GEMS dealer Darius Guppy and business associate Benedict Marsh

admitted spinning a ''web of deceit'' to claim falsely nearly #200,000

VAT on a large consignment of gold bullion that was later smuggled to

India, a court heard yesterday.

When he was questioned by investigators, 28-year-old Old Etonian Guppy

-- best friend of the Princess of Wales's brother Earl Spencer -- told

them that money had not been the motive.

''The main incentive was adventurousness. It was stupid,'' he


Guppy, watched by his pregnant wife, Patricia, whom he had not seen

since being convicted of a separate #1.8m gems insurance swindle 20 days

ago, pleaded guilty at Snaresbrook Crown Court to three charges relating

to the illegal VAT claims between October 1989 and July 1990. Marsh

admitted one of the offences.

Mr Anthony Glass, QC, prosecuting, told the court that the charges

arose from forged export documentation produced to Customs by the two

Oxford graduates to support a false story that they had been exporting

gold to Switzerland.

He said that Guppy was the main organiser of the fraud which came to

light following a routine visit to a Hatton Garden jeweller. Guppy had

been using the dealer's company and books to process the bogus tax

claims, amounting to #197,179.

However, in the event, the pair received just over #122,000, which the

two men had now repaid in full to Customs.

He said that Guppy and Marsh were executive directors of Inca

Gemstones of Bond Street, set up in 1988 under the Business Expansion


''One of the conditions under the scheme was that the company must not

deal in any investment such as gold bullion,'' said Mr Glass.

Mr Glass explained that the gold was bought in this country and the

scheme the men put together centred on the fact that bullion, when

exported, received zero rating status.

To reclaim the VAT they had paid on purchasing it, they forged airway

bills and other documents, some bearing a copied signature of a genuine

Customs officer which had been taken from papers connected with a

legitimate transaction.

In addition, Guppy, of Ladbroke Grove, London, had made up a bogus

Customs stamp to lend authenticity to the scheme, said Mr Glass.

But, he told the court, the two men had not been as clever as they

believed. At least one of the dates used on the false papers and

purportedly bearing the signature of the Customs official happened to

coincide with the officer's holiday.

But behind the picture of gold being sold to Swiss dealers, which the

two men had tried so hard to paint, lay the fact that the precious metal

had been smuggled to dealers in India in false-bottomed packing cases.

''If this export had been conducted in an honest and above-board

fashion, the defendants would have had no difficulty in reclaiming VAT

paid on the gold, and there would have been no necessity for involving

themselves in this web of deceit,'' said Mr Glass.

Mr Glass said that Marsh, of Southwark, London, told Customs

investigators that he only got a ''small amount'' for his part in the

VAT fraud. He could not remember the exact amount.

Mr Glass said that, when questioned about the money he had made, Guppy

added: ''It was thousands, not hundreds of thousands -- probably at the

end of it #100,000.''

Judge Andrew Brooks agreed to adjourn sentencing of the two men until

March 23 after a joint defence application supported by the prosecution.

Marsh's counsel, Mr John Kelsey-Fry, explained that in order to

mitigate properly he needed to know the results of further


It is understood that these relate to the whereabouts of up to #4m

which the two men swindled from Lloyd's of London and their own company

following a bogus gems robbery three years ago in a New York hotel.

Investigators are convinced the money has been secreted in the two

men's private Swiss bank accounts.