City worker gets 13 years for lengthy and sophisticated fraud – explaining...

City worker gets 13 years for lengthy and sophisticated fraud – explaining the sentence

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Nicholas Levene, a ‘city financier’, was sentenced to 13 years for 12 counts of fraud, one of false accounting and one of obtaining a money transfer by deception.

EDIT: On 16 May 2013 the Court of Appeal reduced Mr Levene’s sentence to 12 years’ imprisonment – a very modest reduction. We may revisit the case once the appeal judgment is available.

Levene took investors’ money under the pretense of investing the substantial funds in shares. However the money was spent financing a luxury lifestyle. The frauds were carried out between 2005 and 2009 and involved high net worth investors and high profile victims, including the owner of The Ivy restaurant. He used his strong reputation in the City to convince customers into investing their fortunes with him.

Levene, who was said to have a personal fortune in the region of £15-20m, was addicted to gambling, spread betting and lavish purchases. The amount attributed to his false accounting was in the region of £32m, but after taking into account the lost profits of his customers, the figure rose to over £100m.

Some of the money was given to other investors in order to placate them and to prolong the length of time he was able to continue his fraud.

Maximum sentence and consecutive sentences

The maximum sentence set by Parliament is 10 years for fraud, 7 years for false accounting and 10 years for obtaining a money transfer by deception (now repealed).

Why then did Levene receive more than the maximum sentence? The answer lies in the principal of totality. Because Levene had pleaded guilty to a number of offences, the maximum sentences were 10 + 10 + 10 + 10 etc. However, it would be ludicrous if sentences were calculated in that fashion. An armed robber could receive 12 years, yet a serial shop thief could receive 6 months x 24 offences.

There are principles for concurrent (on top of one another) and consecutive (one after the other), which generally revolve around the nature of the offending, and whether the offences were committed against the same or different victims. These can be seen in the Sentencing Council’s Totality Guideline.

In this case, with multiple victims, consecutive sentences will have been appropriate.

Following that assessment, the Judge must ensure that the overall sentence properly reflects the criminality of the offender. The Judge may have assessed each count individually, added them together, added an uplift for the number of victims and overall sum, and then reduced the figure to take into account totality. He may have arrived at the sentence via a different route. What is important is that the resulting sentence is just and proportionate.

Sentencing remarks

HHJ Beddoe remarked on Levene’s “rank dishonesty”. He said:

“You were responsible for a fraud on a massive scale with a huge panoply of aggravating features, well planned and professionally executed, involving huge sums and huge profits with multiple victims whose trust in you was grossly abused.

“It was committed over a long period, was well concealed and you took further steps to conceal it and further steps to hide profits from it.

“The outstanding losses of £100m speak for themselves.”

Fraud guidelines

It would appear that Mr Levene was using the Sentencing Guidelines Council’s Fraud guideline as a tick sheet. The aggravating features were numerous and manifest:

Committed over a lengthy period (4/5 years)

High level of profit

Significant losses

Committed for gain

Multiple victims

Profits spent on enriching his and his family’s life

Abuse of a position of trust

Money also used to placate other investors, to prolong the fraud, thereby concealing the fraud

Planned

Professionally carried out

Comment

These offences are categorised as a confidence fraud, which in essence means that the offender has deceived or misled the victims into transferring money and/or property to him or her.

The top category of the guidelines for confidence frauds (page 20 of the guidelines) is based on a starting point of £750,000 of consequential loss. As stated above, the figure here was in excess of £100m.

Undoubtedly this would be a ‘large scale confidence fraud’ involving a large number of victims who were deliberately targeted. Consequently, these offences are far in excess of the guidelines.

As Levene pleaded guilty, he was entitled to some credit. That can range from 33% (if entered at the first opportunity) to 10% if entered after the trial has begun. With a final sentence of 13 years, the Judge must have assessed the notional sentence after a trial as between 17.3 and 14.3 years. As the aggravating features were substantial, it is unsurprising that this case was outside of the guidelines. In fact, it is not easy to find comparable cases.

The Guardian has listed other lengthy sentences for fraud, demonstrating that whilst this sentence is high, it is not the highest and it is certainly not outwith any permissible sentence for such widespread and serious offending.

As always, in the absence of the full sentencing remarks, it is difficult to predict. 13 years is a serious sentence, but given the multiple victims and large scale losses, it may be that an appeal is doomed.

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