The Iceman: The Rise and Fall of a Crime Lord

by Wilson, Jim

  An Audemars Piguet watch, also found in Fishescoates Gardens, was valued at £30,000. The model had been painstakingly constructed in the company’s workshops in the village of Le Brassus in the Jura region of Switzerland where the watchmakers Jules-Louis Audemars and Edward-Auguste Piguet had founded their prestigious business in 1875.

  Fine watches were not the only jewellery bought and sold by Stevenson as he cleaned his fortune. Officers in the Folklore busts recovered diamond-encrusted rings, bracelets and pendants and police familiar with his career say Stevenson had long-standing links with diamond merchants in Amsterdam. One said:

  When he came back to Glasgow full-time after the McGovern charges were dropped, he started trading in jewellery on the back of his drugs money. It was an easy way of churning his money around while also offering convenient cover for dealing with some very important business associates in Holland.

  Stevenson had a very close relationship with one particular diamond merchant, as an associate revealed:

  There was a businessman in Amsterdam, a Serb who runs a diamond firm, who Stevenson had a lot of dealing with. He is a serious man involved in many different businesses with a very interesting contacts book. He doesn’t waste his time doing business with anyone apart from Europe’s wealthiest criminals.

  41

  Laundry Business

  Legend has it that American mob bosses, who were raking in a fortune during Prohibition in the 1920s, literally invented money laundering. Keen to conceal and legitimise the takings from their illegal trade in outlawed alcohol, they are said to have filtered the cash through apparently legitimate businesses with a high turnover in cash. Laundromats were a favourite.

  Whether this is true or not, the downfall of Al Capone, who was jailed for tax evasion in 1931, sharpened gangsters’ focus on the need for financial finesse. Over seventy-five years later, the process of money laundering remains the same – only the sums involved are very different. George P. Schultz, the former United States Secretary of State, was not mistaken when he noted, ‘Today’s criminals make the Capone crowd and the old Mafia look like small-time crooks.’

  Money laundering, like the crime that feeds it, is now a global business. Dirty money floods out of Scotland every day and, on its way, it crosses paths with the millions of recycled and rinsed pounds returning to the country’s criminals.

  The fortune made and laundered by Stevenson in his years as the biggest drugs trafficker Scotland has ever seen will never be quantified. Even he probably could not put a figure on the many, many millions that have been sent abroad or cleansed through front businesses and property deals in Scotland. One source, with an awareness of the scale of his operation, says the sums involved are almost unimaginable. He commented:

  Nobody knows basically but you can start with the Home Office saying criminal profits in Britain are a little over £5 billion a year – that’s profit, not turnover. The usual rule of thumb would make that £500 million of profits being shared by gangsters in Scotland every year – most of it drugs money. Add in that, for at least five years, Stevenson was bringing in the vast majority of those drugs and you’re in the ballpark.

  A cop I know told me that, over the twenty years Stevenson was doing it and particularly in the last five, he could have brought in drugs worth £2 billion on the street. He was selling wholesale but was still making £15,000 or so for every kilo of heroin or coke. Given that one of his shipments could be 100, 150 kilos and he was bringing in hundreds and hundreds of kilos every year, then he’s not going to be short for a pint of milk. That’s about all he could openly buy, though – anything bigger and the cops would be all over it.

  And he did not discount the claims of Frank Gallagher, one of Stevenson’s key men, that his boss spent £36 million on a property spree on the Costa del Sol.

  It sounds high even for a guy like Stevenson but, for people with no knowledge of the money being made from drugs, the sums involved are unimaginable. Put it this way, I would be very surprised if Stevenson does not have at least £20 million in clean cash and assets.

  The process of turning Stevenson’s dirty millions into an apparently legitimate fortune involved a morass of cash transfers, dubious import/export activity, property deals and front firms. But the aim of obscuring his wealth and its source remained constant. Like the Mafia’s laundries, businesses dealing in a large number of transactions each involving a small amount of cash are a popular way of rinsing money for Stevenson and other Scots gangsters. Legitimate front men, ideally with no serious criminal record and of no particular interest to the police, would be installed to run the firms. Some of the businesses may have been bought with dirty money but operated legitimately. Others were relentlessly used to launder drugs profits.

  Pubs, security firms, scrapyards, sunbed parlours, nail bars and hairdressers have all got their fans among Scottish criminals but taxi firms have remained the enduring favourite. Fleets of minicabs each making a series of short trips are an almost impossible target for official scrutiny. Many, if not most, of the taxi firms advertising for business in the West of Scotland and through West Lothian to Edinburgh are fronts for organised crime clans. Thousands of phantom fares inflate the accounts covering for the injection of drugs money while drivers can make special tips from their bosses by crisscrossing the city carrying contraband. Some firms have been bought by gangsters while others have been specially created. Stevenson did both and, at the time of his arrest, had a controlling interest in one medium-sized firm, was in the process of setting up another and was busy taking over a third.

