Two men who operated a business supposedly producing Asian meals have been jailed for a £220,000 fraud. Fictitious performance and profit figures persuaded American backers to invest in Tahir Tandoori Frozen Foods Ltd. In reality, the business produced nothing after falling into the hands of a father and son team who pocketed investors' money.
Today at Luton Crown Court, Haroon Khatab (d.o.b. 29/05/76) and his father Umar Khatab (d.o.b. 30/06/53) were sentenced to nine months imprisonment (to run consecutively to a 2 ½ year sentence he is currently serving) and 18 months imprisonment respectively. Confiscation proceedings have been adjourned. Umar Khatab has been disqualified from acting as company directors for seven years. Director's disqualification for Haroon Khatab has been adjourned until 27 February.
Haroon Khatab, an offender in a previous boiler room fraud (see note 1 for editors), is also subject to an application by the SFO for a Serious Crime Prevention Order (see note 2). This has been adjourned to 27 February.
Confiscation and compensation proceedings in relation to both defendants have been adjourned to 12 June.
In passing sentence, HHJ Bright QC described Haroon Khatab as "the main player in a sustained and prolonged course of conduct", and told him that "there were no limits to the lies you were prepared to tell to persuade investors".
Background
Tahir Tandoori Frozen Foods Ltd was set up by three local businessmen in August 2002. It operated from leased premises at Crowbush Farm in Toddington, Bedfordshire and specialised in producing Asian frozen meals. By the summer of 2003 production was underway but on a small scale, perhaps 15 to 20 take-away customers a week, each ordering £50 - £100 worth of food.
The business was taken over by Haroon Khatab in January 2004 Khatab was seeking fresh capital, ostensibly to inject into the business. He contacted an American doctor, Rachna Mehra who was known to him through another investment venture. He visited Dr Mehra in the US, where he baffled her with slick market research documents, sample product packaging and striking projected profits. He claimed that the business had secured some highly lucrative contracts with clients such as Pakistan International Airlines and Wetherspoons the public house chain. She was offered a partnership in the business with promised returns of 30%. She was also falsely told by Khatab that his father, Umar Khatab, had taken out mortgages on two of his properties to grow the business. She invested US$195,000. Only part of it found its way into the business' bank account. £56,000 went to Umar Khatab's bank account. Of that, Umar withdrew £38,000 in cash, bought £4,000 worth of wedding jewellery and paid for family flights totalling some £13,000. Other substantial sums were taken as cash withdrawals or spent by Haroon Khatab including US $ 7,400 on online betting. The company bank account was stripped of all cash by the authorised signatory, Umar Khatab.
A friend of Dr Mehra, another American doctor called Dr Shah, was similarly persuaded in the US to send more than US $ 100,000. He believed he was financing company branded freezer units which the company asserted would be situated in outlets in the UK to sell their own products. Yet, as with Dr Mehra's investment, the defendants spent the money for their own purposes.
Discovering the fraud
In 2007 the SFO was investigating a wine investment fraud (i.e. Vintage Wines of St Albans). Haroon Khatab was a suspect in that case and was subsequently prosecuted (see note 1). Investigators discovered that the two doctors mentioned above, already victims of the wine investment fraud, had been targeted a second time by Haroon Khatab in another fraud. This led investigators to uncover the deception that lay behind Tahir Tandoori Frozen Foods. The defendants were charged in September 2007.
The indictment
"Haroon Khatab, Umar Khatab, Munir Ahmed and Sajid Nazir between 1 December 2003 and 31 December 2005 conspired together to defraud investors in Tahir Tandoori Frozen Foods Limited."
Haroon Khatab pleaded guilty. The three other defendants were tried at Luton Crown Court in December 2008. Umar Khatab was found guilty. The jury returned not guilty verdicts on the other two defendants.
Notes for editors
1. Haroon Khatab's previous conviction
In a wine investments fraud (Vintage Wines of St Albans), Haroon Khatab was sentenced on 29 September 2008 at Southwark Crown Court to two and a half years' imprisonment. That conviction could not be published at that time in order to prevent the jury in the Tahir Tandoori Frozen Food case being prejudiced by the publicity. The reporting ban is now lifted. The judge determined that Haroon Khatab's actions over the course of both frauds warranted a sentence of three years and three months. Thus today's sentence of nine months runs consecutively to the two and half year sentence.
2. What is a Serious Crime Prevention Order?
The SCPO was created by Part 1 of the Serious Crime Act 2007 and they are a civil order aimed at preventing serious crime. These orders are intended for use against those involved in serious crime and the purpose of their terms is to protect the public by preventing, restricting or disrupting involvement in serious crime. They are made on application to either the High Court or, as in this case, the Crown Court upon conviction and breach of the order is a criminal offence. Further information on SCPOs can be found on:
