25th June 2018

£1.6m POCA order for Operation Gleam

A Cheshire-based family who sold illegal tooth-whitening products across more than 150 venues in the UK and from a website were ordered to pay back £1.6m at a Proceeds of Crime Hearing on May 24.

By JTS Staff
Journal of Trading Standards' in-house team
With the skills that the officers have, we can detect quite sizeable criminality and take it down

Powys County Council Trading Standards began an investigation into the Hargreaves family – Matthew (47) and his parents John (71) and Jean (72) – in 2013 when they were found to be selling tooth-whitening products at the Royal Welsh Show containing more than 110 times the legal limit of hydrogen peroxide. Their advertising materials also made misleading claims about the product, including that it was safe for use by any age group.

The trading standards investigation – codenamed Operation Gleam – took three years, at a cost of £400,000. It identified more than 30 victims of the scam, including one who was hospitalised after suffering from burns as a result of using the harmful bleaching product.

The law states that tooth whiteners containing between 0.1% and 6% hydrogen peroxide should not be made directly available to the consumer, other than through treatment by a General Dental Council-registered dentist – the ‘White Again’ products sold by the Hargreaves contained 11% hydrogen peroxide.

Numerous trading standards authorities were involved in Operation Gleam, along with Scambusters Wales, the GDC, and Dyfed Powys and Greater Manchester Police.

“On occasions like this, we can start with quite a small enquiry at a local event, but if the evidence comes together, the connections and the gel between trading standards authorities can make quite a small enquiry into a substantial investigation,” said Clive Jones, Powys County Council’s Professional lead for Trading Standards, Community Safety and Emergency Planning. “With the skills that the officers have, we can detect quite sizeable criminality and take it down.”

‘Systematic fraud’

Over a period of at least eight years, the Hargreaves had set up 20 different companies in an attempt to evade detection while raking in earnings of up to £2.5m, paying no tax and endangering public safety. The various companies were used to deflect the attention of the authorities and avoid product seizures – they had even signed a caution in 2007 admitting the sale of unsafe products, but had continued trading under different company names.

In September 2016, upon the conclusion of Operation Gleam, Matthew and John Hargreaves were both jailed for 18 months. Jean Hargreaves was given a six-month suspended sentence after admitting engaging in an unfair commercial practice.

According to Jones, “What was paramount was getting back to the source of an unsafe product, which was quite difficult because the trader didn’t cooperate and was clearly of a criminal fraternity. They hid behind dissolved companies and made a lot of money. Dissolving companies was part of the criminal method they adopted. It was a systematic fraud – a smokescreen to the way they operated.”

At the Proceeds of Crime Hearing in May, Judge Philip Harris-Jenkins stated that the defence argument that the earnings from the Hargreaves’ business came to less than £5,000 was “not credible in the slightest” and that the defendants were guilty of a “very deliberate and very calculated fraud”.

Matthew Hargreaves eventually admitted that he knew the product the family was selling was unlawful and that their business was fraudulent.

The family has now been ordered to sell six of the seven properties they own in order to pay the £1.6m fine – failure to do so within three months could result in longer jail terms.

Six hallmarks of a scam

There were six specific features of the Hargreaves’ dishonest trade that formed trading standards’ prosecution against them.

  • They knowingly sold a harmful product in a deceptive way, issuing no receipts and using ‘switcheroo’ under-the-counter methods to mislead consumers.
  • They conducted their business over a sustained period of time with no regard for public safety or the consistency of the product they were selling – the idea that they had unwittingly sold a one-off ‘bad batch’ was unfeasible.
  • The Hargreaves’ assertion that they were unaware of the dangers of the product they were selling was proven to be untrue by documents found during a raid of one of their properties, including a letter of complaint from a customer who had managed to track them down.
  • They formed and disbanded a series of  ‘phoenix’ companies in an attempt to avoid attention from trading standards and other authorities over a period of at least eight years.
  • They deployed complicated technical arguments when confronted by trading standards in an attempt to shake off scrutiny and continue trading, in full knowledge that their activities were illegal.
  • The proceeds of their trade were handled in an irregular and dishonest manner, with clandestine and anonymous trading accounts being used to avoid paying tax.

Lessons learned

Jones believes there are key lessons to be taken away from Operation Gleam. “We worked with the GDC to promote knowledge and awareness in this area, and were careful to assist authorities that encountered similar problems, at a national and regional level,” he said.

“With teeth-whitening products, you’ve got to look at the safety considerations. Are you dealing with a legal product with a very small level of peroxide? It may be worth interrogation as to the strength of the product. It’s certainly a risk product, and if the chain of supply looks quite suspicious, then it probably is.”

Comments are closed.