Emory Andrew Tate (better known as Andrew Tate) and Tristan Tate are no strangers to the public eye. The Tate brothers have been accused in Romania of human trafficking and forming a group to sexually exploit women. These charges are denied.
Recently, the Tate brothers have faced Part 5, Proceeds of Crime Act 2002 (“POCA”) proceedings in relation to recoverable property held by them in the UK.
The Chief Constable of Devon and Cornwall (“CCDC”) had obtained Asset Freezing Orders pursuant to s.303Z1 of POCA in relation to seven accounts which were said to have held £21 million (“the frozen funds”). The CCDC then sought Asset Forfeiture Orders (“AFOs”) pursuant to s.303Z14(4) of POCA in relation to six accounts, with the other account subject to an application to forfeit cryptocurrency under newly enacted Chapter 3E.
Asset Forfeiture Orders – the Law
Chapters 1, 2 and 3B of Part 5 of POCA contain the relevant legal principles. S.303Z14(4) of POCA sets out two limbs by which an AFO may be obtained against frozen funds (being those funds to which an Account Freezing Order has effect – see s.303Z14(1)); The first limb being that the court is satisfied that the money, or part of the money, is recoverable property, or, alternatively, the second limb, that the court is satisfied that the money, or part of the money, is intended by any person for use in unlawful conduct.
The burden is on the applicant to satisfy the court of one or both of those tests to the civil standard of proof, namely the balance of probabilities (s.241(3) of POCA), whereas, in order to obtain an Account Freezing Order, the standard is lower, being “reasonable grounds to suspect” (s.303Z1(1) of POCA).
Recoverable property is defined in s.304(1) POCA, as “property obtained through unlawful conduct” (and if it is disposed of, it is recoverable property only if it is held by a person into whose hands it may be followed, see s.304(2)).
Unlawful conduct” is set out in s.241 of POCA and can occur both in and outside the UK:
“(1) Conduct occurring in any part of the United Kingdom is unlawful conduct if it is unlawful under the criminal law of that part.
(2) Conduct which —
(a) occurs in a country or territory outside the United Kingdom and is unlawful under the criminal law applying in that country or territory, and
(b) if it occurred in a part of the United Kingdom, would be unlawful under the criminal law of that part,
is also unlawful conduct.
(2A) Conduct which—
(a) occurs in a country or territory outside the United Kingdom,
(b) constitutes, or is connected with, the commission of a gross human rights abuse or violation (see section 241A), and
(c) if it occurred in a part of the United Kingdom, would be an offence triable under the criminal law of that part on indictment only or either on indictment or summarily,
is also unlawful conduct.
(3) The court or sheriff must decide on a balance of probabilities whether it is proved—
(a) that any matters alleged to constitute unlawful conduct have occurred, or
(b) that any person intended to use any cash property in unlawful conduct.”
Finally, a person obtains property through unlawful conduct (whether his own conduct or another’s) if they obtain property by or in return for the conduct (s. 242 of POCA).
The Recoverable Property and the Unlawful Conduct – the CCDC’s Case
The CCDC made its AFO application under both limbs contained in s.341Z14(4). In relation to the first limb, they argued that the Tate brothers obtained the frozen funds through either cheating the revenue (a common law offence involving fraudulently depriving the revenue of money) in respect of income tax, corporation tax and/or VAT, or money laundering contrary ss.327-329 of POCA. The CDCC further cited additional Romanian offences by the Tate brothers of tax/VAT evasion and/or money laundering in Romania. In relation to the second limb, the CDCC argued that the frozen funds were intended for use in unlawful conduct, being the commission of cheating the Revenue, or money laundering, and/or similar offences in Romania.
Seven accounts and their transactions were detailed in evidence:
- Account 1 (held by an anonymised respondent referred to as “J”), a Stripe account (a payment processing platform providing payment services on behalf of businesses): $12 million was received into this account between the date that it was opened on 2 February 2019 and 23 June 2022 (when Stripe placed a stop on the account). These funds were said to have derived from business revenue (turnover from products purchased online from the Tate brothers’ Cobratate shop via various applications). Various transfers to the Tate brothers from this account were detailed in evidence.
- Account 2 was a Gemini account opened by J, containing USD 88,922.901835 (“the Gemini Account”). J had admitted she was not the beneficial owner of these funds.
- Account 3 (a Metro Bank account held by Andrew Tate): a personal account which was opened on 1 January 2019 and frozen on 12 January 2022. The balance was £35,035. Between 26 October 2020 and 19 May 2022, the account received a total of £5,892,288.84 in credits from Andrew Tate’s various Stripe accounts. Again, various transfers to the Tate brothers from this account were detailed in evidence. The source of funds was said to be customer purchases of the Tate brothers’ online products and therefore revenue from their business activities.
