Illegal tobacco In this feature persistent offenders high stakes effective response THIS IS A NO SMOKING VENUE Simon Ellis, from Medway Trading Standards, resurrects the principles of the Wendy Fair Markets case to help tackle persistent suppliers of illegal tobacco A These were not true small retail shops. Anything sold alongside the tobacco was simply a happy accident fter 17 bag and tag seizure visits to a shop, you dont expect still to be on good terms with the staff there. Strangely, however, this wasnt becoming personal because we never seemed to represent anything like a credible threat financially, legally or morally. A pile of Notice of Powers and Rights forms from previous visits would sit by the cash till, mocking us. It was clear that seizing illegal cigarettes and hand-rolling tobacco represented nothing more than gesture enforcement. The shops we were inspecting could, and would, be restocked inside 20 minutes while we were still in the same road, talking to another shopkeeper with their standing as a reliable place to score cheap fags still firmly intact. They didnt seek or want any other type of local business reputation. No-one in the shops seemed to have anything to lose, and when cases started going to court the derisory punishments handed down by the judiciary seemed to confirm it officially. When they moved beyond a conditional discharge, the fines financially represented no more than a few hours of supplying sleeves of Jin Lings. Nor were we getting many consumer complaints at 3.50 a packet instead of the best part of a tenner. Quite understandably, however, nearby shops and our local MP were failing to see the funny side of these black market bargains. Even so, there was an upside to repeating the seizure pantomime, while foolishly hoping to get a different result; eventually, the penny drops that what makes someone a difficult opponent might also be their Achilles heel. A pattern of shop characteristics soon began to emerge: a small business council tax exemption; no alcohol licence or lottery terminal; transient members of Kurdish male staff; disproportionately generous quantities of low-value products such as sunflower seeds on the shelves, and definitely nothing too perishable. Take Stewart Phillips, from tobacco detection dogs company BWY Canine, for a drive around your patch and, even without his trusty spaniel, he is adept at identifying this type of shop from the outside. With a plethora of window posters sealing off the inside from prying eyes, they are not difficult to spot. These were not true small retail shops. Anything sold alongside the tobacco was simply a happy accident. We knew this from seeing the constant march of customers who suddenly forgot what they had come in for when we were there seizing the tobacco they had so very obviously come to buy. They would quickly purchase a budget 35p energy drink, make a note to come back a bit later, and exit. This was at a rate of about 24 customers an hour. Some quick but ironically appropriate back-of-a-fag-packet economics showed one of these businesses could potentially be turning over nearly 500,000 a year, assuming each customer had only come in for two packets each. The2,000 fines that represented the upper scale of what we were seeing in tobacco-related cases elsewhere started to look like being a very long way from the answer to the problem. Once you start to see things as a huge, criminal, money-making enterprise and ignore the dusty shelves of goods that never sell the answer starts to be more obviously fiscal than fag-based. Unfortunately, we couldnt hope to run the size of operation needed to observe and trace the lines of supply and profit behind these shops. However, there was one set of people, often locally based, who were unknowingly, at this stage receiving their cut of the criminal cash: the commercial landlords or letting agents renting out the shop premises. This raised the prospect of money-laundering offences under sections 327-329 of the Proceeds of Crime Act 2002 for the landlords and agents taking rent from these shops. Inevitably, there was slight trepidation about this approach because of the infamous, failed Wendy Fair Markets case. However, the legal principle of money laundering by those obtaining rent for physical venues selling illegal goods hadnt failed in itself. Arguably, our mock shops situation lent itself even more clearly to these financial offences, so we made a decision to follow the rent money. This immediately starts a very different dialogue with lettings businesses often local establishments that are already aware they have some responsibility for what goes on inside the shops they are renting out. We were going to have to put the matter beyond doubt and, effectively, show our hand to the landlords and agents; we felt we needed to demonstrate, in no uncertain terms, just how unusual the shops were, compared to those we normally deal with. It goes without saying that we didnt consider anything like this approach with proper shops caught ad hoc with smaller amounts of illegal tobacco. All the landlords or agents were traced with a view to putting them on notice of their potential money-laundering liabilities the next time we found illegal tobacco at the shops in question. All we needed was for the shops to carry on supplying illegal tobacco, as their willingness to ignore us was adding to our case. Wewere now approaching shops quietly, hoping the illicit tobacco would still be on sale there and they didnt let us down. Using search dogs and test-purchase evidence, we put together information packages to go to the landlords and agents. The seizures were conducted in the same way, and to the same evidential standards, as if we were going to proceed against the sellers themselves. For a few weeks at a time, we didnt give them any respite and they, in turn, continued to have the tobacco there, ready for supply. Landlords and letting agents were shown our copious photographic evidence of the scale and the tenacity of the shops, including some worrying unauthorised removals of parts of their buildings to hide the tobacco, which certainly didnt harm our cause. It was another example of using the way these shops went about their business to build a persuasive argument for eviction against them. After every new enforcement action at specific premises, the landlord or agent was given further photographic evidence of the seized goods, and was put on notice again, detailing what had been found and their money laundering liabilities. Because none of the shops slowed down their supply (often they ramped it up), the agents and landlords couldnt go on taking rents from the tenants because to all intents and purposes the cash was now clearly criminal property. A typical case involved no more than six seizures before landlords started proceedings to move people on and, in one case, as few as three seizures. The shop was closed within three weeks of it opening, under a voluntary surrender of the lease. The process was far more about persuading landlords to activate clauses in commercial leases to move on tenants who were breaking the law than any specific legal remedy under trading standards law. Most of the shops were in less desirable commercial settings, so there was some reticence from the landlords because of the potential loss of rents, but there were never any objections to our point about money laundering. In fact, the recognition of potential money laundering offences was already there, particularly among the larger commercial lettings sector. At the time of writing of five shops that were prolific suppliers of illegal tobacco we are about to see the closure of the fourth, inside six months. The fifth landlord has rewritten its commercial tenancy agreement specifically to address the sale of illegal tobacco, which has so far also worked. If landlords choose not to move on problem tenants, our thinking is to run joint cases for the tobacco offences and the money laundering when tobacco continues to be supplied from the premises. This has not been necessary so far. Nothing is a panacea, but when another peculiarly empty-looking shop opens, our first move now is to call Medway local authoritys business rates department for the landlords details, to try to do things the easier and more effective way. Credits Simon Ellis is a trading standards officer at Medway Council. Images: Lissoff works / Shutterstock To share this page, in the toolbar click on Some quick but ironically appropriate back-of-a-fagpacket economics showed one of these businesses could potentially be turning over nearly 500,000 a year, assuming each customer had only come in for two packets each You might also like Cover story Ganging up on page 18 of TSReview, November 2015 issue.