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Man jailed in £10m fuel and money laundering fraud

Government Communications (NDS)

28 June 2011

Nigel Barrett, 42, whose last known address was Sunny Gardens Road, Hendon in London was sentenced yesterday (Monday) for his part in a fraud that involved laundering low duty fuels to remove the chemical marker. The laundered fuel was then sold on as legitimate duty paid road diesel with the criminal profits funnelled through a range of business bank accounts and cheque cashing companies in an attempt to disguise their origins.Barrett was jailed for 28 months and received a Serious Crime Prevention Order, which prevents him in any way trading in fuels. He was also disqualified as a Director for a period of five years. Mike O’Grady, Assistant Director, Criminal Investigation, HMRC said:“Fuel laundering is unregulated and dangerous but this gang was motivated solely by greed and personal gain, pocketing millions of pounds in unpaid taxes. “Cheap, laundered fuel is no bargain. It undercuts honest businesses and has devastating effects on the environment when the toxic by-products of the laundering process are dumped in the countryside costing ten of thousands of pounds in clean up costs. HMRC works tirelessly to investigate fuel fraud; anyone with information should contact our Customs Hotline on 0800 59 5000.”BackgroundHMRC’s investigation began following concerns about a fuel supply company - Foyle Distribution Ltd of 46a Carlisle Road, Londonderry, Northern Ireland. Between October 2004 and November 2005 Foyle Distribution Ltd, which was at the time licensed to deal in large quantities of rebated fuels, ordered 3.5m litres of rebated red diesel and almost four million litres of rebated kerosene from a broker in London. After purchasing each consignment of fuel, Foyle Distribution would contact the broker’s storage sites in Immingham or Grays in Essex to confirm arrangements for collection of the fuel. The same vehicle was invariably used. Payments for the fuel were not made by Foyle Distribution Ltd but by a variety of other companies with links to the defendants.Following collection the fuel was laundered at sites in Cublington near Milton Keynes and Old Linslade in Leighton Buzzard, before being sold on as road diesel, earning the gang substantial profits.VAT returns for Foyle Distribution Ltd showed no trading for this period, nor did most of the companies making payment, and HMRC received no returns detailing the sales of fuel from Foyle Distribution, as per the terms of their operating licence. Between October 2002 and February 2003 another company, NEB Services Ltd, paid a second London fuel broker almost £190k for gas oil. The point of contact for this company was Brian McAtavey. HMRC believes that this fuel was then laundered to appear legitimate and sold on across the UK. The gang then laundered the criminal profits from the sale of the illegal fuel by cashing cheques drawn on the business accounts of GAD Services (UK) Ltd, SOBF Services Ltd, I Brite Services Ltd, Bagshaw Ltd and NEB Services Ltd. The money was transferred to private bank accounts or withdrawn as cash.Further investigation identified a company called Lag-Tech Ltd of 19 Eglantine Avenue, Belfast, conducting the same fuel fraud and linked to Foyle Distribution Ltd. Between February and July 2006 Lag-Tech Ltd purchased in excess of 600,000 litres of rebated fuel. Payments for the fuel came from two further suspect bank accounts, including Stephen Boyd trading as Adler & Allan Fuels. Barrett also received a six month concurrent sentence following a prosecution by the Environment Agency for pollution of the Grand Union Canal. This followed the contamination of the canal with 60,000 litres of red diesel, which had leaked from a laundering plant, in April 2005. The clean up cost to remove the contamination from the canal was in excess of £64,000. Notes to editors1. Nigel Barrett, whose last known address was 17a Sunny Gardens Road, Hendon, London, NW4 1SL, appeared at Chester Crown Court on 27 June, where he was sentenced to 42 months imprisonment, with a reduction of 14 months for his guilty plea, leaving a total of 28 months to be served. 2. At a previous hearing on 14 February 2011; Stephen William Boyd, 45 of 25 Loughdoo Road, Portaferry, Co Down, Northern Ireland was sentenced to 20 months for laundering the proceeds of crime.Edward Joseph Kennedy, 58, of 168 Tassagh Road, Armagh, was sentenced to 12 months, suspended for two years, and ordered to carry out 150 hours community service for conspiring to fraudulently evading excise duty. He had admitted the charge at a previous hearing. One man and woman were sentenced for laundering the proceeds of the scam. Both had admitted money laundering at a previous hearing. They are: Tammy Ann Fernie, 37, of 17 Hillside Drive, Edgware, Middlesex. She was sentenced to 12 months, suspended for one year and ordered to carry out 100 hours community service. The second was Gerald Anthony Dunphy, 31, of Flat 1, Anderson Court, Whitefield Avenue, Brent Cross, London was sentenced to 12 months, suspended for one year and ordered to carry out 150 hours community service.At a previous hearing on 18 March 2011 at Chester Crown Court;Brian McAtavey, 46, of Kiln Farm, Flitwick was sentenced to four years for his involvement in the fraud. McAtavey received a Serious Crime Prevention Order, which prevents him in any way dealing in oils and he was also disqualified as a Director for a period of five years. 3. Laundered fuel is red (or green) diesel, which has been filtered through chemicals or acids to remove the government marker. The chemicals and acids remain in the fuel and damage fuel pumps in diesel cars.4. Red diesel is marked gas oil or a rebated fuel for use in agricultural machinery and not for use in road vehicles. Green diesel is the Republic of Ireland equivalent of the UK’s red diesel.5. Laundered fuel is being sold at a reduced price, and motorists may think they are getting a bargain because it is cheaper, but this type of fuel can cause damage to a vehicle. Anyone with information on fuel misuse or suspicious activities can contact the Customs’ hotline on 0800 59 5000.LON 36/11Issued by HM Revenue & Customs Press OfficePress enquiries only please contact: