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England and Wales Court of Appeal (Criminal Division) Decisions

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Cite as: [2009] 2 Cr App Rep (S) 62, [2009] 2 Cr App R (S) 62, [2009] EWCA Crim 69

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Neutral Citation Number: [2009] EWCA Crim 69
No: 2007/5702/D2, 2007/5387/D2 & 2008/6185/D2


Royal Courts of Justice
London, WC2A 2LL
21 January 2009

B e f o r e :





Computer Aided Transcript of the Stenograph Notes of
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Mr J Stone appeared on behalf of Haywood
Mr A Gersch appeared on behalf of Halai
Mr B Aina appeared on behalf of Patino
Mr S Patel and Miss F Jackson appeared on behalf of the Crown



Crown Copyright ©

  1. LORD JUSTICE KEENE: The appellants Haywood and Halai appeal against sentences imposed on them at Kingston-upon-Thames Crown Court by His Honour Judge Price QC. George Patino's application for leave to appeal against sentence has been referred to this court by the Registrar. We grant leave and treat him therefore as an appellant also.
  2. The case concerned a highly sophisticated operation, trafficking in counterfeit medicines, fake Viagra and Cialis for erectile dysfunction and Propecia for hair loss. The evidence was that this operated on a global scale with the fake products being manufactured abroad, smuggled into the United Kingdom and then distributed overseas. Very large profits were made and some of the charges were of concealing or removing the proceeds of criminal conduct. The products were meticulously packaged and to the untrained eye were indistinguishable from the genuine article.
  3. Haywood was convicted in late August 2007 after a lengthy trial of three counts of conspiracy to evade the prohibition on the unauthorised use of a trademark (namely Viagra, Cialis and Propecia), two counts of conspiracy to place a medicinal product on the market without authorisation, three counts of conspiracy to evade the prohibition on wholesale dealing in medicinal products and two counts of, in effect, money laundering. He was sentenced to a total of six years' imprisonment less 561 days spent in custody on remand.
  4. Halai had pleaded guilty on rearraignment on 24th January 2007, shortly before the trial was due to begin, to four offences. Those were two counts of conspiracy to evade the prohibition on unauthorised use of a trademark in respect of Viagra and Cialis, and two counts of conspiracy to place a medicinal product on the market without authorisation. He received a total sentence of four-and-a-half years' imprisonment.
  5. Patino pleaded guilty on 9th October 2008, prior to a retrial, to a more limited trademark conspiracy in respect of Viagra, in his case between February and October 2005. He was sentenced to three years' imprisonment. A confiscation order was made in the sum of $236,700 reflecting an agreed figure as to benefit, with three years' imprisonment in default. He was also ordered to pay 50,000 towards the prosecution's costs.
  6. The judge described Halai as having been at the very heart of this sophisticated and highly organised operation. He was, as the Crown put it, the linchpin of the British arm of the conspiracy. Haywood was the main supplier, obtaining vast quantities of fake Viagra and lesser quantities of fake Cialis and Propecia from China which were smuggled into this country. The bulk of the fake drugs went to Haywood's address. Some went to Halai and were thereafter shipped to the Bahamas to a company called Global Medz. Records from DHL disclosed that of the 64 packages imported into the United Kingdom between January and July 2003, 19 were sent directly to Halai. During this period Haywood was in daily email contact with his Chinese supplier about the products. There was evidence that onward shipments to the Bahamas were accompanied by false invoices and that Halai exported fake Viagra to the Bahamas by a variety of means. The evidence also showed substantial amounts of money being moved. Haywood opened several off-shore accounts in October 2002. Halai wired over $965,000 to these accounts in the first six months of 2003. In the same period Haywood wired $283,000 to various Chinese accounts. Between February and July 2003 Global Medz made over 20 money transfers totalling $1.6 million (then approximating to 900,000) to Halai. More payments were subsequently made to him and to Haywood. Halai also obtained counterfeit drugs from other sources.
  7. In early July 2003 Halai's premises in London were searched and investigators recovered counterfeit Viagra worth over 3,000 in the kitchen cupboard, a box addressed to Haywood containing over 200,000 worth of counterfeit Viagra and counterfeit Propecia worth 292,000 and a substantial quantity of counterfeit cartons, leaflets and packaging. Various forged documents including forged or fraudulent certificates of analysis were also recovered.
