Servcorp UK Limited, the Australian serviced-office and mail forwarding company, has been fined £21,000 with £11,500 costs after pleading guilty to seven offences under the London Local Authorities Act 2007 (LLA) at the City of London Magistrates Court on July 17.
The prosecution was brought after a joint investigation by City of London Corporation Trading Standards and the City of London Police as part of Operation Broadway, and is the first of its kind. It focused on the actions of the company that through its poor business practices enabled suspects under investigation to operate within the Square Mile.
Operation Broadway is a multi-agency initiative disrupting investment fraudsters operating in the Square Mile and surrounding London boroughs. It has spread awareness throughout the mail forwarding, virtual and serviced office industry, of how criminals operate – typically by using prestige addresses to run investment fraud operations in the City and key Metropolitan Police Boroughs.
Under the LLA, mail forwarding businesses are required to keep detailed records of their clients. The records must be kept open to inspection by trading standards and police officers in order to allow those people using a mail forwarding business for fraudulent purposes to be more easily identified.
On December 3, 2014, a visit was made to Servcorp’s offices at Dashwood House, Old Broad Street, by officers from City of London Police and City of London Corporation Trading Standards. A request was made to inspect records on clients of Servcorp – a number of whom were suspected of fraudulent activity involving the sale of worthless or non-existent commodities like diamonds and wine to vulnerable consumers across the UK.
Although required to keep these records open for inspection at all reasonable times, Servcorp did not provide the records for inspection until 3 February 2015, two months later. The records that were provided were inadequate and did not comply with the legislation. The court heard that advice had been given to Servcorp on many occasions about how to comply with the legislation and since it had not been followed, the decision was taken to prosecute the company.
Speaking after the hearing, Jon Averns, the City of London Corporation’s head of trading standards, said: “This prosecution shows that the City of London will not tolerate office providers which allow suspected boiler room operations to develop in their sites. Mail forwarding and serviced office providers like Servcorp have a responsibility to work closely and transparently with trading standards and police to flush out suspected fraudulent firms and protect consumers from serious financial harm. They need to know how their premises are being used and they need to act quickly if they have evidence that their office space has been turned into a base for suspected fraud. We will do everything possible to protect the reputation of the Square Mile and we will not hesitate to use legislation where necessary.”
And Detective Inspector Teresa Russell of City of London Police’s Economic Crime Directorate added, “Working with our partners we continue to drive out investment fraud in the City and across London and will continue to prosecute any mail forwarding, virtual and serviced office providers who ignore their legal obligations and enable criminals to operate, resulting in thousands of victims losing their life savings.
“Bringing this prosecution against Servcorp was necessary. We seek to work with Servcorp and other virtual, serviced office and mail forwarding companies to ensure they are not open to exploitation from organised crime groups, and do not find themselves involved in criminal activity.”
