Achilleas Kallakis Confiscation Order increased, SFO succeeds in POCA s.22 Order.

On 17th March 2023, His Honour Judge Baumgartner, sitting at the Southwark Crown Court, granted the Serious Fraud Office’s application to increase the Confiscation Order made against the Defendant, Achilleas Kallakis, by £92,500.

The application was based upon the recovery of sums representing part of a large donation made by the Defendant to a private girl’s school in Sloane Square, London.

The SFO’s case was that, during the course of the frauds that resulted in his conviction, the Defendant donated £250,000 from his proceeds of crime to the Francis Holland (Church of England) School which, at the time was attended by his daughter.  The payments making up the donation came from a Swiss bank account operated by the Defendant’s co-conspirator, Michael Becker, in relation to a claimed BVI trust structure and were made to the School’s offshore account in Jersey.

The donated funds were used by the School to build a theatre.  The School named the new building “The Kallakis Theatre”, a decision which it reversed after the Defendant’s conviction for conspiracy to defraud in January 2013.

Following the theatre’s change of name, a High Court action was brought against the School by the Defendant’s son, Michalis Kallakis.  Michalis Kallakis claimed to bring the action on behalf of the entire Kallakis family as an “unincorporated association”.  To that end he had obtained, in March 2020, a Deed of Assignment from his father in respect of any “interest in a Cause of Action against Francis Holland School”.

The School agreed to settle the action by means of a payment to Michalis Kallakis of £92,500, plus a sum in contribution towards his legal costs.

The SFO applied to Southwark Crown Court for a finding that the £92,500 was held by Michalis Kallakis as a nominee for his father and, if not, that it was a tainted gift within the meaning of s.77 of the Proceeds of Crime Act 2002 (“the Act”).

Following a three day hearing in which both the Defendant and Michalis Kallakis (as an interested party) gave evidence, His Honour Judge Baumgartner found in the SFO’s favour. 

In reaching his ruling on the matter, the learned judge found that: 

·         the donation to the School came from the Defendant’s proceeds of crime, “the surplus monies of the fraud committed by the Defendant and his co-conspirators” (Judgment, §68);

·         if there was a BVI trust structure, then the Defendant was the only beneficiary of that trust at the time the donation to the School was made;

·         the donation was made by the Defendant “for his own benefit, and not for the wider Kallakis family” as he and his son asserted;

·         the only person who could properly bring any claim against the School in relation to the donation was the Defendant (§76);

·         if the Defendant did assign his interest in a right to bring an action against the School, he only succeeded in assigning the beneficial interest in bringing such a claim, thus retaining “legal title to any claim against the School” (§81);

·         accordingly, the assignment of the beneficial interest only permitted Michalis Kallakis to pursue the “Cause of Action” but did not otherwise enable him to resolve the action on the Defendant’s behalf “without his direct participation as holder of the legal estate” (§81);

·         Michalis Kallakis held the beneficial interest in the sums paid to him by the School as his father’s nominee;

·         the £92,500 therefore formed part of the Defendant’s free property and his recoverable amount under s.9 of the Act (§82);

·         if he were wrong about that, then learned judge found that the complete assignment of the legal and beneficial interest in the  “Cause of Action” amounted to a tainted gift within the meaning of s.77 of the Act, and thus formed part of the Defendant’s recoverable amount (§87).

The learned judge found that it was just to include the £92,500 in the new calculation required by s.22 of the Act and made the following orders: 

·         The SFO’s application was granted;

·         The Defendant’s Confiscation Order was varied by substituting the figure of £3,342,500 for the original amount of £3,250,000;

·         The Defendant had 28 days to pay the sum of £92,500, in default of which he would serve a sentence of 12 months’ imprisonment.

The Serious Fraud Office were represented by Christopher Convey, 33 Chancery Lane
Achilleas Kallakis was represented by Martin Evans KC, 33 Chancery Lane, instructed by Birds Solicitors
Michalis Kallakis was represented by Giles Bedloe of 9 Gough Square

Please see this link for the Judgment