money Lending, Money Laundering,
Kidnap and Blackmail. The Kidnap occurred on 1st October 2008, where
the victim was taken against his will from Cardiff to Bridgwater, by one of
the defendants and two heavies. The victim managed to escape his
captors under threats to kill him.
The main subjects were two brothers and one of their wives. The two
brothers are bare knuckle fighters and revered within the travelling
community.
The main victim had loans from both the brothers. Some of the loans
were forced upon him and then demands for repayment were made,
accompanied by threats to kill him.
The loans were in various amounts, totalling £34,000. The demand for
repayment was in excess of £200,000 of which in excess of £125,000
was paid. The victims sold all their possessions to pay what they did.
Such was the threat to the victim his wife and child they could not return
home through fear for their lives. They were relocated to a safe place by
Officers from the Wales Illegal Money Lending Unit (WIMLU).
Unfortunately the victim’s wife suffered severe depression due to the
threats and fear. This led to her self harming and being diagnosed as
suicidal.
The three main individuals were arrested for illegal money lending,
money laundering, blackmail and kidnap. A total of £20,000 cash was
seized during subsequent searches and their assets, estimated at
£400,000, restrained.
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Five further arrests were made, ancillary to the main offenders for
blackmail, money laundering and witness intimidation.
The two brothers entered guilty pleas to illegal money lending and four
counts of money laundering at Cardiff Crown Court on the 29 September
2009. The indictments of false imprisonment and blackmail offences
remain on file if the subjects re-offend.
Sentencing at Cardiff Crown Court for illegal money lending, money
laundering and with associated offences of benefit fraud and theft
resulted in the following sentences:
John Janes:
Henry Janes:
Deb Janes:
3 years 6 months
19 months
12 months suspended sentence.
Assets are restrained along with £20,000 cash.
A Confiscation investigation is continuing under the Proceeds of
Crime Act with WIMLU and South Wales Police.
Operation Budapest (Swansea) (7 Arrests)
The original loan shark was a male who has operated within the Asian
community of Swansea, using fear and intimidation, over several years.
As he grew older and his health deteriorated, his daughter took over his
clients.
A number of victims provided statements stating threats to kill and other
forms of intimidation were used, although several others will not give
evidence or are reluctant to do so.
On one occasion Police were called to a disturbance at one property
where the daughter and 3 males, armed with a pick axe handle, a
hammer and a wrench were attempting to enforce a debt. The daughter
was arrested and the males made off but were later stopped by Police in
a vehicle containing these weapons.
The WIMLU together with Police and Swansea Trading Standards
executed further warrants on the daughter’s and two sons’ homes,
recovering documentary evidence, computers and heroin. All three were
arrested for illegal money lending, blackmail and drug offences.
The amounts loaned to victims were estimated to total £614,250.
The father was found to be in an unfit state to face prosecution or give
evidence.
During the searches in this operation Jonathan BOWEN as well as
being arrested for illegal money lending was arrested for
possessing Heroin and other drugs. He pleaded guilty to all 3
charges and received a 24 month Supervision Order and a 12
month Probation Order.
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The trial began at Swansea Crown Court on 11 January 2010.
A difficult case with all the witnesses in fear and one in particular
having recently alleged threats to kill him.
The start of the trial proved very difficult, particularly in relation to
witnesses/victims who gave evidence.
As a result of the difficulties guilty pleas were accepted as follows:
Sally Bowen, 3 guilty pleas to illegal money lending and sentenced
to a 12 months Community Service Order to do 100 hours unpaid
work.
Richard Rowe, 1 guilty plea to a Section 4 Public Order offence for
possessing an axe and sentenced to 12 months Community Service
Order to do 120 hours unpaid work.
The Judge also made an order for the forfeiture and destruction of
the axe.
Operation Sycamore (Rhondda Cynon Taff (RCT)) (2 Arrests)
A 45 year old woman in Treorchy targeted mothers at the school gates to
lend money. This had been taking place over a 4 year period.
