Patrick Spiteri cleared of misappropriation in VAT refund case

Patrick Spiteri cleared of misappropriating over €51,000 in VAT refunds from a film-maker after a magistrate ruled that the issue was a civil one, not criminal

Patrick Spiteri
Patrick Spiteri

Disbarred lawyer Patrick Spiteri has been cleared of misappropriating over €51,000 in VAT refunds from a film-maker after a magistrate ruled that the issue was a civil one, not criminal.

Magistrate Victor Axiak had seen how Once-Upon-a-Time-Films and Luigi Riitano had engaged Spiteri as a tax lawyer to assist on VAT issues for a film that had been made in Malta in 2001. He had been supposed to obtain a VAT refund on the endeavour but had allegedly ended up holding on to the money. Spiteri was charged with misappropriation in 2004.

Assistant Commissioner of Police Ian Abdilla had testified that Riitano had explained how he had approached Spiteri in 2001 to start a film company to attract business to Malta. Dolphin Film Productions was subsequently set up and one of the films shot in Malta was “The Terrible Hours” by a One Upon a Time Films.

The arrangement was that the latter company was supposed to inject money into Dolphin Film Productions Ltd who would then pay the costs of the film’s production. When the film was ready the accounts were to be closed and any VAT refunds were to be passed on to Once Upon a Time Films, as long as the production costs were paid for.

When the production was ready Riitano had approached an accountant to prepare the VAT return claim. But before this was submitted, Patrick Spiteri had been approached and it was decided that the lawyer’s brother Ray would sign for the claim as the company’s VAT number was registered in his name.

After some months Riitano and the accountant had asked the VAT department for an update on the claim and were astonished to find that it had been processed in just two days and the resulting cheque had been deposited in Dolphin Films’ account. The amount had been withdrawn and the account closed.

Subsequently, Riitano had approached Patrick Spiteri about the money and had been told that as Spiteri was the majority shareholder in Dolphin Film Productions Ltd, the money was his and he needed money to pay off some bills. Spiteri refused to pass on the refunded cash to Riitano, who then went to the police.

But the court had later expunged the Riitano’s testimony after he failed to return to Malta for cross-examination.

In the absence of Riitano’s testimony and that of the accused, which was also expunged, the prosecution faced an uphill battle to prove its case.

The court said as much but added that even if the testimony had not been removed from the acts of the case, the prosecution was still not in a position to prove its case.

In fact, said the court, the prosecution had not satisfied any of the elements required at law for a conviction on the charges.

The accused had received nothing from anybody, but it had been Dolphin Film Productions Ltd that received the tax refund from the VAT department, said the magistrate.

Naturally, the accused had then received the money from the bank when he went to withdraw them, said the court, but this is a sum of money transferred as a payment by the VAT department as a refund of VAT paid by it on its expenses and therefore not under a title which brought with it the obligation to return the thing or make specific use of it. If there was an agreement between the parte civile and the accused as to what should happen to the money after that, then that was a civil law issue and not misappropriation.

Spiteri was cleared of the charge.

Lawyer Stefano Filletti was defence counsel.