  8. At the same time Haywood's property in Leicestershire was searched. Investigators found 91,500 counterfeit Viagra tablets in the garage along with a substantial quantity of counterfeit leaflets and labels. These and a further 22,000-odd counterfeit Viagra tablets, 2,700 counterfeit Cialis tablets and a tabular account of shipments were seized. The document recorded that 82 separate shipments comprising just under 420,000 fake Viagra tablets with an approximate value of nearly $5 million were made between 15th January and 16th June 2003.
  9. As a result of interception by the United States Food and Drug Administration the supply to the Bahamas came to a halt in about September 2003. But Halai and others then started a company called Imperasto Limited and used it to distribute fake Cialis. The Cialis found its way into the legitimate supply chain resulting in a recall by Eli Lilly, the pharmaceutical manufacturer.
  10. In early 2004 Halai bought an off-the-shelf company, Health First Marketing, in Singapore which he used to meet online orders from the United Kingdom. Patino's own computer record shows he was a significant wholesale customer of Health First Marketing. Halai was meeting hundreds of orders per week for the supply of fake Viagra and this continued in October 2005.
  11. Patino was a qualified doctor who traded in pharmaceutical products in South America. He was in this way able to buy fake Viagra at prices a fraction of what would have been a proper price for Viagra and he was thereby enabled to make a large profit.
  12. The sentences passed are now challenged by these three appellants. Haywood is now aged 60. He has one previous conviction for obtaining a pecuniary advantage by deception in 2001 for which he was sentenced to four months' imprisonment suspended. Halai is now aged 34 and has no previous convictions. Patino is aged 48. He has no previous convictions in this country but has two related convictions in the United States of America.
  13. On behalf of Haywood a number of points are made. Mr Stone submits first that the judge took too high a starting point for these offences. He has drawn our attention to a number of decided cases of which we take account. Amongst others reference has been made to the case of Valentine [2006] EWCA Crim. 217 where a total of five-and-a-half years' imprisonment was imposed at first instance and not challenged in this court. That sentence was passed in respect of a man in control of a factory said to be one of the largest pharmaceutical factories in Europe. That, it should be noted, was a sentence following a plea of guilty and in the absence of any money laundering offences. It was of course, as we have indicated, a case involving the manufacture of illegal pharmaceuticals and to that extent differs from the present case. Nor was it a case where this court was asked to pass judgment on the appropriateness of the sentence.
  14. Nonetheless, given the scale of the operation in the present case, this court does not regard the total of six years' imprisonment as an excessive starting point. As the trial judge emphasised, such unlawful trafficking in fake drugs undermines legitimate pharmaceutical companies. It also damages public confidence in the safety of medicines. Sometimes, although not it seems in the present case, it may give rise to an actual risk to health.
  15. This was a very sophisticated commercial fraud played for high stakes and where high profits were realised. In our judgment it merited a substantial custodial term for the main players and six years was a proper sentence for such players, indeed it could well have been higher.
  16. It is then said on behalf of Haywood that there is an objectionable disparity between this sentence for Haywood and the total of four-and-a-half years imposed on Halai. Mr Stone in his attractively brief submissions refers to the judge's comment that Halai was at the "very heart" of the conspiracy. The implication is that the appellant Haywood played a materially lesser role. We have read what has been put in writing in support of this argument. We are not persuaded by it. We cannot see that there is any objectionable disparity of the kind which merits this court intervening. There are ample authorities which spell out the test for such intervention on such a basis. Halai was the leading figure in the receipt and distribution in and from the United Kingdom. That is true. But Haywood was the vital figure on the supply side. His role was as important and he did not have, as Halai did, the benefit of a guilty plea, albeit that that plea was a late one. In addition, Haywood fell to be sentenced for money laundering offences as well as the trademark offences. In all those circumstances the disparity ground has no real merit.
  17. Finally, reliance is placed on some personal mitigation. This appellant has been involved in a number of charitable organisations and has, with the one exception to which we have referred, a clear record. He also has been diagnosed with cancer of the lower bowel. He is aged 60 and his previous conviction is now spent. We take all that on board, as in our view the sentencing judge also did. He had this mitigation placed before him. It seems to us that the judge properly reflected that mitigation in the total of six years at which he arrived, a total which, as we have said, could otherwise have been higher in the absence of the mitigation to which we have referred. For these reasons, Haywood's appeal against sentence is dismissed.
