Newspaper article The Evening Standard (London, England)

'Jeans Designer to the Stars' Gets Five Years for PS1m VAT Scam; Old Harrovian Who Claimed Friends Actress Was Client Used Clothes as Front for Fraud

Newspaper article The Evening Standard (London, England)

'Jeans Designer to the Stars' Gets Five Years for PS1m VAT Scam; Old Harrovian Who Claimed Friends Actress Was Client Used Clothes as Front for Fraud

Article excerpt

Byline: Sophia Sleigh

A FASHION fraudster who claimed to have designed jeans for Angelina Jolie, Jennifer Aniston and Paris Hilton has been jailed for five years after his clothing empire was exposed as a front for a PS1 million tax fraud.

Harrow and Oxford-educated Sheel Khemka, 42, styled himself as a designer to the stars, appearing in a feature in Vogue that hailed his Lofli range as the next "definite mega success story" and "the perfect denim butt hug".

But investigators from HMRC were called in when suspicions were raised about his trading activity, trail of unpaid bills and VAT claims.

They discovered that Khemka had only imported jeans worth PS24,000 from the US, which he passed around an "elaborate web" of 12 companies using false names and invoices to claim he was selling millions of pounds worth of designer garments in order to claw back VAT. He used money from the fraud to fund a "lavish" lifestyle, boasting to a US blog that he enjoyed fine wines and Mayfair's designer boutiques and "when feeling lazy" took a cab to Harvey Nichols to shop "in search of the perfect red".

He bought a Mercedes and put a PS200,000 downpayment on a PS1.5million home in a Grade II listed 18th-century tower in Gloucestershire.

Khemka submitted 12 VAT repayment claims between May and October 2009, receiving almost PS498,000 in refunds. A further 11 claims totalling more than PS500,000, submitted during 2009, were not paid out.

Khemka based his business in London with satellite offices across the UK, which were often rented shortly before a visit by HMRC inspectors to check the repayment claims. The "small quantity" of designer jeans bought from the US were moved from business to business with new packaging and labels, in an attempt to show that they had just been imported.

Khemka printed fake invoices, sales orders and other documents shortly before each meeting with HMRC, and asked local accountancy firms to sit in on the visits for an air of legitimacy. …

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