Kenyan in US tax fraud scheme to get back his Sh14 million
Jeffrey Sila Ndungi in Texas in the United States in 2016.
What you need to know:
- The court heard that Mr Ndungi's bank accounts had received suspicious sums in excess of Sh50 million, some of which had been invested in a fixed deposit account earning interest.
A government agency has lost a court battle to seize over Sh14 million belonging to a Kenyan jailed in the United States of America for identity tax refund fraud.
High Court judge Esther Maina dismissed an application by the Assets Recovery Agency seeking to confiscate the millions belonging to Sila Jeffrey Ndungi, allegedly ripped off by the American government.
The Kenyan was convicted in the US of stealing Sh430 million through a tax refund scheme and money laundering.
The agency wanted the court to declare that the funds held in various accounts at Absa Bank Kenya were proceeds of crime and should be forfeited to the government.
Mr Ndungi is said to be a US-based businessman involved in the aviation industry and owns two aircraft.
The court was told that the ARA had received information that his bank accounts had received suspicious funds believed to be proceeds of crime and money laundering, prompting the agency to begin investigations.
However, the judge questioned whether the information received from the US, including the trial and judgment, was admissible in the Kenyan courts. She said ARA had not disclosed how it came across the information on which the case against Mr Ndungi was based.
"They merely stated that in the course of the investigation, they obtained further information which revealed that since 2010, the United States Department of the Treasury, Internal Revenue Service Criminal Investigations had been investigating a large stolen identity tax refund fraud scheme orchestrated by persons in Kenya," Justice Maina noted.
She added: "Surely, if the information was not obtained through a request made by our Attorney General under Section 115(1) of the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA), then the same cannot be considered as evidence by this court."
Judge Maina said that having concluded that the information relating to the US proceedings was inadmissible and that there was no evidence that ARA was acting at the request of the US government in bringing the proceedings, "I am satisfied that the agency has not met its legal burden of proof to enable the court to find that the funds are indeed proceeds of crime".
As a result, the judge ruled that the ARA had failed to prove on the balance of probabilities that the funds were proceeds of crime and ordered that the money be released to Mr Ndungi.
The court was told that Mr Ndungi was involved in an identity tax refund fraud scheme.
Investigators said the scheme involved the electronic filing of thousands of fraudulent income tax returns orchestrated from an Internet Protocol (IP) address in Kenya.
The court heard that Mr Ndungi's bank accounts had received suspicious sums in excess of Sh50 million, some of which had been invested in a fixed deposit account earning interest.
Investigations, ARA said, also revealed that upon his arrest in the US, he was charged with the offences of theft of public funds, aggravated identity theft and aiding and abetting the theft of public funds.
Mr Ndungi was later found guilty of all three charges at first instance and sentenced to 97 months imprisonment, but on appeal the convictions for the first two offences were upheld but the charge of theft of public funds was overturned.