Interest rates ranged from 150% upwards. Her partner, a 40 year old
male would enforce payment of the loans by threats and intimidation.
On 3 September 2008 the WIMLU executed a warrant at the home
address of the suspect. The male and female mentioned above were
arrested for illegal money lending and money laundering.
A cash seizure of £33,600 was made and documentary lists of 27 victims
with loan amounts totalling £68,311 were also seized.
The male admitted the offence in interview. The female made no
comment.
A guilty plea was tendered by both defendants. Each was
sentenced to 16 weeks imprisonment. A Confiscation hearing has
also taken place resulting in the following:
Jonathon Rees - £25,683 Confiscation Order, £18,609
Compensation to RCT Housing Benefits Section.
Melanie Griffiths - £30,780 Confiscation Order.
Operation Holly (Merthyr Tydfil) (1 Arrest)
Information was received that a retired Inland Revenue Inspector was
operating as a loan shark from his home on the Gurnos Estate, Merthyr
Tydfil. On 29th July 2008 the Wales IMLU executed a Warrant at the
home address of the suspect. The suspect was present with a female.
During the search, documents and books were discovered, with lists and
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names and addresses of at least 35 persons. Amounts of loans
contained within them totalled £53,000.
The subject denied lending money, but once he was arrested and taken
away, the female occupant admitted having borrowed money from him.
The Client Liaison Officers within the Unit worked with some of the
witnesses. For example, with one they restructured her finances and
debt payments, prevented eviction, and supported her finding
employment.
During interview the defendant made a full confession regarding the
loans.
Statements alleging payment by sexual favours and allegations of
indecent assault have been made since the arrest.
The subject pleaded guilty to illegal money lending.
Griffiths was sentenced to 10 months imprisonment, suspended for 12
months.
A Confiscation Order of £79,330.67 was made against him.
Operation Barcelona (Swansea) (1 arrest)
The circumstances were that Swansea Council Client Finance Section had
been paying a loan shark for 4 years. On investigation it was discovered that it
was initially paid as the loan shark had threatened to break the victim’s legs.
They had not notified anyone prior to our involvement.
A warrant was executed on the subject’s home address and documentation
recovered.
The subject was arrested and made limited admissions.
Approximately 50 victims were identified with total loans to the value of
£75,000.
The subject was re interviewed on the 1st December whilst answering bail and
continued his partial admissions. He was subsequently charged with illegal
money lending and appeared at Swansea Crown Court on 18th March 2010,
where he pleaded Guilty.
Dean Morgan was sentenced to 40 weeks imprisonment, suspended for
2 years, and 100 hours Community Service. The Judge commented that
the only reason Morgan avoided going to prison was that he currently
employs 7 people.
Operation Cairo (Swansea) (2 Arrests)
Intelligence was received that a male and female were operating as a loan
sharks on the Blaen Y Maes Estate, Swansea.
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A warrant was executed, the two alleged loan sharks arrested and premises
searched. They denied the offence. Further intelligence was then received
identifying this same male person as a loan shark.
The victims in this case were living in extreme deprivation, some with children.
WIMLU Officers engaged with Social Services and a number of other
Agencies to help people with their problems.
16 victims were identified, with estimated loans totalling around £50,000.
Following the arrests, one victim had a brick thrown through her window by a
partner of the female loan shark and he was been arrested.
Geraldine Shoemake pleaded to illegal money lending on 22 April
2010 at Swansea Magistrates Court.
She was fined £500 and ordered to pay a victim surcharge of £15.
Operation Cologne (Flintshire) (3 Arrests)
Contact was received from a friend of a victim of a loan shark operating in
Flint. The loan shark was a female, who operated with another female
collector. The collector attended a local Post Office, on a daily basis and
withdrew the full amounts from victims benefit cards. She then walked into
Flint town centre and met victims to collect payments, or makes withdrawals
with the victims PIN numbers, from cash point machines.
