Kevin Slack successfully prosecutes benefit and tax fraud case

January 19, 2018

Kevin Slack from Exchange Chambers has successfully prosecuted a large scale tax and social security benefit fraud case at Liverpool Crown Court.

The family at the head of the £400,000 benefit and tax fraud ring lived a jet-setting lifestyle while claiming they were unable to work. Bernard Knutsen, 68, owned Chaplin’s Bar and a garage in Toxteth but dodged his taxes over a seven year period – while also claiming Income Support, Council Tax Benefit and later Pension Credit over a decade. His wife, Maureen Knutsen, helped run Chaplin’s Bar and their daughter, Kelly Knutsen, helped her parents launder the excess cash whilst she also cheated the benefits system.

The scam came crashing when Bernard and Kelly were arrested in Liverpool and Maureen was picked up at Manchester Airport after yet another holiday to Las Vegas. Police searching the couple’s home in Fell Street, Kensington, found £39,500 in cash, Rolex watches worth £15,000 and a number of gold sovereigns stashed in Bernard and Maureen’s bedroom.

Bernard was jailed for four years at Liverpool Crown Court after admitting three tax fraud and six benefit fraud offences, while Maureen, 63, was jailed for three years after a jury convicted her of tax fraud and benefit fraud. Mum-of-five Kelly, 39 was sentenced to 21 months in prison, suspended for two years, after she was convicted of money laundering and benefit fraud.

HMRC investigations also found that 10 employees at the garage, in Hill Street, and three staff at Chaplin’s, in Lodge Lane, had also been working while fraudulently claiming benefits.

Kevin Slack, prosecuting, said:

“The fruits of Bernard Knutsen’s tax evasion enabled him and Maureen Knutsen to enjoy lavish holidays. During the trial, it emerged that the Knutsens had travelled to Dubai in March 2008 and March 2009 to attend the Dubai World Cup (horse racing event).

“The court will recall the aggrieved tones in which Maureen wrote her subsequent letter of complaint to the travel agents, expressing her dismay at the VIP treatment they had expected not being available to them.”

The couple’s tax-dodging scheme also netted them:

• Trips to the UAE and USA in 2010 followed by a dream trip to the Far East taking in Hong Kong, Vietnam, Thailand, Singapore and India in March 2011.
•  In November 2011, they jetted off to South Africa, followed by more trips to the USA in 2013 and then a holiday to Argentina, The Falklands and Antarctica in 2014 – all totalling £21,000
• A brand new £24,000 kitchen at their Fell Street Home.

Mr Slack told the court: “None of this affluence prevented Bernard Knutsen dishonestly claiming means-tested social security benefits.”

In total, Bernard Knutsen evaded tax from his businesses to the tune of £278,000, while also receiving £85,000 in various benefits to which he was not entitled. Mr Slack said Bernard began claiming Income Support between 2004, when he claimed he had not worked since 2002 and was now unable to work due to diabetes, gout and spinal injuries.

He claimed to have no savings, no bank account and failed to declare his income from the garage or Chaplin’s bar, which he bought in 1999. Between 2009 and 2014, the garage alone brought in over £1.7m revenue, making a profit of £321,000.

Kelly Knutsen failed to declare paid work at Chaplin’s bar and rental income from a property she owned, and illegally received £54,000 in benefits. She also allowed her bank account to be used to hide £50,000 from her parents’ criminal activities.

The court heard the couple were no strangers to fraud, with Maureen jailed in 2005 for her role in a £1.6m scam involving a crooked Norwich Union worker – while Bernard was convicted of helping her launder money.

Judge Rachel Smith, passing sentence, said:

“This was a sophisticated fraud in the sense that property was purchased and placed in alternative names, important licensing and operating regulations were put into other names and money was moved around including in relation to Kelly Knutsen her conviction of laundering the proceeds of the crimes of her parents.”

Kevin is a member of the criminal department at Exchange Chambers.