Ketan Somaia was described as an “Olympian scale” fraudster by an Old Bailey judge when he was sentenced to 8 years in prison for swindling entrepreneur Murli Mirchandani out of over £12.25 million. But despite the severity of Somaia’s crimes, and the amount of money involved in his fraudulent activities, this case may never have made it to court, let alone reached a successful conclusion.
The following case study outlines how Mr Mirchandani was able to seek justice through the courts and recoup his lost money by instigating the biggest private prosecution ever to be carried out in the UK.
The story of the scam
From the outside, Ketan Somaia appeared to be a perfectly respectable businessman. He had made his money in the 1990s and 2000s in banking in Africa and Dubai, and by some accounts owned assets worth nearly £300 million. He lived a luxury lifestyle, had an office in Mayfair, and claimed to have business ties with India’s billionaire Hinduja brothers. He even had high-level political connections in the UK, and his companies had been chaired by a former UK government minister.
So, when the two first met, Murli Mirchandani, himself a successful self-made entrepreneur, saw no reason to doubt Somaia’s credentials. “I trusted him implicitly,” Mr Mirchandani later said. “He seemed to me to be a very successful and wealthy businessman and I thought that I could benefit from doing business with him.”
It was that during the period of June 1999 to August 2000, Mr Mirchandani lent Somaia over US$19 million (around £12.25 million) in short term loans at high interest rates. Mr Mirchandani believed his money was being invested in attractive business projects – shares in banks in Mauritius and Tanzania, diamond mines in Liberia, a hotel chain in South Africa – all with the promise of guaranteed profits and a swift repayment of the original loan.
But whilst Mirchandani did receive the interest payments on some of the initial loans, he never received any repayments of the original capital, and never once saw official paperwork for how his money had been invested. It eventually became apparent to Mr Mirchandani that he had been conned and that if he ever wanted to see his money again, he would have to resort to legal proceedings.
Unfortunately, he was told that state bodies didn’t have the capacity to pursue the matter. So, Mr Mirchandani decided that his only recourse was to instigate a private prosecution, resulting in the largest confiscation order ever to be made in a private prosecution.
Taking on the case
Many people are unaware of their right to privately prosecute, and even those who know the option exists need to be fully informed and given expert guidance throughout the process.
Tamlyn Edmonds, a co-founder and Managing Partner at EMM, took the lead on the case, assisted by Ashley Fairbrother. Tamlyn is a seasoned prosecutor who is well regarded for her expertise in fraud-related private prosecutions. Her wealth of expertise in serious fraud, asset recovery, and corruption was a perfect fit for an unprecedented confiscation case following a private prosecution such as this.
Gathering evidence
But even with such expertise at the helm, conducting a large scale financial investigation of this type without any assistance from state bodies is always a challenge. So, when it came to gathering evidence, we called on the expertise of forensic accounts HSNO and investigators at BGP Global Services.
During the trial and confiscation proceedings, Mr Somaia claimed that he had no money. But Gavin Pearson, financial investigator on the case, was not convinced. “It quickly became clear that the Defendant’s business affairs had been operated in a manner designed to hide income and assets from public view,” he said. “When combined with an extremely extravagant lifestyle, this led me to conclude that the Defendant had hidden assets.”
Indeed, we were able to demonstrate that Somaia owned two properties worth over £1 million, had spent £100k on his daughter’s wedding, and had made a £40k loan to a family friend. We also found he was spending extravagant sums of money on luxury holidays, expensive restaurants and high-class hotels, even whilst the trial was ongoing.
Our investigations also revealed that Somaia had been doing business in the UK since the late 1990s and had been an official resident here since 2009. And yet there was no record of him having ever paid tax in this country – or anywhere else for that matter.
The verdict
Thanks to Tamlyn’s expert leadership, and the scrupulous work of our investigating partners, we were able to deliver a groundbreaking confiscation result following a private prosecution resulting in a record confiscation order. In total, Ketan Somaia was ordered to pay £20 million in a confiscation order which formed the benefit of his crime, as well as £18 million compensation to Mr Mirchandani.
Ketan Somaia was convicted in June 2014 and was sentenced to 8 years at the maximum security prison, HMP Belmarsh.
A landmark case
This case represents the biggest private prosecution in British legal history, and the first time a private individual has carried out confiscation proceedings without the help of the police asset recovery team.
The right to bring a private prosecution is vital to safeguarding individuals’ constitutional rights. In a time when state resources are under increasing pressure, the private prosecution services offered by law firms like EMM are not only a viable alternative for private individuals, but they can also be a quicker and more successful one.