The collector was witnessed making a cash drop, at the loan sharks house,
before returning to the Post Office with 6 benefit cards, belonging to victims,
to withdraw funds. On returning to her home address she was arrested and
the cards and cash recovered.
Simultaneous warrants were then executed on the collectors and loan sharks
home addresses. The loan shark was also arrested. Recovered during the
search was £7,926.86 in cash, documentary lists and letters from victims.
Both were later interviewed at Mold Police Station and bailed for further
enquiries.
The Unit’s Client Liaison Officers have since visited several of the victims
some of whom have made statements but are reluctant to attend Court.
The loan shark was later arrested for money laundering along with her
husband.
The witnesses in this case demonstrated a reluctance to attend Court through
fear of the loan sharks families’ reputation.
3 defendants were charged with illegal money lending and 2 with money
laundering.
In anticipation of a conviction WIMLU and North Wales Police financial
investigators have assets restrained of about £400,000.
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The collector pleaded guilty at Mold Crown Court on the 15 January
2010. The other two defendants pleaded not guilty.
Christine Hughes pleaded guilty to illegal money lending on 7 June 2010
at Mold Crown Court. She was fined £1000 and ordered to forfeit
£3966.38.
David Hughes was found guilty of money laundering and was sentenced
to a 12 month Community Order with 250 hours of unpaid work. He is
subject to confiscation proceedings, which have yet to be completed.
Margaret Bennett received a 6 month Community Order, with
supervision and was sent on an educational course.
VICTIM SUPPORT/ FINANCIAL INCLUSION SUMMARY
VICTIM SUPPORT
Total since start
Total Number of
victims identified
1409
Number of clients
with illegal debt
written off and
value of debts.
Number of inward
referrals to teams
from external
stakeholders.
Number of clients
identified as
needing intensive
casework support.
Number of clients
referred to
appropriate
financial service.
836
£745,950
41
40
187
The Illegal Money Lending Project is part of the wider Financial Inclusion
Strategy within the UK.
Our experience has shown us that financially excluded communities across all
of Wales are far more prevalent than had been expected. The following are
some of the experiences of the WIMLU.
The WIMLU is made up of individuals from a variety of frontline backgrounds.
They have experience of CAB’s, domestic violence, doorstep crime and
community engagement within Trading standards and the Police. However,
the experience of front line working within the WIMLU has on occasion even
tested us. Many of the individuals being targeted by loan sharks are truly
vulnerable adults. Their vulnerability can range from illiteracy, alcoholism or
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drug dependency. A high proportion of victims lead what experts label a
chaotic lifestyle.
Working within communities, with our stakeholder and partner agencies on a
daily basis has demonstrated a frustration on the lack of accessibility of
affordable credit for those who really need it. Many loan sharks target and
entrap those who are vulnerable and cannot on their own access credit,
employment or other means of remaining on an even keel. They often take
the benefit cards of their victims, taxi them to housing offices and withdraw
payments to pay off original loans.
Another finding is that landlords who initially forgo payment of a bond in the
form of a loan to a tenant then circumvent the Housing Act, where payments
now go to the tenant by taking out a Power of Attorney to reclaim the housing
payment from the tenant.
Intelligence has also been received suggesting that some licensed loan
Companies will target a financially excluded community going door to door
offering loans. When an individual accumulates a number of loans from
different companies and falls behind with payments the only place they can go
to pay off this debt is a loan shark.
The Unit has found that one in three users of illegal loans is receiving
disability benefit, evidencing that individuals with disabilities or learning
difficulties are particularly vulnerable to exploitation by loan sharks.
This paints a bleak picture and experience of dealing with the financially
excluded individuals and communities in Wales and yet we can make a
difference if people will work with us. We have conducted marketing and
media campaigns specifically designed to engage with vulnerable individuals
and communities.
The figures show 187 victims have been directly supported to date. However,
836 in total have been positively affected as their illegal debt has been written
off as a result of the intervention of the team.