  The Folklore tapes were running as Stevenson discussed the launch of a new firm, CS Cars – named after and ostensibly run by his wife Caroline. The couple spent almost £100,000 on a fleet of ten Skoda Octavias but, on 29 March 2006, Stevenson was secretly recorded detailing exactly how the cars would help launder his money. He was heard telling his wife:

  This is what we’re gonnae do with the taxis. There’ll be twelve hundred pound going in your bank but I’m going to put twenty-four hundred [£2,400] in every week and say I double shift the motors . . . over a year that will be £100,000 minus tax.

  Taxi drivers were frequent customers at a service station near Stevenson’s home in Burnside where the fuel prices were usually the lowest around. Stevenson would also fill up at the garage but he might not even have paid the bargain prices since he was its secret owner. The garage was one of several Stevenson enterprises to be looked after by one of his key business associates, Anthony Burnette, the business fixer who appeared on the Folklore tapes discussing commercial opportunities with Stevenson, including the purchase of other forecourt garages.

  But taxis and petrol stations were not Stevenson’s only involvement in the motor trade. Unlike many gangsters, he did not buy and sell cars frequently to wash some cash. Instead of selling cars, Stevenson cleaned them.

  One officer said:

  A lot of these guys started car washes to launder their money but then the latest trend became mobile valets. Stevenson was one of the first. He had some guy running about in a van cleaning cars. He must have done a right good job because, to make what he was meant to be earning, he would have needed to have been polishing every car in the southside.

  He also had put money in car showrooms and haulage firms. The gang boss, nicknamed The Iceman, was not known for his sense of irony but he also had a stake in a fleet of ice-cream vans selling sweets around the schemes of Glasgow. Dirty money launched each of his businesses but many were not subsequently used to launder drugs cash. Rather, they were straightforward investments gaining a layer of legitimacy with every year that passed. The service stations, for example, would be rented to leaseholders who were often unaware of the true identity or business of the owner.

  Stevenson also had extensive property interests. He bought scores of flats and houses in Scotland and around the world, with a portfolio that included homes in Spain, Holland and Eastern Europe. He leased out many, some were bought at
the development stage and off – loaded when built and others would simply lie empty until it was a convenient time to sell them.

  Of course, Stevenson’s sideline of trading in gems and luxury watches was another convenient cover for moving his money. A £10,000 watch or jewel-encrusted necklace bought in Scotland could be sold to an amenable Amsterdam gem trader for a tenth of that before being sold again for the full market value and the proceeds returned to Stevenson fully cleansed minus a cut for his contact.

  The halawar money transfers from Makkah Travel and other agencies in England also sent millions abroad. Some was laundered and some would be used to pay for more drug shipments. And, despite his aversion to unnecessary risk, police believe that Stevenson, his stepson Carbin and other members of their outfit got directly involved in the most basic mechanics for transferring money abroad. One officer said:

  They were never caught so it is impossible to say for sure but I have absolutely no doubt they carted hundreds and thousands of pounds through Glasgow Airport in their hand luggage. They were flying to Spain, Amsterdam and Dubai – all over the place – and I don’t think they could resist the opportunity to get some cash out of the road. What’s the worst thing that could have happened? They could lose a bagful of cash at check-in – a bad day at the office, that’s all.

  One source, who was involved in an investigation into Stevenson before the launch of Folklore, said:

  Cleaning their money and keeping track of their investments is a full-time job for Stevenson and criminals like him. Of course, they will not be burdened with the paperwork but have to instruct their people organising that, keep briefed on their investments, and, most importantly, keep an eye out for new opportunities. That’s the key to it. The volume of notes coming in has to be moved quickly or you literally run out of places to hide them. You need a range of options, a number of different channels to get rid of it, so that, if one is closed, you can try another. Stevenson knew that. He wouldn’t drive past a For Sale sign without thinking about it. He was always looking for things to do with his money.

  He might have the ideas but he still needed help to legitimise his money. And he got that help from legitimate people. Lots of very legitimate people.

  42

  The Money Detectives

  A recent recruit to the elite agency targeting Scotland’s serious and organised criminals will never make an arrest, interview a suspect, or take a fingerprint. A forensic accountant started work at the Scottish Crime and Drug Enforcement Agency in May 2007, signalling a new front in the war against gangsters. The £60,000-a-year accountant joined the agency’s money-laundering unit after the capture and conviction of Jamie Stevenson but he will help to track the money trail of Scotland’s other gangland leaders.

  Ken Milliken, who leads the Scottish forensic team for international accountancy giants KPMG, believes the appointment only underlines the increasing focus on the finances of modern criminals. The expertise and experience that a forensic accountant can bring to bear on suspected criminal assets are vital as millionaire gangsters increasingly blend dirty money with legitimate income in a diverse portfolio of firms and property. Milliken said:

  Typically, they will have a number of businesses. Some may operate entirely legitimately after being bought or launched with criminal proceeds. Some firms may be laundering money. Some may be supplying services and goods to others owned by the same people. The aim is simply to create as complex a web of income, transactions and investments as possible – to build a shell of transactions coming and going to make it more difficult to identify and follow the criminal money.