- Account 4 (a Metro Bank account held by Andrew Tate): a personal account opened on 20 April 2022. It was frozen on 12 October 2022 with a £22,659.13 balance. This was a personal savings account. It received £73,000 in small payments from account 3 with the reference “E A Tate”. Various transfers to Andrew Tate’s other accounts from this account were detailed in evidence.
- Account 5 (a Revolut account held by Andrew Tate). It was opened on 14 September 2018 and frozen on 12 January 2022 with a balance of £126,272.13. Again, various transfers in the millions of pounds were detailed in evidence including to and from other accounts held by the Tate brothers. The account was also used to purchase property in Dubai and make other high value payments as well as payments to female complainants connected to the Romanian indictment alleging sex trafficking.
- Account 6 (Global account held by Andrew Tate) Global: a personal account opened on 10 August 2022 using UK identification and a UK address. It was frozen on 27 June 2023 with the balance of £19.50, $180,521.09 and €203,510 .47. Again, high value credits and debits were detailed, including to and from other accounts held by Andrew Tate.
- Account 7 (Revolut account held by Tristan Tate): a personal account opened on 13 December 2018, using a UK address, and frozen on 12 October 2022. The frozen funds being £657,964.66 and €108.13, 336.02. Again, evidence detailed how the account was funded with the various high value credits and debits outlined.
Between 2017 and 2022 the Tate brothers were said to have earned large amounts of money. The income was received into the frozen accounts, controlled by the Tate brothers. Senior District Judge Goldspring described the income received as “striking” as were the Tate brothers’ displays of boasting about their wealth. The CDCC alleged that the Tate brothers earned £21 million despite no significant qualifications, business experience, established companies, shares, intellectual property or similar assets. The evidence showed that the income was received from “Adultwork”, an online adult services platform, Only Fans, Stripe, “Dek-Co”, a UK payment platform which processes payments on behalf of Paxum Inc, with whom the Tate brothers had accounts, and “Global”, another financial account which accepts credits and debits.
The CCDC also alleged that neither the Tate brothers nor their corporate personalities had paid any tax or VAT in any jurisdiction since 2013. In respect of their corporate personalities, the CCDC alleged that only one Romanian registered company had made tax declarations but had under-declared turnover so as to fall under the tax threshold. Apart from this declaration, the Tate brothers had not registered for tax. Instead, it was alleged that the Tate brothers used multiple accounts and numerous transactions to move funds and obfuscate the true source. They used these funds to make luxury purchases and pay co-defendants to the Romanian alleged indictments.
The CCDC also relied on evidence including Andrew Tate’s own YouTube videos in which he proclaimed that he could not be forced to pay tax (nor, in fact, comply with many other laws set by various authorities). In one video he said: “but when I lived in England I refused to pay tax it was 40 so they started sending me letters and threatening me you know what you do you know what most people would do reply to the letter get a clever accountant guess what I did ignore the letters ignore ignore ignore then they start sending people around to my house where’s Andrew oh he’s not here ignore ignore ignore there becomes a point where there’s a cost benefit analysis where they sit down and go we don’t know where this guy is we don’t even know how much money he has we don’t know if he’s gonna pay he might have left the country this is a waste of our time..”.
The CDCC further alleged that the Tate Brothers opened financial accounts in the UK, holding out their address as being in Luton (not Romania), to receive business revenues and launder funds.
Neither the Tate brothers, nor “J” served any evidence in response. They instead submitted that the evidence demonstrated legitimate earnings. They further submitted that if their argument failed, only liability to tax should be forfeited (i.e. the pecuniary advantage), not the whole amount. No adverse inference was drawn, but the lack of tax returns was acknowledged to speak to the case.
Cheating the Revenue / Tax Evasion – Pecuniary Advantage
The Senior District Judge considered the case of Ahmed v Revenue and Customs [2013] EWHC 2241 (Admin) in which the appellant/ defendant operated a legitimate business but dishonestly under-reported proceeds of sales and thereby evaded tax over a number of years. He kept the under-reported revenue in cash at his home address. In that case, the court held the order should have been limited to the amount that represented the pecuniary advantage derived from the tax not paid [53].
In this case, the Senior District Judge distinguished Ahmed because the seizing authority in Ahmed did not put its forfeiture case on the additional or alternative second limb basis; i.e. there was no evidence that the appellant had intended to use the cash in future unlawful conduct. He concluded at paragraph 60:
“Thus, the effect of s.340(3)(a) POCA is the concept of “fungibility”, meaning (in a Cheating the Revenue / tax / VAT evasion case), that the criminal property is the entirety of the undeclared turnover, and not merely the tax due, because the benefit is represented in part by that sum.”.
