New Forest pub brothers jailed for £3.2m VAT scam
THREE brothers who ran a restaurant and pub empire have been jailed for 14 years for stealing £3.2m in a tax scam.
Shahab Hashtroudi, who “orchestrated” the scheme, was jailed for six years at Southampton Crown Court, while his two brothers Shahin and Hedayat were each sentenced to four years.
Judge Peter Henry also banned Shahab (64) from being a company director for 12 years and the other defendants for eight years.
However, he spared a fourth defendant – Tracey Carder – who worked as a bookkeeper for the brothers, from a prison term because she was a single mum with two young children.
The sentences mark a fall from grace for the Hashtroudis, well-known locally for running pubs and restaurants throughout Hampshire, Dorset and Surrey.
They included a number in the New Forest, such as the Sir John Barleycorn at Cadnam, The Hobler at Lymington and The Old Beams Inn at Ibsley.
In court, Judge Henry said the family’s foray into business began when Shahab and a fourth brother, Massoud (who died in 2001), started a small “modest” coffee shop in Bournemouth.
But those humble beginnings led to the establishment of the Grand Leisure (GL) firm – with Shahab and Hedayat as directors – which at its height employed close to 300 people.
However, trouble began during the 2008 financial crash. It caused the Royal Bank of Scotland (RBS) to call in the £500,000 overdraft it had with GL, which eventually was forced to cease trading while owing £1.7m to the taxman. That money has never been recovered.
Because of the collapse, Shahab and Hedayat were both made bankrupt and prohibited from being company directors for 12 months.
But the pair, who the judge said had “substantial mortgages”, decided to continue trading and alongside Shahin came up with a “corporate structure” scheme they ran for the next eight years.
It involved the brothers setting up a series of incorporated companies – 11 in total – which all failed and left huge debts.
Each firm would trade for a period of time before failing and being liquidated, and a short time later another firm would start up under a new name and the process would begin again.
Among those collapsed firms were Alcatraz – including Alcatraz Dining Group Ltd, Alcatraz Pub Company Ltd, Alcatraz Restaurant Company Ltd and Alcatraz Wine and Beer Company Ltd – 8 Rivers, Apricot, Alcatraz Group Ltd and Candy Experience Ltd.
None of those lasted longer than 24 months, some trading for less than a year and failing to pay a single penny in VAT to Her Majesty’s Revenue and Customs (HMRC) while the Hashtroudis stole the Income Tax and National Insurance contributions of their employees.
Judge Henry made it clear he believed Shahab had been “the power behind the throne”, telling him: “You involved others in this fraud by pressure, by persuasion, by force of personality or by playing on the desire of some to keep their jobs.”
The court heard the Hashtroudis were rumbled when HMRC launched an investigation after becoming suspicious when Apricot failed.
A team set to work and uncovered the scam, leading to the three Hashtroudis and Carder being charged and standing trial at Southampton Crown Court late last year.
Tens of thousands of pages of evidence were presented to the jury, with various employees of the Hashtroudi firms appearing before the jury during the seven-week trial.
The jury found Shahab guilty of four counts of cheating the public revenue, and Shahin (58) and Hedayat (68) were each found guilty of one. Carder (42) was found guilty of one charge and not guilty of another. A fifth man, Paul Podvoiskis, was found not guilty of one count he faced.
When the Hashtroudis went before the court last Friday, Judge Henry was handed glowing references on their behalf and they were described as “devoted family men”.
They were “loyal” to their staff, the defence barristers claimed, adding the Hashtroudis felt they had an “obligation” to their staff to keep their businesses going.
It was pointed out all three men worked “tirelessly”, often clocking up 80-90-hour weeks and making “sacrifices” such as missing family events and avoiding holidays to keep the businesses going.
The Hashtroudis, it was repeatedly stressed, were remorseful and very sorry for the impact their offending would have on their families – which each put “above all else”.
Representing Shahin, of Thwaite Road, Bournemouth, barrister Nick Tucker stressed his client had been a “mere figurehead” who provided a “veneer of legitimacy for the businesses”.
He added: “During their trial the court repeatedly heard of the brothers’ reluctance to implement cost cutting measures that would have an impact on staff pay or the numbers employed.”
During his time with the business, Hedayat, of Stirling Road, Bournemouth, had been a waiter, cleaner and even a plumber on one occasion to save money.
Jonathan Underhill, the barrister for Carder, of St Peter’s Road, Poole, pleaded with the court to spare her prison, pointing out his client did not benefit in any way personally from the offending.
Judge Henry suspended Carder’s two-year jail sentence for two years, and ordered her to complete 300 hours of unpaid work.
“I have to take account of the fact were I to send you immediately to custody, the effect on your young children would be devastating,” Judge Henry said.
“Of course, I regard with some suspicion you becoming pregnant during the course of this trial process in the sense that it was after you had been charged and so forth – but I have heard no evidence it was deliberate and I will not penalise you in the sense of that,” Judge Henry said.
Carder wiped away tears as she was led from the dock and Hedayat patted her arm before he was led to the cells.
Richard Wilkinson, HMRC’s Fraud Investigation Service assistant director, said: “The Hashtroudi brothers were serial offenders in setting up businesses and ripping off the British taxpayer, by pocketing the Income Tax and National Insurance contributions employees had paid and also VAT on sales. The money they failed to declare is the equivalent to the starting salaries of 165 nurses for a year.
“Tax fraud is a serious crime and I ask anyone with information about possible fraudsters to report it to HMRC online or contact our Fraud Hotline on 0800 788 887.”
HMRC has issued confiscation proceedings against the Hashtroudis and Carder to claim back some money. That case will take place in the coming months.