Not all of the 187 have been prepared to provide evidence in a statement.
Some are only prepared to engage and provide information for the Unit to
work with and are supported by the Client Liaison Officers
.
Whilst some of the victims are too fearful to provide evidence others have
been suffering depression over their debt and intimidation by the loan shark,
and at its worst are close to suicide. We have found that the vast majority of
victims on those financially excluded estates are female. There have been
several occasions when it has been drawn to our attention that although
having a loan from a loan shark their partner or husband is often unaware of
the loan. In some of the extreme cases sexual favours or worse have been
requested or demanded when a victim is unable to meet a payment. This
makes it even more difficult for the victim to provide a statement in fear the
partner will become aware of the loan and worse the sexual connotations.
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The Client Liaison officers within the Unit support victims face to face. Early
engagement has proved essential in gaining their trust and support and they
are often sceptical that someone is actually trying to help them.
A number of our victims are in debt, not only to loan sharks but also legal
lenders, high cost lenders (often more than one) and utility companies.
Introducing people to ‘affordable credit’ is an easy term to use but in reality
difficult to access.
Credit Unions are not in the majority of cases proving to be a viable option.
In the first instance, many of our victims have so much debt and any
additional money is needed to pay that off first. Credit Unions will not take
on high risk borrowers at the risk of their members and the lack of
accessibility to credit unions make doorstep lenders more attractive.
In consultation with victims, we find that they generally have little or no
knowledge of Credit Unions before working with a Client Liaison Officer. We
are contributing to efforts to improve awareness amongst the Welsh public.
Crisis loans via the social fund can be an option but many of the victims are
up to the limit on making further applications by the time we engage with
them.
Charitable loans can be on option in a few cases, but is not the medium to
long term solution.
The Client Liaison Officers within the Unit assess each victim individually,
develop an understanding of their situation and set up a plan for a medium
to long term move away from illegal lending. That may include working with
one or more of the 190 agencies we engage with across Wales towards
achieving financial inclusion for our victims.
Some of the Agencies we work with include the voluntary and statutory
sectors such as CAB’s, Communities First, Credit Unions, Local Authority
Health and Housing Departments, schools and local community groups.
As part of any plan the Client Liaison Officers (CLO) support clients with
income maximisation and access to benefit advice and assistance. Many
victims have been supported in accessing their full entitlement. An example
of best practice in this area is a scheme that exists in Rhyl, The Rhyl Advice
Shop, where individuals can obtain benefit advice and has proven to work
yielding high returns from DWP for a small outlay by the Local Authority.
The CLOs also negotiate with creditors and set up realistic payment plans
for the victim. Some of the cases are complex particularly where eviction or
arrests for non payment of fines are imminent, and this involves working
expeditiously with Housing Departments, Solicitors, Social Services and
Court Enforcement Teams.
Victim Support of course goes well beyond the objective of financial
inclusion and introducing victims to affordable credit. Many of the victims of
our loan sharks are intimidated, threatened with violence suffer violence or
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sexual exploitation or receive threats to kill themselves family and children.
This in our experience is certainly more prevalent than any of us would
want.
Victim safety and protection can never be taken lightly. We work closely with
the Police to ensure they stay safe.
We have used witness relocation, having suspects remanded in custody,
Police markers and alarms. Other subjects are on strict bail conditions to
live well away from areas of their illegal lending and other criminality,
reporting daily to police stations, staying away from witnesses and their
families and surrendering passports.
‘Critical Incident Markers’ on police computers which dictate an immediate
response from the police and a contact number for a member of the Wales
Unit to contact. This has been triggered on a number of occasions on
separate cases.
CONCLUSIONS
The WIMLU has contributed to the wider financial inclusion agenda, through
its work, in a variety of ways.
It has also supported Trading Standards Services in their financial capability
work.
It is the intention of the Unit to develop and improve its impact in both these
areas.
Steven Hay
Operational Manager
16 July 2010
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