The Decision
The Senior District Judge ultimately found that the Tate brothers’ entire financial arrangements were consistent with concerted tax evasion and money laundering and that, on the balance of probabilities, “they have engaged in long-standing, deliberate conduct in order to evade their tax/VAT liabilities in both jurisdictions” (see paragraph 97).
In respect of account 1 (of which “J” admitted she was not the beneficial owner of any funds) the Senior District Judge was satisfied on balance of probabilities that the Tate brothers obtained a benefit from criminal conduct, namely a pecuniary advantage representing unpaid tax and VAT from cheating the revenue, contrary to Common Law, and tax / VAT evasion in Romania. He was satisfied, on balance, that the revenue from the Tate brothers’ businesses, accrued in account 1, was moved between various accounts and was not declared to the tax authorities in the UK or Romania and no tax or VAT had been paid in the UK or Romania, demonstrating intentional conduct in either jurisdiction.
He found support in this finding by reference to Andrew Tate’s own public statements regarding his attitude to paying tax.
The Senior District Judge assessed the date at which the pecuniary advantage crystallised, therefore, when s.340(3)(a) POCA was triggered on the entirety of the funds in the account, such that the entirety of the funds became criminal property, and therefore amounted to money laundering under ss.329, 327 and 328 of POCA).
He further found, at paragraph 84, “that over time, further pecuniary advantage from the tax/VAT offences accrued on the account, which continues to taint the entirety of the funds in the account as being “criminal property” up to 5 August 2022 when the account was frozen.”
He found similarly, in relation to accounts 3 to 7. In relation to account 5 he noted at paragraph 90 that he was “satisfied that this account is used for payments connected to female complainants in the Romanian allegations and also significant payments to co-defendants in the Romanian criminal proceedings.”
The Gemini Account
In relation to account 2, the Gemini account, the CCDC advanced a case that the funds in the Gemini Account were in fact monies in fiat, as required by section 303Z14(4) of POCA, but later conceded that the funds in the Gemini Account were cryptocurrency. Thus, the court was asked to grant a crypto wallet forfeiture order, in respect of the account, rather than an AFO as previously applied for.
Respondent “J” submitted, inter alia, that the court ought not to make a forfeiture order of the Cryptocurrency under principles of fairness, because at the time the CCDC made the Account Freezing Order, it could not have made the crypto wallet freezing order as the relevant statutory provisions were not yet in force. As such, “J” argued that the CCDC had benefited from an unlawful order. The Tate brothers argued that neither the first nor second limb had been proved in relation to these funds.
Amendments to Part 5 of POCA are contained in section 180 of and Schedule 9 to the Economic Crime and Corporate Transparency Act 2023, which inserted Chapters 3C, 3D, 3E and 3F into Part 5. The Chapters set out specific forfeiture and freezing powers for Cryptoassets. A court may order the forfeiture of Cryptoassets if it is satisfied that it is recoverable property or is intended for use in unlawful conduct, in the same way that it can do so under Chapter 3B of POCA.
The Senior District Judge made similar fundings in relation to the Gemini account as he did for accounts 2 to 7. The Senior District Judge did not agree with “J’s” submissions on fairness stating that it would have been open to the CCDC to have made a seizure application at any time after commencement of the statutory provisions relating to Cryptoassets.
Conclusion
The Senior District Judge reiterated the purpose of proceeds of crime legislation: “.. the act allows for the confiscation of assets that have been obtained through criminal activity. But, the act also provides for the confiscation of money and assets even if they have been acquired through legitimate means where it can be shown that they are indirectly derived or intended for use in criminal activity… thus the main purpose of the act is to confiscate the proceeds of crime and to prevent money laundering. It is true that the source of the funds was probably legitimate in the first instance, but the legislation is designed to deal with legitimately earned monies being used or intended for use in a criminal enterprise…”.
He went on to provide his agreement with the regime: “It is sometimes called a draconian law but it is a necessary tool to help the authorities disrupt organised crime groups ,recover stolen funds and deter financial crime, it is an essential tool for safeguarding communities against financial exploitation and protecting the integrity of the economy and the banking systems.”
The case is a stark reminder of the force of the Part 5 POCA civil tools, available for the recovery of the proceeds of unlawful conduct. This includes the forfeiture of proceeds of crime, including Cryptoassets, without the requirement of a prosecution or conviction.
January 2025