  18. We turn next to the appeal by Halai. Many of the grounds of appeal advanced on paper in respect of this appellant have been abandoned before us today, in our view rightly so. We confine ourselves therefore to those which remain. On behalf of Halai, Mr Gersch adopts the argument that the starting point taken by the judge was too high. He emphasises that this appellant pleaded guilty and offered to give evidence for the Crown. Mr Gersch submits that sufficient credit was not given for the plea of guilty. Reference has been made particularly in the written submissions to a passage in the sentencing remarks where the judge referred to a reduction of three months because of delay in sentencing and the guilty pleas. For our part we can see no basis upon which three months could have been intended by the judge to reflect even a late guilty plea. It would arithmetically not even have been a ten per cent reduction. Partly for this reason we do not read the judge's remarks as meaning that the three months reduction included the reduction for the guilty plea. We take the view that, slightly ambiguous though the wording may have been, the three months was intended to have been the reduction for the delay in sentence. In any event, we deal with the matter afresh.
  19. Mr Gersch argues that a proper discount would have produced a sentence lower than the total of four-and-a-half years' imprisonment. In addition, it is emphasised that this appellant is of good character. The point is also made that the appellant has a young family and reference is made to other personal mitigation. In addition, Mr Gersch makes the point that no one's health materially suffered as a result of these conspiracies and transactions.
  20. We take all that into account but we reiterate what we have said in the case of Haywood about the appropriate starting point. This was a sophisticated commercial operation played for large amounts of money. It was fraud on a grand scale. In the view of this court the sentences imposed on Halai properly reflected all the relevant considerations. Had he fought these charges, and given the scale of the operations and his crucial role in it, a significantly higher sentence could well have been expected. The sentences passed and the total of those sentences were not manifestly excessive.
  21. Three matters are raised in the appeal, as it now is, by Patino. First, there is a challenge to the sentence of three years' imprisonment imposed in his case. That is criticised on the basis that the judge failed to take account of the plea of guilty, the fact that the basis of plea limited the culpability of this appellant to his dealings with Halai during an eight month period in 2005, and that there was an agreed extent of benefit in his case to just over $236,000. Mr Aina on this appellant's behalf emphasises that there had been a marked change since the first trial. As compared to what this appellant faced at that first trial, the count to which he eventually pleaded guilty at the retrial in 2008 was, it is said, a different animal; it related to a shorter period of time, there was only one fake prescription drug referred to and only one other conspirator alleged.
  22. There has been some suggestion in argument that this appellant's willingness to plead on this more limited basis arose from a Crown indication that it was prepared to proceed on such a footing, but that does not appear to be the case and that line of argument is not pursued. However, it is said that it would not have been realistic to proffer such a limited basis of plea at the first trial because the Crown would never have accepted it. This court does not accept that that would not have been a realistic course of action to have adopted. Whatever the Crown's likely reaction there was no obstacle to such a limited plea being offered at that particular stage. As it was, it was not proffered until long after the first trial. That first trial was fought by this appellant on the basis that he had had no involvement whatsoever in dealings with fake medicines. That, as was ultimately conceded, was untrue. We cannot see that his eventual plea of guilty, albeit on a more limited basis, can be regarded as anything other than a late plea for which only limited credit could be given.