  Using dirty money to secure legitimate loans is one method of obscuring the source of the start-up capital. Banks are in the business of encouraging enterprise and, if people come to them with proof of identity and an acceptable level of apparently legitimate income, then there will be nothing to suggest that those loans should not be given. If you are apparently in a small start-up situation and you say, ‘I am employed as such and such and here’s some bank statements showing my income and this is my house and some proof that I own it.’, then banks cannot really be expected to question that.

  Of course, the legislation now means you do not have to prove assets were bought with criminal funds to seize them. You must only prove that Mr X spent so many hundreds of thousands of pounds and then prove that his income is, or was, less than that. Years may have passed but the paperwork will still be there. It will be a case of rewinding backwards to the start and then looking at the conveyancing records, seeing where the money came from. The difficulty is that, once you have a range of businesses and they are buying and selling to each other or merging with each other, the money is being mixed up and the web is becoming more complex.

  Milliken believes that police intelligence is the key to focusing attention on suspect individuals and businesses. He said:

  It has to be driven by intelligence. Once they are looking at a particular person, then the flags can go up at the banks, the tax authorities, wherever. Once an individual’s business is being investigated, then there is work that can be done without alerting them. The police can get warrants to access the bank accounts to look at the cash coming in and going out. They can look at Revenue and Customs records, look at VAT returns, look at staff numbers and wages through PAYE and National Insurance.

  Police surveillance can test things like staff numbers and the number of customers going through a shop’s door, for example, but, eventually, you will come to a point where you need to see the books. There will be a raid and the accounts will be seized.

  It is at that point, Milliken believes, that the specialist expertise of forensic accountants can be vital. He said:

  They can look at those books for the things that don’t fit in. There may be unusual patterns of transactions. One part of the accounts might not fit with another. They look at the cash flow, the receipts, the VAT records. They scrutinise all the pieces of information that make up the financial profile of a firm and then identify where there are possible mismatches, where the financial information is not fitting together as smoothly as it should.

  Comparisons will also be made to other similar-sized businesses within the same industry to compare those key elements.

  This experienced accountant, who has led a series of major fraud investigations, believes that businesses involving a large number of cash transactions are popular with criminals for very obvious reasons. He said:

  The ease with which the cash takings of taxi firms, for example, can be falsely inflated and the difficulties proving that make them attractive for money laundering. Criminals will pay tax on those earnings, of course, but they will see that as commission. They will get back eighty pence in the pound or whatever the tax rate may be.

  Of course, buying property as an investment may well return more than that. They may easily recoup more than a pound for every pound invested.

  There has been a growing awareness among law enforcement agencies that, if you can prove that an individual’s money has not come from legitimate services, then that money can be attacked. Businesses launched with or laundering criminal money are no different to a legitimate business. They will employ people, they will have managers, finance officers, accountants. There are records. There are accounts. If you can take away the finance, you are disrupting them. You are moving them on.

  He thinks the Proceeds of Crime Act and related legislation has helped close a number of routes previously open to criminals seeking to legitimise their profits. He said:

  Ultimately, money laundering is a very simple concept. What are you going to do with that £1,000 or £100,000 that you have earned from drugs, human trafficking or whatever? How do you turn that money into legitimate money, money you can spend? You can’t put it into a bank because they will report it. Lawyers and accountants are under a similar obligation to report suspect transactions.

  If you go to a lawyer with £20,000 in cash as a down payment on a flat and they ar
e unclear where that money came from, then their report may soon be with the police. You can buy some big cash purchases but the car showrooms, the jewellers and the rest have also been ordered to be vigilant and report any suspicious cash payments. Of course, you will always have lawyers, accountants and traders willing to turn a blind eye – there will always be a small proportion of people prepared to take the money without question.

  There is no doubt that very many criminals have the highest quality of legal and financial advice. There is the possibility that the police could build a case against their advisers for money laundering or that they might be struck off by their professional bodies. However, that will not necessarily remove them from their advisory role. It does not stop them having that expertise.

  Milliken is not surprised that the SCDEA and Strathclyde Police have now employed their own forensic accountants in-house.

  It would appear to make perfect sense. The costs involved in this kind of financial investigation are considerable and clearly the police are working under the constraints of their budgets. They must decide if £30,000 spent paying a forensic accountant to carry out a complicated investigation would, for example, be better spent putting another officer on the beat.

  The workload is such that I would very much doubt they will be able to take on all the forensic accountancy previously contracted out. They will presumably act as filters. They will have the expertise to identify those investigations where there is the realistic prospect of identifying discrepancies capable of being taken to court. Ultimately, it has to be driven by the police and focused by their intelligence.