  23. Of course, as Mr Aina submits, this appellant fell to be sentenced for a much more limited conspiracy; we have already indicated the extent of that. It is clear to this court that the judge had that factor in mind. The appellant was given a shorter sentence than, for example, Halai who also pleaded guilty. The appellant was described by the judge as a highly intelligent man and being medically qualified someone who must have been aware of the risks involved in the distribution and marketing of fake medicines. We also bear in mind that the judge, having presided over a very lengthy first trial, was in a much better position than this court to be clear about the different roles and responsibilities of all those who eventually he had to sentence. Given the scale of the operation, even for the shorter period for which this appellant fell to be sentenced, we are not persuaded that the three year sentence of imprisonment whilst severe is manifestly excessive. It follows that the appeal against that term of imprisonment must fail.
  24. The second point taken concerns the costs order by which this appellant is to pay 50,000 towards the Crown's costs. The judge here was in effect ordering him to pay almost half of the costs incurred in respect of this appellant at both the first trial and the retrial, the total for those two being, we are told, 106,000. Mr Aina argues that this order was for an excessive amount. He says, first, that the jury at the first trial could not agree on the verdict, which is true, and the appellant should therefore not be regarded as responsible for those costs. We do not accept that argument. The appellant fought the first trial and gave evidence at it on a basis now admitted to have been false to a material degree. He has in effect now pleaded guilty to part of what he was originally charged with. The judge obviously sought to reflect that in ordering him only to pay 50 per cent of the costs. Costs are always a matter on which an appeal court is loathe to intervene. It is difficult for this court to substitute its judgment as to the appropriate proportion and this court is only going to intervene where there has been some error of principle or where the order is manifestly wrong. We can see no basis for doing so on that first argument.
  25. In addition, it is said that 50,000 is in excess of this appellant's means. Our attention has been drawn to the fact that the appellant has a judgment debt against him of 32,500, his business it is said has collapsed and he is therefore in no position to pay this sum of money. Certainly we accept that this appellant has the debt to which we have referred (and indeed may have other debts). The question which remains, however, is: what about his assets? This is a man who resides in Mexico where he has a house; he also we are told has a property in the United States. There are no valuations available for either of these properties. In particular he has refrained from making disclosure of full details of his financial circumstances. In that situation no argument about insufficient means can possibly succeed. We are not prepared therefore to interfere with the costs order.
  26. Thirdly, and finally, it is said that the judge was wrong to order, as he did, that the other counts in the indictment against this appellant should lie on the file. Mr Aina raises an ingenious argument that such an order involves a breach of Article 6(1) of the European Convention on Human Rights which guarantees the right to a fair trial. As part of that, there has to be a trial of any criminal charge against a person within a reasonable time. Leaving a charge on file means, it is contended, that that charge is left hanging over that person's head in perpetuity. Mr Aina recognises that this court has held in the case of Mackell (1982) 74 Cr.App.R 27 that it has no jurisdiction to hear a challenge to such an order. This court is a creature of statute and it is not empowered by the Criminal Appeal Act 1968, or any other legislation, to hear appeals other than against conviction or sentence. However, he emphasises that since that decision the Human Rights Act 1998 has come into force and he submits that by virtue of section 3 of that Act we should seek to interpret the 1968 Act so as to preserve the appellant's Article 6 rights. The statute should be interpreted so as to allow an appeal against ancillary matters such as this order to which we have referred.
  27. We regard this as an interesting argument, although we doubt whether any breach of Article 6 is involved in such an order. The Strasbourg Commission has ruled in the case of X v United Kingdom [1983] 5 EHRR 508 against such a result. But we cannot in any event see how we have the power to deal with this issue on this appeal. If any provision of the 1968 Act were to be read in such a way as to provide jurisdiction it would have to be section 1(1) which provides for an appeal against conviction. The order to lie on the file is in no sense connected with or ancillary to sentence or to an appeal against sentence arising under section 9 of the 1968 Act. Yet that is what we are dealing with today. That is all we can deal with. There is no leave to appeal against conviction. So Mr Aina's point is one which he will have to put on ice for a future occasion. We have no doubt that he will seek to find some appropriate opportunity to raise it.
  28. Nonetheless, it follows that all three appeals by these appellants are dismissed.

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